Pain Points in B2B Payments and How To Solve Them

The Future of B2B Payments

According to the European B2B E-commerce Market Forecast, B2B e-commerce in Europe will reach € 1.57 trillion (USD 1.8 trillion) by 2025, driven by an increase in B2B online consumption. According to Visa, in 2020, B2B payments amounted to € 104 trillion (USD 120 trillion) globally.

The speed and convenience of B2C payments are now in demand in B2B payments as well. More use-cases are emerging of B2B payments moving beyond paper checks towards digital payment methods. Reconciliation of payments is crucial for companies – matching data to payments accurately brings transparency, speeds up settlements, and removes additional costs.

PYMNTS/Visa research has found that 91% of firms are keen on real-time settlement. Another 2021 report from Statista found that 34% of companies worldwide are ready to turn to fintech solutions. Hence, modernizing B2B payments seems to be the way to go. Or is it?

The complexities in B2B payments

B2B payments follow a more complex process, and several factors impact them. Some of these include:

• Longer approval time – In a business, numerous stakeholders have to review a payment decision before the final sign-off. On average, it involves five to seven people, which results in longer approval times and delays. These delays in the payment cycle affect timely payments, impacting over a third of mid-sized businesses.
• Larger Volumes – B2B purchases and sales are in bulk, with larger volumes, and often are worth thousands of euros. Companies also prefer to make regular, recurring purchases and build lasting buyer-seller relationships.
• Industry-specific Payments – B2B payments can also vary depending on the industry. Different industries work on their payment terms and standards, leading to more complexity in B2B payments.

How to solve Pain Points in B2B Payments

B2B payments face several issues, such as manual processing, delayed payments, reconciling data and payments, visibility, and fraud.

Move from manual processing to automation

Manual billing is tedious, takes a lot of time, and can lead to errors and data inaccuracies. Modern businesses work with a variety of payment and pricing models. To process all these payments manually can be frustrating. Automating your B2B payments gives you more control and visibility, reduces your operating costs, and saves time. Switching to digital payment methods can help you make and receive payments in real-time.

Automating your accounts receivable (AR) and accounts payable (AP) reduces the manual and repetitive work. You get real-time access to accurate data, which helps you reconcile your payments easily. You manage your cash flow better, track revenue, and improve reporting. To get the best out of automated billing, you should merge it with other business processes within your organization. For example, integrating payment APIs into your ERP system can help you seamlessly manage your payments by safely sharing payments data between different functions.

Manage Risk and Protect Data

Data breaches and payments fraud is the topmost priority of most business. According to PYMTS/ Visa research, 60% of businesses cite data breaches and payment fraud as a major concern.

Hence, you should authenticate B2B payments using Strong Customer Authentication (SCA) as per the latest PSD2 mandates in Europe. Ensure that you secure the payment credentials of different payors and suppliers to prevent unlawful access. Use additional layers of security like two-factor (2FA) and multifactor authentication (MFA) to secure sensitive payments data against hackers and fraudsters.

Using AI for fraud management helps you monitor large volumes of complex payment data in real-time. AI systems analyze data from varied sources and correlate them to detect suspicious patterns. These algorithms use a continuous feedback loop to constantly learn and improve their ability to detect newer fraud patterns.

Reduce payment delays

According to the European Commission, only 40% of businesses get paid on time in the EU. Late payments account for 1 out of 4 bankruptcies. Another report from Intrum shows that 51 percent of business owners across 29 European countries felt late payments reduce their liquidity. Payment delays impact your cash flow, business relationships, and reputation.

Timely payments are a blessing for businesses – improving cash flow and helping you to maintain business continuity. They help build stronger relationships between buyers and sellers. Digitizing your payments helps you to raise and settle invoices on time, automate payment schedules, and track late payments.

Improve visibility

Automating your B2B payments helps you get deeper insights into your payments and revenue. They generate automated reports to help you to track your sales, cash flow, and revenue. You get a better understanding of what is working and what is not. You can monitor the health of your business and plan your growth. Having greater visibility on your payments provides greater predictability and better control over operations, cash flow, and business relations.

How Can Novalnet Help?

As a global PSP, many of Europe’s leading brands trust us with their payments. We can guide you on how to make your B2B payments more efficient. We help you accept payments globally in 125+ currencies in 150+ automated country-specific payment methods. Set up your payments within minutes with minimal coding using our instant payment plug-ins. With our AI-based risk management solutions and advanced analytics, you can design the best payment experiences for your customers, all in a fully secure environment.

Reach out to us to know more about payment automation and how to use it to grow your business.

Jose Augustine

Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.