B2B Payments

The Ultimate Guide to B2B Payments

Team Balance
July 27, 2023
Table of contents

Getting paid successfully is the ultimate goal of every business. To achieve that goal, companies need to meet their buyers at the right place and time, offer the payment options that make sense in the transaction context and be flexible enough to make sure that no deal falls through because of an inadequate payment solution. 

So what do merchants need to know in order to make all of that happen? First, you need a good grasp on B2B payments.

Understanding what B2B buyers want

Let's start with the most important consideration--what do business buyers care more about? The answer is very simple: When they pay and how they pay. Sellers wishing to remove the friction from their sales process should focus on these exact issues, being flexible about:

1) When they get paid (meaning they have to offer payment terms)

2) How they get paid (meaning they need to accept not only cards, but ACH, wires and checks)  

3) Where they can get paid (preferably online, in a streamlined process, or using modern technology providing a frictionless payment journey). 

In 2022, achieving the above is as important as ever. B2B transactions are moving online faster than ever, driven, in part, by Covid-19. Offering a flexible, streamlined, and delightful payment experience is key to succeeding in selling online to other businesses.

Offline vs online B2B payments

The $200 trillion question

Business transactions take place online, offline, or with a mix of both. If you only look at the online slice of B2B transactions, the value of global B2B e-commerce was $21 trillion - and that was in 2018.  But business commerce, in general, is a very large pie - try 10x larger. Global commerce was worth $218 trillion in the same year. This means 90% of business transactions are still happening offline. 

Why aren’t more B2B payments happening online? Part of the reason is the inadequacy of most payment solutions. Much of the innovation that’s occurred in fintech has been confined to the B2C segment, where people are accustomed to one-click checkout, a high degree of integration with identity providers, and even “buy now, pay later” programs. Many of today’s payment solutions used in B2B were really created for a B2C context, while few have been purpose-built for the nuanced needs of business buyers. 

For more of the pie to transition online, and it will, there is a huge amount of work to be done in digitizing business payments and advancing the consumerization of B2B transactions. But when merchants are offered the right B2B payment methods and mechanisms, along with a smooth user experience, B2B e-commerce will gain market share. 

What are B2B payment terms?

To illustrate the importance of payment terms to keeping the wheels of the economy turning, let's use an example from the fashion industry. A retailer in a mall that sells designer sneakers might be buying from the regional distributor on consignment, paying for the inventory only after it’s been sold. The distributor buys the goods wholesale, and might be paying the manufacturer with extended terms, like ‘net 30,’ or thirty days after the delivery of the shipment. And the manufacturer pays its suppliers with even longer extended terms, like ‘net 60,’ or sixty days after the delivery of the fabric, rubber, or glue that was used to create the sneakers. 

In a recent real-world example, Apple made the news in February 2022 for changing its payment terms with Apple Store accessory suppliers and making them less favorable - from 45 to 60 days. This means all those suppliers now need their own suppliers to extend longer payment terms for them, or they run the risk of being strapped for cash.

It goes without saying that offering payment terms hurts your cash flow as much as it helps your buyers’ cash flow, but not offering terms undermines the ability to transact in the first place. Wouldn’t it be nice if there were a way to extend terms without hurting your own cash flow? That solution is called financing and we’ll cover it a little further down this article.

What are B2B payment methods?

B2B sellers can definitely work with credit cards only, but not for long. Let’s use an example from the software industry. Startups that sell software to other businesses are called B2B Software-as-a-Service companies, or SaaS companies. Early-stage B2B SaaS companies will often start by accepting credit card payments online for software subscriptions. When they go upmarket to sell software subscriptions to larger enterprise buyers, B2B SaaS companies often need to find a way to accept traditional or offline payment methods, like paper checks, wire transfers, or ACH, because ultimately, that’s how businesses pay.

Average B2B transaction size by B2B payment method
Average Transaction Size by Payment Method in 2018

In a recent study released by the US Federal Reserve, there were 37.6 million business credit card accounts in the United States in 2018 with an average transaction of $2584. And $1.5 trillion changed hands by credit card for purchases of $1000 or more. Compare that to the 294 million US businesses transferred $64 trillion by ACH and $28 trillion by check.

What are the different ways to sell goods and services?

Merchants have adopted digitization at different levels. The minimum level of digitizing B2B transactions is putting a catalog on a website. Today, most merchants still require buyers to call in to place an order and make the payment offline. The next level is to accept small transactions by credit card, right on the website, but to require a sales call for anything more complex, like larger transactions, or alternative B2B payment methods. The most digitally advanced merchants will offer a completely online process that keeps buyers right on the company’s website until the payment has been made. That’s called a B2B Checkout, and it should support every available payment method and mechanism in order to facilitate a smooth transaction. 

Top Pain Points for B2B Buyers

A Deloitte survey found that the key pain points for middle market players are:

  • Payment delays
  • High processing costs
  • Fraud risk
  • Limited transaction visibility
  • Supplier payment methods
  • Manual AP processing
  • Remittance data and processing
US B2B payment landscape - pain points

How do these pains translate into lost revenue? According to MSTS, “48% of B2B buyers did not complete a purchase for their companies because their preferred payment method wasn’t an option.” The same report found that more than ¾ of business buyers were prevented from completing an online credit card purchase. 

No matter the buyer, there are countless ways to make their life easier and keep them coming back.

Which B2B payment methods are merchants considering?

B2B merchants are greatly limited in their ability to offer multiple different payment methods. Which is why, according to a Mastercard survey, checks still remain as the most common payment method merchants turn to.

Mastercard survey on the need for B2B payment methods

ACH for B2B payments

ACH stands for Automated Clearinghouse, a payment network that transfers money directly from one bank account to another with a debit and a credit. 

ACH debit is when the merchant, as the payment originator, withdraws money from the buyer’s account on the basis of a pre-approved authorization. There is usually a several-day time lag from debit request to actual debit attempt. The risk for the merchant is that the available account balance when the debit was requested might change by the time the debit itself is attempted. If funds are not sufficient to cover the authorization, the payment fails, and the seller incurs fees. 

ACH credit is when the buyer, the payment originator in this scenario, pushes money into the merchant’s account.

While wire transfers may be faster, and credit cards can provide real-time authorization, ACH is significantly cheaper than wire and credit cards. ACH takes away the hassle of dealing with paper checks, and it’s easy to set up automatic debits on a recurring date.

Wire transfers for B2B payments

Bank-to-bank wire transfers are a common way for businesses to pay - according to a survey, 69% of businesses used wire transfers in 2019. For large payments and ones that need to arrive within several days, interbank wire transfers make sense. This is a traditional payment method used domestically and internationally, and it provides a strong level of security and reliability.  


  • Secure and reliable
  • Relatively fast (24 hours to a few days)
  • Traditionally used for larger payments 


  • Overhead to track and trace
  • Push method, controlled by the buyer

Checks for B2B payments

As outdated as paper checks are, about half of business buyers still use them and rely on the control that this method gives them on a regular basis.

Checks are the most common B2B payment method
Source: Remittance Coalition Survey

Buyers’ reluctance to replace checks with more modern, faster, and cheaper B2B payment methods, is something overlooked by merchants going through a digital transformation process. Often, as merchants convert their online property into a place where buyers can now only browse , but actually purchase, this dependency on paper checks suddenly becomes a bottleneck impeding ecommerce growth. 


  • Checks have all the remittance information right on them, so it’s easy to know who and what they were coming in for
  • Traditional customers may want to use checks


  • Checks take a lot of time to arrive and deposit, which is suboptimal for cash flow
  • High check processing fees 
  • Administrative overhead for your team on large quantities of checks

Credit Cards for B2B payments

Credit cards are everywhere in business, and are valued for their convenience and security. In the organization, corporate cards provide oversight in procurement spend for purchases of things like supplies and control over employee spend, like travel expenses and discretionary budgets. Virtualized cards have become widespread in recent years as banks keep up with the demand for mobile wallets. 


  • Easy to set up as the seller
  • Easy to provide a self-serve experience for the buyer


  • Very expensive
  • Cross-border fees 4-6%

What are the top B2B payment mechanisms?

As we have seen, there are so many ways that businesses can get paid, but just as important -  there also are a lot of possible scenarios that can trigger a payment. We’ve mentioned net terms earlier, but that’s just one of several common B2B transaction mechanisms. Buyers might pay in installments for larger purchases, like when purchasing a full set of office furniture or at pre-set project milestones, like in the construction services industry. For SaaS companies, subscription payments are commonly used.

Net terms for B2B payments

It’s common practice for companies to seek extended terms with their suppliers. The most well-known set-up is for businesses to be allowed to pay 30, 60, or 90 days after they receive goods or services, with no interest. This impacts the buyer’s working capital by giving them the chance to resell goods before paying for them or to use the goods for manufacturing and send it to distributors before the bill is due.  In some cases, merchants offer a discount for earlier payment.

B2B industries that wait the longest to be paid
Source: Industries that wait the longest to get paid

Because net terms are something buyers need, it’s also something merchants need to offer (and in turn ask for themselves from their suppliers). The business extending the terms benefits from offering a more attractive value proposition and increased customer loyalty, and that is reflected in a significant sales and order size lift. 

The business impact of offering flexible payment terms

But all this comes at the cost of the supplier’s own cash flow. This is where 3rd party financing comes into play, as we’ll discuss later.

Subscriptions for B2B payments

Monthly or annual subscriptions are used for digital products or services, like software, edtech, or publishing. Subscriptions allow businesses the flexibility to pay as they go, or to cancel a service they no longer need. 

For business sellers, working with subscription business models gives them a way to get recurring revenue in a predictable way, and helps close the deal with unsure buyers. 

This is very common in the world of B2B SaaS payments. In the past, software licenses meant that a business would pay a large amount once to use the product for a set amount of time, or forever. Today, subscriptions allow businesses to charge a lower amount up front and potentially widen their customer base. Additionally, subscriptions build relationships with customers and increase their LTV. 

Milestones for B2B payments

Milestone payments are used frequently in the services industries and help buyers build trust with sellers. 

Construction contractors, creative agencies, and even headhunters accept milestone payments to tie payment to progress and make it easier for buyers to trust them. 

Another specific use case of a milestone-based payment would be paying for goods upon delivery. For example, B2B marketplaces may allow buyers to pay upon delivery to help facilitate trust on the platform.

Installments for B2B payments

Milestone payments, such as installments, help buyers with cash flow and budget management and can be particularly helpful to new businesses or support new revenue streams. 

Like any flexible payment mechanism, offering installments can help build customer loyalty. For example, a company selling health and fitness equipment to gyms might offer installment payments so that the gym can start generating revenue before its payments are due. Just like milestone payments, installments carry a degree of risk. 

How can businesses offer transaction financing to more buyers?

Buyer relationships and trust are the cornerstone of traditional transaction financing. In many industries, some form of transaction financing is common and expected. Companies that want to offer financing need to consider the risk of doing business with new buyers, or with small and medium businesses that may be less reliable. The other challenge with financing is that credit approval is typically a longer process that may lead to abandoned transactions or churn. 

Why is it difficult to assess risk?

Risk assessment can be a complex calculation, and getting it wrong has major consequences if a buyer fails to pay. Risk assessment looks at macro factors like country risk (economic, political, and social environments), company characteristics and competitive position (size, cash flow, market share, profitability, stability proxies in general), previous relationship with the merchant, public data about sales volume and inventory turnover.

What are the costs of assessing risk?

Beyond the obvious financial costs of actually offering financing,  assessing risk for financing is expensive in and of itself. Ever wonder why the ‘Apply Now’ button for transaction financing often leads people straight off of merchant or marketplace websites and into an offline flow? While risk assessment services can be expensive to buy, it’s even more expensive to run credit approvals in-house. Some merchants will use a third party to either assess risk or offer terms. It can be more attractive than maintaining a team to do so. 

Who gets financing?

The overhead of assessing risk often leads to the process only being done for big customers and large transactions, meaning the long-tail of smaller businesses and smaller transactions cannot be assessed for financing by the in-house team and is often a missed opportunity. 

With more advanced credit approval technology, sellers can make better, faster decisions and make sure that no low-risk buyers that should have been approved are denied financing, no matter their size.

The top ways for business sellers to overcome the challenges of financing:

  1. Outsource the credit program to a third party
  2. Run an in-house financing unit 

Regardless of how businesses manage risk and credit approvals, they can make a significant impact on the bottom line by choosing a solution that is fast, technologically advanced, and approves buyers for terms on the website as they check out. 

What is B2B payment automation?

It costs companies money to issue payments for goods and services, and it costs no less to receive payments in an orderly manner.  

The cost of B2B payments

Business sellers and merchants deal with issuing invoices, tracking, reconciling, and settling payments, collections, and vendor payouts. Since transactions can be made online or offline, using multiple methods and mechanisms, there is a lot of costly administrative overhead. 

The source of these costs are clear as someone in the organization - or an entire department - needs to be responsible for all these processes.

B2B payment automation takes all these manual payment operations processes like bookkeeping work and makes it streamlined, repeatable at scale, and with lower costs.  It refers to both accounts payables and receivables, meaning, both the buyer and the seller side of the transaction.

A good payment automation solution makes sure that incoming payments, by any payment method, are automatically matched against the right invoice. It also makes sure that installment payments are made on time and when they're done, that the transaction is settled as paid in full. Automation can also assist with making sure ACH debits are being done on time or that financed buyers receive automated collection reminders.  

While accounts payable automation has traditionally been the domain of larger enterprises who could afford spending money to cut costs,  today, new technologies are paving the way for the affordable automation of every part of the back office, on both sides of the transaction, for businesses of any size or stage. 

If businesses can speed up their invoice-to-payment time, they can deploy the funds for other purposes. 

The benefit of automation in B2B payments

How can businesses start accepting payments online in 2022?

Since 90% of business transactions take place offline, there is a lot of room for improvement - and many opportunities for cost-saving and streamlining. The solution a business should choose depends on the technical resources they have available. 

Recommendations - here’s what to look for in a payment solution by effort level:

Easy effort - no developer, no coding, and no website required

Companies that process payments offline or manually can benefit from a solution that provides a home for all incoming B2B payments online. Ideally, they should be able to log in to their service online, and handle all aspects of payments in one place. 

Key payment platform functionalities to look for:
  1. Create payment requests
  2. Issue digital invoices
  3. Get invoices financed
  4. Automation of the invoice life cycle
  5. Omni-channel payment support
  6. Analytics and data

Low effort - a small amount of technical resources required

Companies may be looking for a way to easily accept payments on their own website, offering buyers a self serve experience. They should look for a solution that’s hosted on their website, but only requires a line or two of code to install. A hosted B2B checkout will keep buyers on the merchant website as they go through the payment process. 

Key hosted checkout functionalities to look for:

  1. Purpose-built for B2B
  2. Seamless integration with your website and cart
  3. Support for multiple B2B payment methods
  4. Offering buyers credit approval and instant terms right in the checkout
  5. Self-serve invoicing
  6. Global support for local currencies 

Medium effort - more committed development resources required

Companies that are looking for more customization in functionalities or mix and match abilities should look for a well-documented API with available customer support. 

Key API functionalities to look for: 

1. Checkout integration

  • Adding a vendor
  • Opening checkout dialogs
  • Reviewing payments
  • Listening to changes using webhooks

2. Payment platform

  • Adding Buyers
  • Adding Vendors
  • Creating Payments

3. Payouts

  • Payout API
  • Platform Payouts

High effort

Companies looking for complete control and a more complicated solution can consider building their own solution. The possibilities are endless, but do require a lot of knowhow, development time and financial resources, as well as ongoing maintenance that’s out of the core business. This only makes sense for large enterprises with unique needs that aren’t met by any other existing solution. 

Trends in B2B payments in 2022 - it’s all about experience


The Covid-19 pandemic accelerated payments digitization significantly. First, because as purchasing moved online, payments moved online as well. Second, as companies were unwilling to send people to physical offices to process payments manually, many business payments shifted online across sectors. As a result, more businesses had the opportunity, if not the necessity, to provide a more seamless experience to their customers and continue to look for solutions to smoothly move their payments online. 


Businesses providing online checkout services to their customers are thinking about the user experience and how to improve it with personalization for the business buying team. This can take the form of suggested products in the cart, saving a cart for use by multiple buyers, and saving frequent or recurring purchases as lists. As a result, businesses are providing better service to the people behind the business transaction.


Most payments innovations until recently had focused on the consumer segment, like one-click checkout, identity verification solutions, buy-now-pay-later, and others. With the world of business payments experience lagging so far behind, there has been a recent outpouring of solutions that mirror the consumer experience. Companies that purpose-build solutions for business will be best positioned to offer a sleek, consumer-like experience that can solve business-specific problems.

To learn more about B2B payments, reach out to our team in the form below.

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