It’s estimated that by 2024, 50% of all payments in the UK will be by debit cards. With many businesses turning to online payments or going cashless, some B2B businesses are struggling to keep up.
An overview of B2B payments
Electronic processing is the main transaction for B2C businesses, however many businesses still rely on paper checks and Automated Clearing House (ACH). Unlike B2C businesses, B2B transactions are more complex. B2B payments tend to be higher value by nature and are more frequent compared to B2C. This all combined with the fact that the process is complex and can take a long time to complete can cause delays. Ones that are not typically associated with B2C payments.
What are the main ways to send money B2B
On the whole, there are 5 ways most businesses send B2B payments:
Interestingly- when it comes to B2B payments, many are still made by paper cheque, although checks may sound outdated they remain a firm favourite for businesses as they leave a clear paper trail throughout the payment cycle. however, as anyone who has sent a cheque will know – they can be slow.
An ACH is an electronic version of writing a check. An ACH simply lifts payment from the buyer’s bank account and deposits it into the sellers (after it has been authorised by the buyer).
3. Credit cards
A trusty way to do business, credit cards are a reliable way to send and receive money. The caveat being that providers do charge high fees at both ends. This means that they can be impractical for businesses dealing with large amounts of money due to spending limits.
4. Wire transfer
A wire transfer is an electronic transfer of funds across a network of banks across the world. It’s a great way to transfer money overseas and can be quick way to do business.
5. Electronic funds transfers
Growing in popularity, electronic fund transfers (EFTs) are digital payments that are significantly lower cost (and higher speed!) than wire or ACH transactions.
Why virtual cards are a great solution for B2B
For businesses looking to modernise the way they process payments, virtual card solutions can be a great way to digitize the payment process.
Virtual cards allow businesses to view their spending and offer unparalleled speed to process payments. For businesses struggling with cash flow, virtual cards allow companies to access payments in real time, meaning they are less likely to run into issues with cash flow. This is great for smaller businesses and SMEs.
Pairing this with AI (to automatically match invoices to payments) could make tracking payments and running businesses easier for many businesses, removing the headache associated with the B2B payment sphere.
In short, while advancement has been slow, more and more businesses are getting up to speed with payments. With virtual card solutions on the rise, businesses can start to take control of their finances and B2B businesses look set to rival the speed at which B2C transactions take place.