B2B Payments Landscape and Methods

Nicole Georgiev
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Are you looking to start a business using the B2B business model, but don't know how B2B payments work or how to accept payments online?

That's an important thing to learn, and we can help.

Collecting B2B sales leads (see what is B2B sales) is meaningless if you don't have a structured method of collecting payment from those sales.

Book a Demo to learn how BlueCart can help

We'll run you through the ins-and-outs of B2B payments, the methods used, and software options available to you.

B2B Payments Definition: What Is a B2B Payment?

B2B payments are transactions processed between two businesses for exchanged products or services. B2B vs. B2C payments are similar, but come in at different intervals and in different amounts. B2B payments tend to be for much higher sums and are often split across months or quarters. Direct to consumer brands get paid upfront, but in much smaller amounts.

What Is B2B Payment System?

A B2B payment system is the program a B2B business uses to process payments. These systems range in capability, but the best ones come with a few additional features.

Look for these features:

  • Escrow-type feature. This provides a guarantee to the buyer that the product or services they order will be delivered to their satisfaction. It also ensures that neither party can break the contract without suffering a penalty.
  • Credit-worthiness tool. Many B2B systems provide assessments of buyer credit. This allows sellers to limit the credit they offer or feel safer in selling to the buyer.
  • Integrated reporting. Reporting is the most important feature of B2B payment systems. The best, like BlueCart Payment Processing, include the ability to send automated payment reminders, report on on-time or late payments, collections, and more. You may have this as an integrated tool for your headless eCommerce system.

How Do B2B Payments Work?

B2B payments are either received at the point of sale or an invoice is sent to the buyer at a later date. Most B2B businesses send invoices monthly and require payment in 30 days, or net 30. The method and terms of payment vary by business and relationship of the parties involved.

Which Type of Electronic Payment Is Typically Favored in B2B?

Electronic checks are the preferred payment method for most B2B businesses. This is due to the low cost of payment processing to the business and a guarantee that the payment won't be canceled. B2B businesses prefer electronic payments due to their speed and security and ability to integrate with a b2b ecommerce platform.

B2B Card Payments

B2B card payments are when a buyer pays in full upfront via a credit card. The buyer then has a variety of options in paying back their credit provider. This is one of the quickest methods of payment for both B2B and direct to consumer businesses.

B2B Check Payments

B2B check payments are the most common form of payment and can be either physical or electronic. These checks need to be endorsed by the buyer and deposited by the seller into their own bank account. Many banks now offer mobile apps that let you scan checks for quicker depositing.

B2B Mobile Payments

B2B mobile payments are the least common form of payment and involve using a digital wallet on the buyer's phone to send a payment to the seller's phone. This form of payment has been growing exponentially in the B2C world. However, many businesses fear it is not secure enough to conduct large B2B sales through it.

B2B Payment Automation

Automated Clearing House, or ACH, payments are automatic payments that are transferred electronically from one entity to another. This is done through financial institutions using routing numbers and bank accounts. Automated payments are popular among B2B businesses that provide consistent deliveries of products or services and require recurring payments. Automation in all sectors of business is the future of eCommerce growth.

B2B Real Time Payments

B2B real time payment, or RTP, is similar to ACH and lets suppliers send messages and payment requests to buyers in real time. The buyers can then directly transfer funds from their bank account to the supplier. RTP is a growing payment method among B2B businesses due to its speed and ease-of-use.

Blockchain for B2B Payments

Blockchain is a form of data storage where transactions are transmitted through a network of computers, clustered together in blocks, then chained together to create a permanent record. It is a complicated, but growing method of data storage and transference that is used by cryptocurrencies.

It offers many benefits, particularly in the area of security, but is not very common among B2B transactions. This is due to its relatively recent invention and the slow adoption cycle of B2B businesses.

B2B Electronic Payments

Electronic payments for B2B include many types of payments and make up the bulk of B2B transactions. Whether ACH, RTP, or even mobile payments, the convenience and security of electronic payments make them popular among B2B wholesale businesses. (See our What Is B2B eCommerce article for more info.)

B2B Business

B2B Payments Landscape: B2B Payment Services

The B2B payment landscape has been dramatically shifting in recent years. More and more businesses are adopting electronic and automated payment systems. Cloud services in particular have gained traction and allow businesses to increase efficiency and focus on growth.

B2B Payment Methods

There are essentially five B2B payment methods.

B2B Payment Methods

These include:

  • Checks. The most tried-and-true method of B2B payment is by check. Though electronic transfer methods are growing, checks still dominate the B2B payment landscape.
  • Credit cards. There are many benefits in using credit cards for B2B purchases including that they're easy-to-use, fairly secure, and build a business' credit. However, they also charge a fee to the seller for processing and charge interest to the buyer.
  • Electronic funds transfer (EFT). Bank-to-bank transfers are a convenient and immediate way to make a B2B payment. However, they do require directly contacting the financial institution to start and can't be reversed if there's a dispute between parties.
  • ACH transfer. This form of electronic transfer is also convenient and processes quickly, but can be reversed in the case of a dispute. The drawback is that the initial set-up is a complex process, so they're best suited for recurring payments.
  • Online payment platforms. A wholesale ecommerce platform allows businesses to see and track invoices and payments in real time. There are many providers out there with their own fee structure and requirements for use, but the best for food wholesalers is BlueCart Payment Processing. You can use it when learning how to find wholesalers, buy wholesale products, or sell wholesale items of your own.

B2B Payment Providers

There are many B2B payment providers on the market, each with their own platforms and software changing what is B2B. These providers handle most of the work including invoicing, payment processing, and fund transmission. Usually, these providers charge a fee per transaction, though some larger providers also have subscription models.

B2B Payment Software

B2B payment software is eCommerce software that allows businesses to automate their billing and payments. They have many benefits for the businesses that use them.

Here are three benefits:

  • Quicker payments. Since they eliminate the need for manually handling transactions, they allow businesses to send bills and receive payments more quickly. This way you can invest more time and energy to increase eCommerce sales.
  • Simpler billing. Both the bills themselves and the payments can be complicated when done by hand. Customers may make mistakes or forget to pay and transporting checks and cash to the bank is a hassle. Software eliminates all of that fuss.
  • More secure. Physical payments can get lost or stolen. Electronic payments are much more secure and larger payments are better suited for the medium.

Future of B2B Payments

The future of B2B payments is through the cloud and online payment platforms like BlueCart Payment Processing. These tools continue to grow more secure every day and allow for immediate transmission of funds and access to historical data.

They also allow small businesses to have access to robust financial tools, sell to a global market with less risk, and see tremendous eCommerce growth.

Book a Demo to learn how BlueCart can help

Show Me the Money

Now that you know all about B2B payment systems, you can make the most out of your business and make money. That's made even easier by using a solid B2B marketing plan (see what is B2B marketing). Don't miss out on making deals and growing your business.

For wholesale food distributors, the BlueCart Digital Storefront is the best B2B online marketplace and a great way to increase revenue and reach new customers. It even lets you sell DTC food, so you can increase your market easily.

Frequently Asked Questions About B2B Payments

Understanding B2B payments is an essential part of running a modern day business. Now that you have the basics covered, you may have more questions about how B2B payments work. Here are some commonly asked questions and our answers: 

Can credit card payment be used in B2B?

Yes; credit card payments are not only possible in B2B transactions, they are increasingly common. Paying via credit card offers speed and simplicity for the buyer and easier accounting for the seller. 

Credit card payments are almost universally accepted because of how many payment gateway providers integrate this option. From BlueCart and PayPal to Netsuite and Chargify, there are several ways you can easily collect B2B credit card payments. 

What is a B2B credit card?

A B2B credit card is a payment card used exclusively for business transactions. It’s a credit card in the company’s name and designated for company expenses, like office supplies, furniture, and professional services. 

B2B credit cards are useful for accounting purposes. Instead of tracking expenses between multiple accounts, you can consolidate expenses on one card. Unlike cash, credit cards allow you to see how much is being spent on any item in real time, and who is spending it.

Is Square B2B or B2C?

Square is both a B2B and B2C business. The company offers B2B services through the Square platform and app and B2C transactions through Cash App. 

Square’s B2B services include payment processing, an eCommerce website builder, invoicing, point of sale systems, and more. This part of the company has over 350,000 active sellers with total company revenue exceeding $9 billion.

Cash App, an increasingly popular C2C money transfer app, boasts over 36 million users and $1.23 billion in profit in 2020. The app started off as a personal and professional fund transfer app and has since expanded to offer stock and bitcoin investing.

What is B2B payment processing?

B2B payment processing involves the transfer of currency from buyers to suppliers for goods and services. B2B payments can be recurring transactions or one-time payments based on the agreement between the buyers and suppliers.