B2B Payments

In With the New, but Wait With the Old

Team Balance
July 27, 2023
Table of contents

B2B commerce is getting a capital ‘E’, and adapting to Ecommerce at a dizzying pace. At the same time, the B2B payments landscape is evolving thanks to increasingly sophisticated buyer needs and ecommerce expectations.  By 2025, 72% of B2B merchants expect the ‘majority’ of business revenue to come from ecommerce sites they own and operate. To get there, though, merchants need to deliver the purchasing experience business buyers expect. B2B payments playing a major role in that.

What stands in the way of digitizing B2B payments?

While payments might seem like a separate discussion to ecommerce, there are actually very closely related. So the best way to understand the B2B payment landscape is to look at what trends are shaping the ecommerce space. For example, one key trend in B2B ecommerce is towards self-service. 41% of buyers consider self-service functionality the leading feature they look for on ecommerce platforms, but not many platforms meet this expectation. Within reason, digital transformation is a leading focus with B2B merchants, looking to march their organizations into a future where their customers get the best possible service. But as all transitions go, it could be a tough one. And payments are not an exception to that.

As far as self-service goes, B2B payments tend to be far from that. Many B2B merchants, even those with a functioning ecommerce platform, still use fax to facilitate communications up and down their supply chain, including in the critical moment when someone actually wants to make a purchase. And the fax machine is just an example of how large organizations, even those focused on digital innovation, are still bound by prevailing industry norms.

You’d expect that by now, many organizations would be ditching paper checks and moving to more advanced, modern payment solutions, right? Not so simple.

A study by the Association for Financial Professionals (AFP) found that almost half of business-to-business (B2B) payments are being made by check. Almost half.

And while many modern payment solutions look to altogether replace outdated payment methods, such as checks, with ACH, wire and credit cards, we've found that for the overwhelming majority of merchants, swift change is hard. 

In this regard, checks are not alone. The "Product Catalog → Email Quote → Email Invoice → Wire Payment”, is still a prevailing ecommerce flow. But B2B payment preferences and procurement processes don't have to completely change all at once in order to solve for inefficiencies. Merchants have a lot to gain from something as simple as digital invoicing.

How should digital adoption influence the B2B payments landscape?

Before we launched Balance, we spoke to tons of industry experts. Based on their feedback, we found that merchants want cutting-edge innovation but they have to account for established practices as well. 

That’s why we knew that in our mission to build the most advanced B2B payment platform, we had to keep certain industry practices and norms that are so deeply rooted they still command a meaningful place in our product offering. Merchants deserve a business checkout experience that allows for instant ACH payments, automatic credit approval, auto-consolidation of transactions and milestone-based payments. 

At the same time, merchants still need to solve the paper checks challenge, the much needed “Get a quote” flow to work, and better ways for buyers to pay invoices. That doesn't mean that one day B2B buyers won't pay via digital wallets, but simply that the B2B payments landscape is not going to change overnight. Let alone is it going to be completely replaced with digital services that aren't fit for the unique challenges and preferences that merchants come across in business payments.

What merchants need is for someone to bring the new and the old together, to create a seamless buying experience for B2B buyers. And that's what we're building at Balance.

Finding the right balance to B2B payment innovation

The best way to understand what this means is to think about a real example. One of the most relevant aspects of the current and future B2B payments landscape is trade credit or net terms. A recent survey we commissioned revealed that over half of of B2B customers would not purchase online without a fast and easy way to pay with net terms.

In that case, why wouldn't merchants offer fast, secure payment methods tailored to in-the-moment needs of their buyers? Well, the process of accepting, reviewing, and approving trade credit applications and then tracking outstanding invoices is a major task to take on. And while there are B2B digital payment solutions that instantly check and approve credit lines—merchants are resistant to change. After all, when you have a tried and true way of doing something, the time and effort it can take to do something new can be daunting. Especially when it comes to payments, such a core element to a business.

So what will it take to see merchants adapt to the B2B payments landscape? According to PYMNTS research, the two most-cited hindrances to adopting digital B2B payments solutions are having a lack of human resources and tending to avoid risks.

Unfortunately, businesses that are reluctant to embrace innovation risk losing customers who cannot wait for improved customer experiences and may seek alternatives. Business customers want the convenience of online payment options that consumers enjoy, and this desire for a better payment experience will drive change in the future.

Next time you think about your B2B payment stack, remember that yes, it's important to offer the methods that business customers are familiar with. However, you don't have to sacrifice efficiency for convenience. Using Balance's B2B ecommerce payment platform, you can easily offer multiple payment methods for B2B customers, automatically reconcile payments, and set flexible net terms. This streamlines your payment processes and frees up time to focus on growing your business.

By investing in B2B ecommerce payments today, you can enable the flexibility, automation, speed needed to keep up with the increasingly standard for B2B payments to be instant, digital, and online. Business buyer needs are already changing. Reach out to our team to learn more.

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