B2B – Business to business
The term business to business, or B2B for short, generally refers to business relationships between two equal business partners, i.e. between entrepreneurs or merchants, as opposed to relationships between business people and end consumers (B2C) or other groups.
Characteristics of B2B business
While B2C transactions are directed at end consumers and are regulated by the German Civil Code, transactions between two merchants are governed by the German Commercial Code (HGB). Differences can be found, for example, in the time limits for notifying defective deliveries. For example, obvious defects must be reported immediately in the presence of the supplier, otherwise the right to rectify the defect expires. More consumer-friendly deadlines apply to B2C transactions.
Distinction from other forms of business
One misconception is that a B2B transaction is defined by the quantity purchased. While it is often true that traders purchase large quantities of goods for resale, there are also end consumers who build up corresponding inventories. However, it is essential that a B2B transaction is not made for its own use, but that a transfer or processing of the corresponding goods is intended. Another characteristic is the type of invoicing. In B2C transactions, the customer receives a lump-sum receipt for services and goods delivered. For service transactions, items such as labor, travel and materials are often listed separately. However, the rule for purchases of all kinds is invoices and receipts that are limited to the quantity of goods purchased and the resulting price. Prices shown are always gross prices for the end consumer, in which all ancillary costs and sales tax are already included. The sales tax is shown, but not added on again. In B2B relationships, prices are usually calculated in net prices. Sales tax and any delivery and freight costs are listed separately, making pricing more transparent. Since the sales tax payable by companies is offset against the sales tax collected through the input tax deduction, it is regarded as a transitory item and is therefore not taken into account in the pricing. Nevertheless, it is of course shown and added to the net price. The purchase price is therefore made up of the net price, minus any rebates and discounts, plus the purchase costs.
B2B as a communication relationship
B2B relationships are becoming more and more important, especially due to the ever-increasing position of the Internet. In this context, B2B also refers to communication relationships between two companies. In this way, business relationships are simplified through standardized representations, thus minimizing erroneous orders.
Access to B2B business
Due to legal aspects and comparatively good conditions, B2B transactions are usually not freely accessible to everyone. Rather, these are special stores and portals for business customers to benefit from improved conditions as resellers. For example, both wholesale markets and dealer platforms on the Internet require proof of business activity. This is done, for example, by presenting an extract from the commercial register. B2B transactions conducted on the Internet are more complex than B2C transactions. They must be legally incontestable, and price scales and purchase quantities are often more precisely defined than in B2C sales.
