According to Forrester, B2B ecommerce sales are expected to reach $1.8 trillion by 2023. But finding a B2B payments solution for your ecommerce site can be tough. Why? The digital adoption of payments in the B2B space is still relatively new. There are automated AP/AR solutions out there but what kind of functionality is enough or not enough is not an easy thing to know. The key is to find a solution that will fit your business in particular, and in that sense, you might not find everything you need in a one-size-fits-all solution. What works for others might not necessarily work for you.
With that, here is a short guide on how to choose the best B2B payments solution for your ecommerce site.
1. Determine flexibility of B2B payment methods
Flexibility can come in many forms. For one, it can refer to supporting various B2B ecommerce payment methods. Nowadays, there are many ways to accept payment—from credit/debit card processing, digital wallets, cryptocurrency, bank to bank transfers such as ACH (automated clearing house) and wire, and even checks. By offering a self-serve experience in your ecommerce website, your customers can have the freedom to choose what payment method they want to use during transactions.
Flexibility also has to do with how payments fit into your current organization and tech stack. A B2B payments solution can be broken down into a number of groups. There's invoice factoring, financing, BNPL, but sometimes merchants don't know exactly what they'll need first or when or maybe their business needs evolve as their ecommerce strategy and growth evolves. All-in-one B2B payment solutions can be better fit for merchants who want to be able to scale with a platform that can be adapted to their most current needs and easily meet future ones.
2. Prioritize the offering of payment terms
Being able to offer payment terms to your customers can by far be the most significant needle mover for growth. Companies that offer terms for payments can see an increase in AOV (average order size) and improve shopping cart conversion rates. And it makes sense--business buyers want the option to buy now, and pay later, just like consumers do. Except in the business world, it's not just a matter of convenience. With higher transaction values than in B2C, BNPL for B2B is a necessity to protect cash flow. Delaying payment can be the difference of an organization meeting revenue goals for that month. In the consumer world, the stakes are a lot lower.
Within reason, merchants usually have some sort of net terms offering. But it's usually managed offline and through a manual credit application process. Plus, the heavy lifting is often on merchants in terms of the financial risk taken and the operational overhead involved. Therefore if you’re looking to offer payment terms, opt for a solution that digitizes the process and takes on 100% of the risk of evaluating and qualifying buyers for terms.
3. Check payment float
Payment float refers to payments that are yet to clear as they are being transferred from one bank to another. This process usually takes up time, ranging from a few days to even a few weeks. Some payment methods like ACH, offer a real-time money transfer. This is why ACH can be an attractive payment method for merchants to offer, but the process of matching ACH payments with the correct invoice can turn AR teams off from the idea. Thanks to digital payment solutions, that's all changing. Merchants can reduce waiting time and have funds available immediately, without the added manual work.
Payment gaps are also usually due to the delay in processing paper checks. But when choosing a B2B payments solution for your ecommerce store, you don't want your transactions to be held up. As a supplier, you need to get paid immediately, but that can't come at the cost of limiting the payment options you offer buyers. The best solution is one that solves for both.
4. Gauge complexity of B2B payment processing
B2B payment transactions often undergo additional processes before completion. This makes it a more complex process compared to P2P and B2C transactions.
A lot of merchants today offer credit card payments at checkout. And that's because there a lot of B2C-built payment processors that make credit card payments seem like the easiest option. But credit cards don't cover the needs of B2B buyers. That's why there are B2B payments solutions that simplify the payment process, without limiting the kind of payment experience you can give your customers. The benefit? Merchants can reduce credit card processing fees, AR overhead costs, and grow conversions by leveraging a platform that processes multiple payment methods and automatically reconciles every transaction.
Another thing to look out for is API capabilities. API-first payment solutions can significantly reduce development efforts and resources--so you can have a full B2B tech stack up and running in a matter of days, not weeks or months. API integrations are also an important way for merchants to get white-label financial services and adopt embedded finance solutions. A B2B payments solution that merchants can easily integrate into their own branded checkout can be a simple, low-cost, and reliable way to bring more value to the ecommerce checkout.
5. Determine payment cost, fees, or hidden charges
A lot of B2B payments solutions have hidden charges or fees per transaction. Merchants should keep an eye out on how much a solution is charging for payment processing before committing to it. Watch out for billing practices by going over the terms and conditions of each service provider. Look for those that provide consistent billing statements and transparent calculations to show a breakdown of their fees.
Sometimes, these charges are unavoidable. Nevertheless, you should check out the different rates they offer for each payment method to see if they are reasonably priced. For example, processing credit cards online can cost more since it is more vulnerable to fraud. Another important calculation is how much you could be saving by offering net terms to your ecommerce buyers. Merchants can end up paying a lot in manual review teams and overhead by not having a more automated, digital, and centralized payment tech stack.
6. Prioritize security and privacy
Security has always been a major concern for the B2B payments industry.
To minimize risks, consider a payment solution that provides data encryption. With encryption, hackers, scammers, and fraudsters can’t easily steal your customers’ payment details and personal information. Frequent updates and patches are also important to maintain the latest security infrastructure. And if you want to further strengthen your system’s security and privacy, consider hiring or partnering with IT experts who can help monitor and maintain your payment processing solution.
What B2B payments solution is right for you?
Searching for the best B2B payments solution can be a complex task. Especially for merchants who are also undergoing a major ecommerce project. We've found that for our customers, it was helpful to learn about other businesses that have gone through a similar journey. Learn more here about how one B2B marketplace went about discovering the kind of payment stack they needed and what the results were from there.