B2B payments often involve complex, highly customized invoicing and revenue recognition challenges that aren’t easy to solve even with modern platforms and systems. These payments also take time to process and generate a lot of communication that can quickly overwhelm Accounts Payable (AP) and grind your business to a halt.
With over 60% of B2B payments coming from either ACH or wire transfers in 2024 according to EMarketer, optimizing your payment strategy is a fundamental competitive challenge.
For some businesses, an inability to streamline B2B payments beyond their initial manual and customized processes can have a serious impact on their ability to grow and scale. There’s a natural limit to what can be achieved with Excel spreadsheets and non-automated reconciliation, even when you’re using a best-in-class ERP like NetSuite.
Without the right integration investments to centralize and streamline all your data systems, revenue leakage and inefficiency will eventually dominate your business strategy.
However, mastering the art of B2B payments can unlock a wave of growth, solidify your competitive advantages, and extend your legacy systems and platforms into the foreseeable future.
B2B payment methods
Other than paper checks, nearly all B2B payment methods take the form of electronic funds transfers (EFTs). These digital payments come in many shapes and sizes, and the ability to handle a large variety of sources accurately and efficiently can have a serious impact on your business. You’ll need to have a flexible data infrastructure to monitor your transactions – and give your AP team the tools they need to keep up.
Wire transfers
Wire transfers are a small but significant source of B2B payments. They are most often used for large payments that need to be transferred immediately between two bank accounts.
While wire transfers are fast and direct, they often are accompanied by higher fees. Also, because they represent a small percentage of overall transactions, businesses often handle processing manually. This bogs down the order-to-cash cycle and introduces errors and inefficiencies that lead to revenue leakage.
Automated Clearing Houses (ACH)
ACH payments have become the most popular B2B payment method as of 2022, representing nearly 40% of total transaction volume in the U.S. and Canada. These low-cost transactions include formats like:
- Direct deposits
- Fund transfers
- E-checks
The downside of ACH payments is that they are often processed in batches at specific times of day, potentially causing delays of 1-2 days and introducing revenue recognition challenges.
Also, businesses are expected to offer their customers a variety of B2B payment gateway options – especially as they grow and scale. Platforms like Stripe are excellent payment processing partners that provide a lot of value, but many businesses still reconcile and compile the data manually to make up for their ERP’s limitations. This can slow down business, introduce costly errors and create serious business intelligence (BI) obstacles.
Best practices for B2B payments
Unlike B2C transactions, businesses handling a high volume of B2B payments need to consider their solutions in the context of a broad range of business functions. Digital payments mean handling an enormous amount of data – data that’s critical for accurate and timely reporting for BI purposes, compliance and security, and maintaining a healthy cash flow.
This can quickly become a nightmare for your AP team. The partners you choose and the software integrations you use to streamline your ERP and other data sources can make or break your business.
Choosing the right payment solutions
Every business is different, but the range of payment options they offer will typically increase as they grow. This introduces complexity on every level of the order-to-cash cycle, and it’s not just a question of which payment processing partner you choose.
Rather, businesses need to invest in software integrations that allow data from these systems to be reconciled entirely within their ERP to support automation and eliminate reliance on manual processes and Excel spreadsheets.
For instance, ZonePayments automatically reconciles payment information from the popular payment gateway, Stripe. This allows businesses processing digital B2B payments to bring their billing and revenue recognition engines together. As a result, ZonePayments supports streamlining the customer’s payment experience as well.
Optimizing cash flow
Invoicing that isn’t underpinned by automation is already going to drag down your business, but optimizing cash flow also means reducing communications chaos for your AP department. Maintaining an accurate balance sheet manually or on multiple systems can waste countless hours just trying to close the books.
Integrations like ZoneCapture automate the processing of documents, data and invoice generation entirely within NetSuite so your team never has to juggle logins or wait on crucial information to do their job. Also, ZoneCapture builds on NetSuite’s standard 3-way match process to offer extended capabilities and easy-to-recognize alerts, eliminating the likelihood of errors.
Common challenges in B2B payments
In addition to the complexity surrounding compliance, security, cash flow and data system integration, businesses handling B2B payments may also face challenges with the following:
- Flexibility expectations: According to a study by the B2B eCommerce Association, 73% of B2B customers would abandon a sale if they encountered friction at checkout. Businesses need to offer as much ease and flexibility for preferred devices and payment options as possible.
- Faster pace of business: According to the Federal Reserve, nearly 45% of businesses believe faster and more streamlined payments will lower their costs.
- Remote and hybrid work: With over 36 million remote workers expected in 2025, B2B payment methods will need to make it safer and simpler to authorize from anywhere in the world.
- Financial crime: J.P. Morgan’s 2023 study indicates that 65% of businesses are victims of B2B payment fraud attacks, and systems need to be optimized to reduce the threat.
Payment terms
While most businesses would love to be paid immediately for their services, B2B payments often require a little choreography because of lags across each customer’s payment agreement. It’s common for payment terms to be net 30, net 60 or net 90, indicating that they will be due in 30, 60 or 90 days.
This can create long paper trails that Accounts Payable needs to stay on top of to successfully close the books. Also, with additional delays from B2B electronic payments that can all vary depending on the method, these numbers can be moving targets as well as long-range ones.
Supply chain issues and volatility are still impacting businesses around the world, and maintaining reliable cash flows has become more of a priority than ever before. Faster and more reliable payment methods represent both a competitive advantage as well as insurance against market instability.
International transactions
While global markets are more accessible than ever through e-commerce, it also introduces a great deal of complexity for the Accounts Payable team. Customers in other countries have different time zones, preferred payment methods, rules and regulations, and even simple language barriers businesses need to overcome.
Solutions like ZoneCapture can take care of the heavy lifting by automating communication and payment information for AP as it comes in regardless of the format or time of day. Its 3-way match functionality combines purchase orders, item receipts and vendor bills with a green/yellow/red light alert system to instantly draw attention to inconsistencies. Your team can also customize rules based on amounts, rates and item codes to support international transactions.
Perfecting your B2B payments strategy with Zone
The complexity and volume of digital B2B payments are only going to go up as paper checks disappear and fast, convenient EFT options take over. Staying ahead of the game will mean becoming a master of B2B payments, and augmenting your ERP and legacy systems with the software integrations they need to support automation and drive your business into the future.
Zone & Co is helping Accounts Payable departments everywhere extend their NetSuite instance with native SuiteApps like ZonePayments and ZoneCapture to optimize their order-to-cash processes. By eliminating manual work, multiple logins and costly delays, these solutions ensure you’re never a day late – or a dollar short.
Find out more about how Zone can transform the way your business handles digital B2B payments.
FAQs
What are B2B payments?
B2B payments are made from one business to another for products or services. While they have often been made by paper checks in the past, digital formats are now much more common.
What are the B2B payment methods?
Businesses can pay in several ways:
- Checks
- Wire transfers
- ACH payments by way of third-party payment gateway platforms like Stripe
- Other forms of electronic funds transfers
What is the best payment method for B2B?
Every business model is different, but ACH payments tend to be the most common method because they are low-cost and reliable.
What are the most common terms for B2B payments?
Net 30, net 60 and net 90 are common payment terms for B2B payments, but these numbers become less predictable due to delays in the order-to-cash cycle.
