B2B Payments

What to ask before you buy: A starter’s guide to B2B payments

Team Balance
July 27, 2023
Table of contents

The B2B payments space, a once largely underserved segment, is increasingly becoming crowded with solutions. Between BNPL for B2B, digital invoicing, and AR automation, identifying the type of payment stack best suited to your business model can prove overwhelming.

On the other hand, choosing not to offer a competitive payment experience to your customers is simply not an option. In fact, according to Avionos, 90% of B2B buyers would turn to an alternative solution if a supplier’s digital channel couldn’t support their needs.

To stay relevant in an increasingly crowded ecosystem, it’s important to implement a B2B payments experience that is both working for you and providing your customers with a great experience.

Below, we’ll cover some important questions that can help you understand the type of B2B payments stack you need in order to create the most value for your ecommerce customers.

Imagining the B2B payments experience 

Whether you’re improving your B2B ecommerce checkout, or launching your first B2B ecommerce store, payments in and of themselves–and the technological requirements needed to support them – often demand just as much time and energy as creating a new product would.

The more precisely you can define the kind of experience your customers need, the smoother the sales and integrations process will be. Here are some of the questions we recommend discussing as a team:

How many different B2B payment methods do you accept?

Most B2B checkouts today are limited to one or two payment methods. Credit cards are typically the most popular because they're widely available and easy to integrate. But the majority of businesses prefer to pay with other methods like via ACH and check. In fact, over 80% of businesses are still using checks. So having a checkout that accounts for that goes a long way in giving more value to your customers.

Do you want net terms embedded in the checkout? 

Whether buyers want net 30 terms or net 60 terms, most businesses today handle this process offline. Offering net 60 terms at checkout, when most online businesses today typically only offer credit card, can be a competitive advantage.

Some other questions to consider when it comes to net terms are:

  • What kind of payment schedule do your buyers expect? 
  • Does a customer’s payment schedule impact the type of payment methods they can select?

These questions will help you determine the embedded checkout functionality you need to meet your customers’ expectations.

You can offer a great payment experience, but if it’s not the one your buyers want, you’ll significantly undermine your own efforts.

Identifying internal tech limitations

Some solutions on the market might offer point-of-sale financing but still expect you to actually process payments yourself. That might suffice if you only accept credit cards; however, processing ACH, wire, and check might demand more sophisticated circuitry.

There are also invoice factoring companies that do manage collection, but they expect you to integrate their system with your checkout, process the payment, and keep track of invoices. So, how much or how little do you need? It depends on where your business is today and where you’d like to be in the future. Discuss with your team the following:

Do you have an in-house payments team?

If so, are they efficiently managing the flow of payments? What happens if you were to onboard new customers in the future? 

Are tedious manual processes preventing you from scaling? 

This question relates to the previous one. If your team is manually underwriting or processing payments from 60 customers a week, are you set up to have the bandwidth to handle larger volumes of customers? 

Does your current payment processor limit the payment options you can offer?

Are you losing out on business because your current processor doesn’t offer a payment option that potential customers want?

How much of your payment stack is currently offline?

And what would it take to bring more of it online? 

How do you reconcile payments at the end of every month?

If your reconciliation process is heavily manual, then consider how automation could make this process more efficient and easier on your finance team.

Do you struggle to approve buyers for credit efficiently? 

Is this because you are manually underwriting or because your current provider has limitations when it comes to approving buyers?

The answers to these questions will highlight the areas a partner can provide the most value. For example, API-first tools that offer you a full payment stack—from financing to reconciliation—can significantly streamline the integration process and limit the dev resources required to get the solution up and running properly.

Credit risk underwriting: What to know

For B2B companies, a single purchase order might involve tens if not hundreds of thousands of dollars worth of goods or services. Because merchants often finance these transactions, they need to be able to swallow large costs upfront.

Unfortunately, it’s not easy to verify at scale whether buyers will pay on time or at all. To save you and your team from pursuing a vendor that doesn’t cover the kind of financing options you need, consider the following issues: 

  • Do you want to pre-approve buyers or extend credit on a per transaction basis? 
  • How much credit do your buyers need to purchase? 
  • Do you have a long history with your buyers?
  • Do they purchase in high values and amounts?
  • Do you have the volume of capital needed to finance these transactions in-house?
  • How could relying on a third-party financing partner remove the burden and risk of underwriting buyers?

From here, you can start to define the kind of payment flow you want to provide to buyers who have been approved for payment terms. If you have dozens of customers waiting weeks on end for credit options, you risk losing a significant amount of business.

Alternatively, determining, for example, that you want to pre-approve existing buyers for a certain credit limit can help you eliminate a large swath of potential challenges from the outset.

B2B payments can help you stand out

With the right approach to B2B payments, merchants can significantly remove barriers to purchase, increase overall sales and order value, and boost cash flow. However, all of that requires a certain amount of internal strategy and prioritization ahead of time. And while there is no one-size-fits-all, you can identify the must-haves and the must-not-haves early on for your B2B payments experience, to set your online business up for success.

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