Business to Business Payments
Modern business is changing the way B2B payments are made. Today, automation is the driving force behind how we get paid. Paper checks have been almost completely replaced by electronic transfers in the consumer arena, but business-to-business payment options have been slower to evolve. HOPE Processing Solutions, LLC offers B2B secure payments for ALL types of businesses including CBD, Hemp, D8, Kratom AND Cannabis.
1. Credit Cards
One of the primary vehicles for B2B payments is through a credit card. They provide a convenient and inexpensive way to facilitate transactions and float cash. In addition, card payments can be easily tracked at month-end with an electronic or paper statement.
Although credit cards incur interest rates (like an annual percentage rate (APR)) when the revolving balance is paid fast, it gives a business access to extra funds. If the credit card is treated more like a debit card and paid off each month, it’s a highly beneficial form of payment.
*As for Cannabis, we can set up PIN-Based debit card payments.
2. ACH Payments (Automated Clearing House)
ACH, which stands for Automated Clearing House, is another form of B2B digital payments that is faster and more efficient than hard-copy methods. This type of transaction moves electronically from one entity to another using a routing number and bank accounts. Because they are so simple, ACH payments work great for B2B recurring payments.
HOPE Processing Solutions can set up a seamless process for your business to accept ACH payments from your business partners. We have negotiated with our banks to process CBD, Hemp, D8 and Cannabis transactions without fear of having your account shut down. We do side by side comparisons to make sure you are getting the best rates and customer service you and your company deserve.
Many organizations use ACH because it’s cost-effective. In fact, some financial institutions charge nothing at all and push this form of transaction over paper checks.
ACH payments are a good way to manage cash flow and settle accounts. That’s because these payments are easier to track and appear on the month-end statement. ACH payments can also integrate into a company’s enterprise resource planning (ERP) system and other applications.
It should be noted, however, that Automated Clearing House is a U.S. institution that can only be used within America. Additionally, there is a daily cut-off time for ACH payments. This is because transactions are conducted in multiple batches throughout the day. If you miss this time frame, a business must wait until the next day to send it out.
Market Growth and Landscape of the B2B Payments Market
Twenty years ago, there were only a few ways to make a B2B payment and digital transactions were still a pipe dream. But now, new B2B payment methods have exploded and the market has been on a path of exponential growth – that is, until COVID-19 swept the nation.
According to Mckinsey’s 2020 Global Payments Report, global payments revenues were predicted to be down by 7% in 2020 compared to 2019, due to the pandemic.
That being said, COVID-19 will have long-term effects on the B2B payments market that will continue to catapult its growth. For example, a worldwide decrease in cash usage is predicted to stick. In the US alone, we’ve seen a 23% decrease in cash usage in total transactions between 2010 and 2020.
COVID-19 may have thrown a temporary wrench into current B2B payments market growth, but long term projections show no signs of slowing down and, in fact, some extra growth due to the pandemic.
Trends in the B2B Payments Space
While the market continues to grow at extreme rates, specific trends are appearing that any business, big or small, should pay close attention to. This will help to gain a competitive edge in future transactions. Some of the more common movements in the B2B payments industry include:
Sticking a check in the mail opens a business up to all types of fraud. Mail theft is still a very real threat. Although digital solutions aren’t immune to security breaches, most payment providers have a team of engineers and experts watching over your data at all times. There is also a clearer “paper trail” when every transaction is done electronically. As for cash only businesses, the transparency, ability to track transactions and payments and the SAFETY of not dealing with cash is immeasurable.
Save Time and Labor
Adopting B2B payment solutions means saving resources like time and money for the business, employees, and customers. The merchant doesn’t need to write a check and you don’t need to deposit and reconcile one.
How to Accept B2B Payments
Solutions for B2B payments tend to lag behind. A recent survey by the Association for Financial Professionals showed that more than half of all B2B payments (51%) are still made by a paper check. However, this is not always the most secure way. Many organizations are planning to universally switch to digital payment options.
Today, a business can accept B2B payments and have the transparency needed and not have to deal with sending and receiving checks AND the security of not handling cash.
Electronic Bank Transfers
Payments between two banks that are routed through the Automated Clearing House (ACH) are considered electronic bank transfers. This is one of the safest and most reliable systems but can take a lot longer than wire transfers (a few days).
Credit cards (including one-time virtual cards) allow a seller to receive payment quickly. A business that is buying can defer payment for one or more billing cycles. Credit card payments are the standard way to collect money online. It’s a popular method for SaaS and ecommerce companies.
This is an online payment platform that allows a buyer to pay for goods/services during the checkout process. It represents different options at the end of the shopping experience (like Paypal or Venmo).
Each option will differ in use for the sender and recipient, security, and cost. That being said, most businesses are shifting away from paper checks and moving toward digital payments.
How to Improve Operational Efficiency by Automating Payments
It’s time to put away the business checkbook. Approximately 51% of organizations still pay with a check and 44% still receive payments that way. Although a sharp decline from the 80th percentile in 2004, this still means that many companies are unaware of their B2B payment options.
Person-to-person (P2P) payments are expected to account for $240 billion worth of transactions by 2021. B2B presents an even larger opportunity but the payments industry is lagging behind. For these reasons, a modern business of any type should consider automation and digital payment options.
The next step in the payments market is mobility. Only 21% of organizations use mobile payment tools to review payments sent/received, while another 37% expect to do so over the next three years.
Going digital with your B2B payments makes it easier to send, receive, and process money. It also improves cash flow, guides merchant relationships, facilitates payments, and drives growth. Simple automation streamlines operations and encourages employees to focus more on creative tasks.
Evaluate where your organization excels and where there is an opportunity to improve processes. This will help to better position your company for efficient treasury operations and more prepared to take advantage of key B2B payment innovations.
Contact us to discuss your best option(s) for payment.