Over the last few years, the B2B payments landscape has seen numerous advancements, gaining considerable traction in the business space. A study by Gartner predicts that in the span of the next few years, 80 percent of B2B sales transactions between suppliers and buyers will take place over digital channels. The opportunity to make B2B payments will provide astronomical benefits to all sectors of the market. Keep in mind that about 28 trillion dollars worth of B2B transactions occur on an annual basis. 1.8 trillion of that amount ends up being card payments, while 12 trillion goes through checks.
B2B Payment Landscape
Many interesting things are happening in the world of B2B eCommerce. Besides the fact that it is a 12.2 trillion dollar market– that’s six times larger than the B2C market! –around half of all sales are recorded through manual processes. Sales reps, purchase orders, and paper-driven business processes are in need of extensive upgrades.
There is a massive opportunity for innovation in the B2B commerce space. Taking advantage of this opportunity can accelerate companies’ growth, whether they’re already there or are looking to enter the space. Now, new marketplaces, distributors, and industry players are making a big difference in helping the overall market to grow. However, traditional methods are yet to improve when it comes to the payment types within the market.
You have to think about companies making larger payments to suppliers or vendors. When you are a supplier dealing with a business, remember that they will not pay anyone upfront, so the way you get paid can vary. In this case, knowing B2B payment processing tips can help.
How Do Payments Affect B2B Commerce?
B2B companies that are starting to go online, whether they have just started operations or have some eCommerce experience, need to consider payment methods. The speed at which companies conduct business operations is increasing rapidly, and today’s payment processes need to be efficient and solid to support online transactions. In this highly digital world, banks are taking measures to accommodate the speed at which businesses are continuing operations.
They are working with industry leaders to accelerate business-to-business payments by incorporating modern solutions that meet the demands of the future. The aim of such system integration is to replace checks and invoices with end-to-end automation and technologically advanced solutions. Whether it is invoicing, payments, remittance information, and more, change is inevitable.
Trends of B2B Payments
Moving Away from Paper
Consumers are no longer relying on paper transactions and have decided to move to digital alternatives since they are cheaper, faster, and safer. 59% of users currently use mobile banking, but businesses aren’t catching up. Despite mobile banking being a digital alternative, it is nowhere near the scale of B2B payments that you can use today. Companies will soon realize that a scalable and standard process is well within reach. Implementing and deploying B2B payment methods will mitigate paper processes to a large extent.
Making B2B payments using manual methods will have its fair share of errors. It is also more costly and time-consuming than digital alternatives. Digital innovations in the B2B payment sector are causing businesses to strategize their processes, ensuring they are more streamlined. Innovations that include these strategies present businesses with the opportunity to re-imagine their current payment system entirely. This maximizes the efficiency of payment processes at every step of the way.
Businesses benefit from adopting electronic payments. Automating business processes offers further advantages, which is critical if you wish to survive in today’s economy. These include error reduction, cash management, increased transparency, risk mitigation, and more.
One of the trends also includes electronic invoices, electronic remittances, and other automatic financial procedures. All of this combines to make payments less manually intensive and quicker. It also frees up employees’ time, so instead of keeping up with payments, they enjoy the peace of mind to perform important tasks that contribute to the business’s growth.
Digitalization also helps businesses manage cash flow capabilities with real-time data management. Ultimately, decreasing invoice payments can help businesses avoid delayed payments and take advantage of early payment discount programs. Virtual exchange systems of value are much more efficient and reduce any potential for human errors.
B2B payment trends that take virtual undertakings are also very low on risk thanks to limited manual processes and a low volume of paper checks, which minimizes the risk of fraud. It will also increase transparency, making cash more manageable. Reports tracking unpaid and paid invoices bring about greater insights that lead to a better automation process. It also makes payments more secure and stable for businesses, which opens up more revenue generation opportunities.
The data collected by the E-remittance technology make payment applications faster and more precise. It also improves the accuracy of receivable balances and different accounts. Though the benefits are clear, frameworks for account management may differ in the coming future. Service providers are likely to act as service points to deliver data and information to clients.
B2B payment trends in 2022 will have standards that ensure interoperability, allowing businesses to incorporate a highly compatible payment option that receives payments through various channels. Payment systems in the future will formulate a virtual framework that will help businesses enhance connectivity and value across an expansive cross-border network. Suppliers will likely have to engage with providers and locate access points. All of this will help make payments more accessible for B2B transactions.