- Rahim Harji
- Aug 31, 2023
As businesses expand their operations across borders, efficient B2B payment solutions become essential. Many small and medium businesses opt for digital payments because manual processes take longer and increase financial strain on your business. Limited payment options, higher transaction costs, and using cheques to pay invoices are inefficient practices that impact your cash flow. B2B payment automation transforms your payment collections processes by offering payment convenience to your customers while streamlining payment workflows so you get paid promptly. This article features the benefits of embracing a B2B payment automation solution and how it speeds up payment collections.
In this article
What are B2B Payments?
Business-to-Business (B2B) payments refers to the exchange of money between two businesses in return for goods or services. In the B2B context, the seller is referred to as the merchant and the buyer as the customer. Depending on the business type, B2B payments can involve one-time transactions or recurring payments between a merchant and a customer. Cash and paper cheques are common payment methods to transfer B2B payments between parties.
Why automate B2B payments?
Automating B2B payment processes improves the overall efficiency of a business by speeding up payments, which cannot be achieved with manual platforms. When you automate your B2B payments, you offer convenience to your customers to pay using their preferred mode of payment. With automation, you will never have to wait for mailed cheques because automation leads to faster payment processing via digital payment rails. Automating your payment processes helps you gain more visibility to track payments due to the electronic recording of transactions. For an efficient and prompt payment solution, automated B2B payments are a reliable solution that improves cash flow and processes payments faster.
How B2B payment automation benefits customers?
Payment automation software for B2B businesses helps customers pay their invoices easier. Automation empowers merchants to send clients a click-to-pay invoice and choose their preferred mode of payment. Paying invoices electronically is also convenient for customers to pay their merchants across borders with low transaction fees. B2B payments automation also enables customers to set auto-pay to pay recurring invoices and track their payment history. This also ensures frictionless payment journeys for international customers to pay invoices in their currency, saving from manually calculating exchange rates.
Challenges with Traditional B2B Payment Processes
B2B payment processes are challenging when managed manually. Recurring invoicing is a severe pain for the AR team because paper-based invoices are prone to human error. Some common challenges with the manual B2B payment processes include the following.
- Invoice Delays: Delayed payments are unavoidable due to manual paper-based invoices that take longer to create and send. An invoice with errors or mistakes further delays payments.
- Matching Data: Matching invoices with order numbers and reconciliation of invoices is inconvenient when done manually. It burdens the AR team and impedes the cash flow.
- High Processing Costs: The costs to create invoices and process payments are higher, reducing the revenue margin of a business.
- Risk of Fraud: Manual invoicing systems are vulnerable to check fraud and cyber-attacks, increasing the risk of business loss.
- Low Visibility of Transactions: Disruption due to chargebacks, delays, or incorrect invoices necessitates the AR team to track issues, further delaying collections.
- Mismatched Payment Method: Payment conflict is imminent when the payment method of the supplier and buyer is different.
- Billing Cycles: Lack of automation results in longer payment cycles due to inefficient payment processing methods.
Embracing B2B Payment Automation to Overcome Challenges
B2B Payment automation helps you gain more control over the order-to-cash process to record your transactions electronically and enhance payment visibility. With an automated system, you prevent invoicing errors and disputes to send accurate invoices to your customers, so you get paid faster. A cloud-based B2B payment automation platform gives you a single source of truth platform to track payment histories and unpaid customer invoices with higher visibility. This allows the AR team to access the same information and track real-time payment histories to make accurate business decisions and avoid potential cash flow problems.
An automated payment system increases efficiency and minimizes errors in your invoicing and collection system. You also cut down costs and time to create and process a single invoice, compounding the savings for multiple invoices with automation. With digital payment methods, you allow customers to pay using their preferred payment method to save higher transaction fees. This cuts down the cost of manual labor involved in the process and also reduces the billing cycle. Other costs saved with automation include minimizing paper usage, printers, and toners used in paper invoices.
Material Time Saving
Automated workflows reduce manual efforts, making the workflow efficient. B2B payment automation translates streamlining payment processing and collections to keep your finances consistent. An automatic payment solution opens doors to immediate payment from local and international customers, saving time for mailing, signing, depositing cheques, and bank processing. In addition, you can save time by sending a digital invoice promptly to request an impending payment. Automated payment reminders and dunning messages also save time in reaching out to customers, so you get paid faster.
B2B payment automation is a scalable cloud-based solution that facilitates growth without installing on-premises infrastructure to meet more customers. As your business expands, you may experience an increase in the number of invoices to create and process daily. Using the traditional invoicing and payment processing method requires more resources to meet growing business needs. However, this is not true with an intelligent B2B payment solution because it is fully scalable. You can add new clients in a matter of a few clicks to meet your business needs.
Customer Experience and Trust
Automated payment solutions increase the customer experience with accurate invoicing processes that reduce disputes. Enhanced payment options also ensure seamless payment journeys, improving customer experience. Personalized soft payment reminders are also a feature of B2B payment automation that develops trust among your clients with secure payment methods. In addition, automation saves the time spent on follow-ups, eliminating customer frustration. With a dedicated customer portal, customers can gain more control over invoice-related activities and track their payments with higher visibility.
Ways to Collect B2B Payments with Automated Solution
Credit cards and debit cards are the common payment method to make B2B payments. However, a business must ensure whether its merchant accepts the particular payment method. Higher transaction fees are also involved in payment processes. Choosing an automated B2B payment solution empowers you to add a credit or debit card payment option to pay your invoices.
Automated Clearing House, called ACH transfer, is a reliable option to transfer money from the customer’s bank to the merchant electronically. This payment method is secure and facilitates payment with a lower transaction fee. However, the drawback is that it takes more time for payment to be received by the merchant. ACH payments are common payment options for recurring payments in the B2B context.
Wire transfers are real-time electronic transfers to move funds from the customer’s bank to the merchant’s bank account. This payment method is faster, but the transaction costs are sometimes higher than other payment methods. For cross-border transactions, it can take longer to receive payment by the merchant with the higher payment processing fees.
Commonly used for online purchases, payment gateways are also a common payment method for B2B customers to make electronic payments. Merchants give their customers an invoice with a click-to-pay link to pay their invoices. Clicking the link takes the customer to the payment page, where they can pay using a credit or debit card or other payment options.
Using Cadency for B2B Payment Automation
Automation resolves inefficiencies to keep your cash flow consistent, saving you from disruptions. But Cadency extends beyond B2B payment automation to optimize the invoice-to-cash lifecycle. Cadency helps increase collection rates by reducing processing times, minimizing errors, and automating collections to add value to your brand. Cadency’s automated dispute resolution process resolves payment issues to minimize delinquent payments. By giving access to the customer portal, Cadency offers customers more control over their profiles to make payments and track their payment history with higher visibility. Merchants can customize invoices, payment reminders, and communication to enhance customer experience. Cadency establishes a comprehensive payment policy based on the following terms.
- Due Date: The date to pay the invoice is agreed upon by both parties. For instance, a business can pay within 30 days or 45 days of the invoice date.
- Late Payment Fees: Decide the delinquent fee amount a payer will be charged upon late payment, if any.
- Partial payments: The rule-based system allows customers to make partial payments, and merchants can finalize the payment conditions.
- Payment Methods: Identify the payment method used to pay invoices. Cadency allows cash, e-cheque, credit card, wire transfer, and ACH.
- Promise to Pay Feature: Cadency empowers you with a promise to pay feature to track missed payments and optimize cash flow to ensure you fulfill your financial obligations.
Traditional payment processing is slow and takes longer to process customer payments, impacting your cash flow. Automating payment processes for B2B payment helps expedite payments, reduces delays, shortens billing cycles, and streamlines workflows to keep your cash flowing. By automating your payment methods, you increase customer convenience by giving them more payment options and sending click-to-pay invoices. Using Cadency to automate B2B payments extends beyond payment processing features. Integrating with Cadency automates your entire accounts receivable collection process and streamlines your workflows, including invoicing, communication, and reconciliation. To learn more about how Cadency integrates with your ERP platform, schedule a demo with our team.
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I'm an expert in B2B payment solutions with a deep understanding of the challenges faced by businesses in managing cross-border transactions. I have hands-on experience with various payment automation platforms and a comprehensive knowledge of the benefits they bring to businesses. Allow me to provide insights into the concepts used in the article and shed light on the importance of B2B payment automation.
B2B Payments: Business-to-Business (B2B) payments involve the exchange of money between two businesses for goods or services. This transaction includes a seller (merchant) and a buyer (customer), and it can be either a one-time transaction or a recurring payment.
Why Automate B2B Payments? Automation of B2B payment processes enhances overall business efficiency by accelerating payment cycles. Automated systems offer convenience to customers, allowing them to choose their preferred payment methods. This eliminates the need to wait for traditional methods like mailed cheques, leading to faster payment processing through digital payment channels.
Benefits of B2B Payment Automation for Customers: Automated B2B payment solutions make it easier for customers to pay their invoices. Features such as click-to-pay invoices, preferred payment methods, and auto-pay for recurring invoices enhance the payment experience. Additionally, automation facilitates seamless cross-border payments with lower transaction fees and the ability to pay in their preferred currency.
Challenges with Traditional B2B Payment Processes: Manual B2B payment processes present various challenges, including invoice delays, data matching issues, high processing costs, fraud risks, low visibility of transactions, payment method mismatches, and longer billing cycles.
Embracing B2B Payment Automation to Overcome Challenges: B2B payment automation addresses these challenges by providing enhanced authority, reducing expenses, saving time, fostering expansion, and improving customer experience and trust. Cloud-based automation platforms offer a single source of truth for payment histories, minimize errors, and streamline the order-to-cash process.
Ways to Collect B2B Payments with Automated Solutions:
- Credit Cards: Common for B2B payments, but businesses must ensure merchant acceptance and be aware of higher transaction fees.
- ACH Transfers: Secure electronic transfers with lower transaction fees, suitable for recurring payments.
- Wire Transfers: Real-time electronic transfers with higher transaction costs, often used for cross-border transactions.
- Payment Gateways: Commonly used for online purchases, providing a click-to-pay link for B2B customers.
Using Cadency for B2B Payment Automation: Cadency is highlighted as a B2B payment automation solution that goes beyond payment processing. It optimizes the entire invoice-to-cash lifecycle, offering features such as automated dispute resolution, a customer portal for payment control, and a promise-to-pay feature. Cadency allows customization of invoices, payment reminders, and communication to enhance the overall customer experience.
Bottom Line: Traditional payment processing is described as slow, impacting cash flow. B2B payment automation expedites payments, reduces delays, shortens billing cycles, and offers various payment options to enhance customer convenience. The article emphasizes Cadency's role in automating accounts receivable collections, streamlining workflows, and integrating with ERP platforms.