The Ultimate Guide to B2B Payments and Credit Solutions

B2B Payments and Credit Options Guide for B2B Merchants and Buyers

Everybody knows how consumer payments have changed in our personal lives over the last several years. The rise of services like PayPal, Zelle, and Venmo has made it super easy to send money to friends and family members on any connected device. New payment platforms like Apple Pay, Samsung Pay, and Google Pay give customers the convenience of buying things with their phones. But what about B2B payments?

While much has changed in the world of consumer payments, the business-to-business (B2B) payment landscape has evolved at a much slower clip. Currently, 67 percent of consumer payments are made electronically yet 64 percent of businesses still pay by check. For some reason, in a world of direct deposit, instant transfers, and digital disruption, tons of businesses are still relying on a payment mechanism that’s over 250 years old.

In 2014, the U.S. B2B payment market accounted for $16.5 trillion. Of that, $12.24 trillion were domestic payments and $4.26 trillion were international payments. By 2020, the market is expected to grow to $23.1 trillion.

On a global scale, the numbers are even more staggering. Worldwide B2B payments are expected to reach $218 trillion by 2022.

Add it all up, and there’s plenty of opportunity for disruption in the B2B payment sector.

The winners in this space will generate a ton of revenue. At the same time, business owners across all sectors will benefit from faster payments, better customer experiences, reclaimed time, improved organizational efficiency, and a whole lot more.

To help business owners like you navigate an evolving B2B payment landscape, we’ve put together this comprehensive guide that covers everything you need to know about business-to-business transactions.

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What are B2B payments?

Very simply, B2B payments are payments made between companies. A startup tech company might pay AWS for servers. A pharmaceutical company might bring in a team of consultants to identify opportunities for improved efficiency. A restaurant owner might pay a supplier for vegetables, fruits, meats, and more.

Basically, any time one business invoices another business, it creates a B2B payment scenario.

B2B payments, while noticeably slower to evolve than business-to-customer (B2C) payments, have gone through many changes over history. Here’s a brief summary of that evolution:

  • Historically, payments were settled in cash
  • In 1681, the first checks were issued in the United States
  • In 1850, American Express launched as a fast snail-mail delivery service
  • In 1872, Western Union added wire transfers to its existing telegraph network
  • In 1974, ACH deposits launched; four years later, all local ACHs were connected
  • By 2011, credit cards accounted for just 3 percent of all B2B payments
  • By 2014, credit cards accounted for 10 percent of all B2B payments

Since then, a number of new digital payment tools have emerged to provide business owners with the convenience they’ve grown accustomed to in their personal lives (more on these solutions later).

The State of B2B Payment Processing

According to Deloitte, the U.S. B2B payment market will grow from the $16.5 trillion it generated in 2014 to $23.1 trillion by 2020, enjoying a 5.8 percent CAGR over that period.

Of those payments, roughly 75 percent are domestic and 25 percent are international—with the bulk of those payments going to Canada, China, and Mexico. Deloitte predicts that by 2020, 61 percent of B2B payments will be made by large businesses with more than $1 billion in revenue while the rest will be made by small- and medium-sized businesses.

Here are the industries that process the largest volume of B2B payments:

  • Manufacturing – $3.53 trillion (28.8 percent)
  • Professional and business services – $2.60 trillion (21.2 percent)
  • Finance, insurance, real estate, rental, and leasing – $2.19 trillion (17.8 percent)
  • Mining – $685 billion (5.6 percent)
  • Wholesale trade – $643 billion (5.2 percent)

As consumers increasingly turn to online banking solutions and mobile payment apps like Venmo, Zelle, and Square’s Cash App to pay each other—and digital tools continue to emerge to replicate this experience for business owners—we expect this market will continue to grow for the foreseeable future.

The Different Kinds of B2B Payment Mediums

Imagine you’re a small business owner and one of your suppliers sends over an invoice. Your bill’s due in 30 days. Assuming you’re not able to barter your debts away, you’re going to have to send payment over somehow.

Let’s take a look at some of the most common ways you can settle your account.

1. Cash

Just about everybody takes cash.

But in the world of B2B payments, unless you’re walking over to a supplier who’s across the street, you’re probably not going to send a client a briefcase full of bills.

When cash gets lost in the mail, it’s gone. While businesses might have used cash to pay each other over the years, this approach to B2B payments is essentially obsolete.

2. Checks

Paying by check is relatively easy. Sure, it’s a piece of paper, and you have an envelope and a stamp and stick it in the mail. But all things considered, the whole process should only take a few minutes (multiply that across hundreds of accounts, though, and all of a sudden it’s a massive undertaking).

Since it takes a few days for checks to reach their destination, paying by check can help business owners stretch their cash a bit further. Another advantage of using checks for B2B payments is that pretty much everybody takes them.

Checks, however, have their downsides. For starters, in an age of instant everything, checks travel via postal mail. Checks take a few days to get where they’re going, assuming they don’t get lost in the mail. And while the act of paying by check is easy, checks can be difficult to track on both sides of the balance sheet. When a check comes in, you might misplace it. When you put a check in the mail, you never know when it might be cashed.

Imagine in a scenario where your supplier misplaces your check. A few months go by and you forget all about it. One day, the supplier finds the check and deposits it. Depending on how much money you have in your account, this situation could cause a check to bounce.

Still, because of their ease of use, widespread acceptance, and security features, the bulk of B2B payments are still processed using the medium that’s been around for hundreds of years.

Interestingly, a study by the Federal Reserve found that the number of checks written between 2000 and 2012 decreased by 50 percent. Interestingly, according to PYMNTS, 64 percent of B2B payments are still made with checks. So, while we’re not using them in our personal lives anywhere near as much, they still dominate the business world.

3. Wire transfers

Western Union introduced the first wire transfers over 150 years ago. Here’s how it worked: you’d go into a telegraph office, pay them a sum of money and specify the intended recipient. Then Western Union would transfer the money to an office near the recipient.

Over time, wire transfers have evolved, using electronic networks to send money from Point A to Point B immediately through services like SWIFT and Fedwire.

When they were introduced, wire transfers revolutionized payments. Today, wire transfers can provide a fast method of sending money to someone; transactions can often be completed in 24 hours or less—but not always. Wire transfers can also be quite expensive. Businesses that wire money might have to pay up to $40 per transaction while recipients might be charged $10 or $15. International transaction fees can be even higher. Businesses that are keenly focused on profitability will probably prefer other cost-effective payment options.

4. ACH payments

Automated Clearing House (ACH) payments transfer funds from a business’ checking account to a client’s account. To pay using this method, you’ll need to fill out some paperwork and get the businesses you’re paying to do the same. Due to the inconvenience of handling a round of paperwork, you probably won’t want to pay a one-off bill via ACH transfers, but they can make repeated payments easier. If, for example, you own a company and have a contractor on a retainer, ACH may be your preferred method for facilitating recurring payments.

On the plus side, once you’ve filled out and submitted the paperwork, ACH deposits offer convenience to both parties. Payments are sent and received quickly—usually within three business days. ACH fees are reasonable, too, ranging between 15 and 95 cents per transaction.

For these reasons, NACHA, the organization behind ACH deposits, predicts that ACH transfers will overtake checks as the primary B2B payment mechanism by 2020. As it stands today, the network already processes $43 trillion in transactions each year.

Like anything else, however, ACH has its downsides.

For starters, recipients of ACH transfers need to provide their personal bank account information. In the age of identity theft, privacy is an increasing concern. Beyond that, ACH transfers can be hard to reverse; you must report errors within 60 days for potential remedy. Finally, if you’re sending payments and don’t have enough cash in your account, you can also get hit with overdraft fees.

5. Credit cards

In the age of credit cards rewards programs, more and more business owners are using credit cards to pay their bills. Still, business credit card adoption is eons behind personal credit card adoption. In 2015, for example, there were 13.9 million small business credit cards — fewer than 4 percent of the number of personal credit cards.

If you have a high credit score, it’s most likely easy for you to get a business credit card. However, in the B2B world, not every vendor accepts this form of payment. While high-frequency companies like Walmart, Amazon, and Apple might have no problems paying 3–5 percent credit card processing fees, many small businesses—the contractors, startup vendors, agencies and freelancers of the world—can’t really afford to absorb those expenses. So instead of signing up to accept credit card payments, they’re happy to wait a few extra days to get a paid another way.

That said, many businesses like paying via credit card because they’re able to build up rewards points. Offering clients the ability to settle their bills with a credit card will enhance their experience with convenience.

Of course, you have to be willing to pay the associated credit card fees in the first place.

6. Cryptocurrency

Over the last few years, cryptocurrency has grown from a niche technology championed by a small cadre of enthusiastic supporters into a mainstream juggernaut that aims to transform all sorts of things, including B2B payments.

Historically, it’s been difficult for businesses to send money internationally (more on that later). Most commonly, businesses conducting business with companies in other countries would send and receive payments via wire transfer—getting hit with the associated fees.

To this end, a number of crypto startups are emerging to facilitate payments between companies. For example, Ripple Labs—with its cryptocurrency, Ripple—aims to disrupt this space by facilitating inexpensive, real-time cross-border B2B payments. Recently, American Express indicated that a preliminary pilot test using Ripple had been a success.

With players like JP Morgan Chase entering the space too, things are just heating up.

While crypto is exciting, many businesses would be wise to avoid going this route. Cryptocurrencies are incredibly volatile to begin with, and most businesses won’t accept them as payments. Even if they did, there’s also the issue of fragmentation. You might want to pay someone with bitcoin only to find out they only accept Ethereum (again, assuming on the far-fetched notion they’d actually accept cryptocurrency). Making matters worse, the world of crypto has had its fair share of scams over the years.

Bottom line: It might be fun to think about crypto and even invest in it personally. But when it comes to B2B payments, we’re at least several years away from any reliable and proven systems being in place.

7. Online payment platforms

In the age of disruption—and with so much money on the line—it comes as no surprise that several companies are innovating in the B2B payments space. Platforms like PayPal, Stripe, Square, and Bill.com have emerged in recent years promising to streamline the online payment process for businesses of all sizes.

Online payment platforms provide lots of upside. They’re convenient, quick, and cost-effective. Leading tools integrate with popular accounting platforms, so it’s also easy to maintain records.

However, with so many different players in the space, the online payment market is also fragmented. It’s unlikely that all of the companies you work with will be using a digital platform for B2B payments in the first place. Even if they are, odds are against you using the exact same solution as all of your clients and vendors. It’s a good idea to understand the top platforms and choose the one that makes the most sense for your business.

The Challenges with B2B Payments

Of course, businesses get by under the current B2B payment landscape.

Still, there are a lot of problems within the existing ecosystem. Here are seven or the more common gripes about the current state of B2B payments.

1. There are many payment mediums

You want to pay with a credit card, but your client doesn’t take credit cards. A customer wants to pay you via wire transfer but you don’t want to absorb the high fees. Maybe you’ve just migrated to a modern platform but your vendors don’t accept payments through it.

Every business has its own approach to payments. One business owner’s preferred method of payment might not be taken everywhere. You might end up accepting payments via check, ACH deposit, and wire transfer while paying with credit cards, check, and online services—which isn’t the most efficient approach.

As more and more B2B payment solutions come online, it remains to be seen whether they will solve this problem or add to it. While companies are increasingly moving to modern payment tools to consolidate payments, it’s not all roses. 35 percent of businesses say the inoperability between various platforms makes them hesitate to move in this direction.

2. Fraud is a danger

The convoluted payments landscape makes it harder to keep track of all funds coming in and going out, which can open the doors to fraud. According to Deloitte, 22 percent of middle-market businesses have dealt with payments fraud in recent years.

No business wants to lose funds to bad behavior—which is why more and more companies are moving to modern B2B payment systems.

In fact, almost 80 percent of businesses believe new payment solutions can help them mitigate potential risks.

3. Lack of visibility

All of these customer accounts are paying you at different times through different methods. And if you’re working with a lot of vendors, you might be using several different methods to pay your own bills.

It’s a confusing configuration of money coming in and going out through various mediums into various accounts at various times. This cacophonous approach generates a ton of unnecessary work and makes it impossible to get crystal-clear visibility into your finances—especially as you scale.

As a result, it’s difficult, at best, to take advantage of any potential early payment discounts. In some instances, you might not even be aware of why certain payments are going out in the first place. If you want to get to the bottom of it, you’re going to need to put in a lot of time.

Diagram illustrating an example of a complex B2B payment cycle.

Diagram illustrating an example of a complex B2B payment lifecycle with multiple processes. Source: Wharton FinTech blog.

4. Time

B2B payments are complicated processes on their own. Making them more difficult, lots of companies deal with lots of payments; one study found that 54 percent of global companies pay more than 1,000 suppliers on a regular basis. That’s a lot of checks.

Coordinating that many payments takes a lot of time—particularly since most organizations have different payment cycles. One company might cut checks every two weeks and another might pay out accounts once a month.

Not only does it take a lot of time to manage payments on your own end, it also takes a lot of time to actually get paid. On average, it takes 45 days to process a B2B payment. This finding backs up our previous research that revealed that 64 percent of small businesses routinely wait on late payments.

5. Resource-intensive

Lacking modern tools, many companies are still processing B2B payments manually. Depending on the size of the company and how many checks are being sent out every month, this approach can get quite expensive, with 62 percent of those costs attributed to labor.

Regardless of industry or size, every smart business is always aiming to get more done in less time. While a complicated approach to payments can hold you back, optimizing your approach will save a lot of time which can then be invested in other important areas of operations.

6. Cost

When you accept credit cards or use wire transfers, you are hit with significant fees. Even if you’re just paying your bills with checks and collecting checks as payments, managing your cash inflows and outflows will take a lot of time. When it’s your time, you’re unable to focus on growing your business because you’re managing your finances. When it someone else’s time, you’re paying them. Either way, it’s expensive.

Then there’s the problem with wire transfers and credit card fees. An enormous organization might be able to absorb those costs, but most small businesses won’t.

7. Industry-specific problems

Some different industries are governed by different sets of regulations. For example, healthcare operators may be more concerned with privacy due to HIPAA requirements.

If your business is dealing with several different vendors spread out across different high-security industries, you may encounter an additional set of unique payment challenges.

How International B2B Payments Work

Historically, it’s been difficult to make international payments. Just take a look at this example of a cross-border transaction, courtesy of a 2018 report from eServGlobal:

Example of a cross border transaction

Example of a complex cross-border transaction. Source: The Cross-Border Payments Landscape, prepared by eServGlobal, September 2018.

Generally speaking, international payments have traditionally been sent via wire transfer. Not only do wire transfers come with hefty fees, but businesses are also often on the hook for currency conversion costs. Beyond that, it might take several days before funds from a wire transfer ended up coming through; sometimes it can be faster. But it can also be tricky to get visibility into these transactions. Once a transfer is sent, you can’t easily track it without contacting the sender (such as your bank).

In today’s increasingly globalized world, more and more companies are doing business internationally. Remember, by 2022, it’s expected that global cross-border payments will reach $218 trillion; B2B payments will account for the biggest chunk of that figure.

In an age where everything is at our fingertips and we can PayPal somebody $100 right this second, why do international B2B payments still have to be so expensive? And why do several players—potentially the buyer’s bank, the buyer’s bank correspondent, the seller’s bank correspondent, and the seller’s bank—need to take a cut of each transfer?

More and more companies that conduct business on an international level are looking for new B2B payment solutions that are faster, less opaque, and cheaper. Banks better watch out. According to Accenture, as much as 25 percent of banks’ traditional international payment revenue streams are in jeopardy due to these developments.

The Benefits of Solving B2B Payment Challenges

The B2B payment landscape is riddled with inefficiencies and other challenges. With so much money at stake, the entire global economy is relying on a more efficient way forward. This is why we’re seeing an increasing number of new B2B payment solutions on the market.

By solving the aforementioned challenges, businesses across all industries will enjoy a number of benefits. Here are nine of them.

1. Reduce your costs

It currently costs up to $22 to process an invoice manually. With a modern B2B payment solution in place, however, that number can drop to $7—or even less.

The strongest businesses are always looking to reduce their costs however they can. Optimizing B2B payments presents a great opportunity to reduce cash outflows—which is exactly why many businesses are investing in new payment solutions. One study found that 65 percent of respondents are primarily interested in digital solutions because they expect them to be more cost-effective.

This is precisely why 90 percent of corporate decision makers believe that moving to electronic payments will have a very high or high impact on their business over the next three years.

2. Reclaim your time

Processing B2B payments the traditional way takes a lot of time. With a modern solution in place, much of the repetitive work that had to be done manually is automated—giving you and your employees more time to focus on other important areas of operations.

3. Faster payments

Solving B2B payment challenges means you’ll be able to process invoices faster—which means your clients get paid faster. It also means that your suppliers can pay you faster. Always know where your bank account balances stand and get paid much sooner for work you’ve already done.

4. Get more visibility

Modern B2B payment solutions provide full visibility into payments. They also integrate with existing tools—like QuickBooks and FreshBooks. This makes it easier for you to analyze spending to see where your money is going while taking advantage of payment discounts.

5. Less paper to manage

Modern payment tools enable you to eliminate much—if not all—of the paperwork from your financial workflows. Not only does this make everything easier to track, it’s also better for the environment.

6. Improve your cash flow

Faster payments that are easier to process, reclaimed time due to automation, and more visibility into your finances add up to deliver improved cash flow. With more cash on hand, it’s easier to respond to changes rapidly and pursue new opportunities.

7. More convenience

One of the biggest challenges of B2B payments is the fact that there are so many different mediums and everyone wants to pay their preferred way. By accepting digital payments, you give your customers an additional way to pay—providing more convenience to improve the customer experience while increasing the chances you get paid faster.

The same holds true when it comes to paying your business customers. With modern solutions in place, you can send money quickly and easily, without massive fees.

8. Improve your security

In any financial transaction, security is a top priority. While modern B2B payment solutions are still susceptible to hackers, today’s leading providers usually have top-notch security and a team of engineers and data analysts on hand to detect intrusions—and even prevent them from happening in the first place. This protection, coupled with the way digital systems track payments, work together to deliver enhanced security.

9. ROI

Reduced costs, reclaimed time, faster payments, more visibility into your finances, less paper usage, better cash flow, and greater convenience. An investment in a modern payment solution drives considerable ROI—and quickly.

The Top B2B Payments Platforms and Companies

In recent years, several vendors have offered solutions to the B2B payment problem; it seems as though more and more platforms are coming online every day.

As you start researching a new payment solution, you’ll quickly find out you have a lot of options. To make your search easier, here is a brief summary of five of today’s top B2B electronic payments vendors.

1. PayPal

PayPal offers a B2B payment service that makes it easy to invoice clients and easy to send payments to and receive payments from vendors on the network. Buyers can pay invoices with their PayPal balances at no cost; the seller incurs a fee of 30 cents plus 2.9 percent on each transaction paid with a credit card.

2. Square

Square is popular in the B2C market; if you’ve never used one of their devices, odds are you’ve at least seen one. Square also offers a number of B2B payment solutions like credit card processing, which costs 2.75 percent per transaction; invoicing, which costs 2.9 percent of the amount plus 30 cents; and an interface that provides insight into your payments. Square has several solutions on top of these. With everything seemingly at a different price point, figuring out how much you’re actually paying can be quite tricky at times, depending on your setup.

3. Due

Due provides payment solutions to businesses of all sizes, including a digital wallet that makes it fast and easy to send and receive money online, an interface that provides visibility into your cash inflows and outflows, and low-cost credit card processing services that start at 2.8 percent.

4. Bill.com

Bill.com is an online payment platform that helps businesses automate the AR and AP processes. The platform integrates with popular accounting software, and it also enables you to send payments to companies in other countries without incurring wire transfer fees. Bill.com memberships start at $29 per user per month. If you aren’t sending a lot of invoices or receiving a lot of payments, you may want to consider another option.

What’s happening in the world of B2B payments? Here are five trends that are transforming the way businesses pay each other.

1. New B2B payment solutions are popping up everywhere

Since there’s so much opportunity in this space, new B2B payment systems are emerging all over the world. It remains to be seen which of these solutions will end up dominating the market. But it appears that it’s only a matter of time before checks and wire transfers become a thing of the past.

2. More businesses are using digital payments

Seeking a better way forward, businesses are increasingly moving to digital payments. According to one study, nearly 50 percent of mid-sized companies have digitalized nearly 50 percent of their payments. We believe this trend will continue to accelerate for the foreseeable future.

3. Legacy tools are holding businesses back from using new tools

Businesses hesitate to use new payment tools because they are still relying on lethargic legacy tools that aren’t flexible enough to adapt to the fast-paced needs of today. However, as we move further into the future, more and more businesses will ditch their legacy systems and move to modern solutions.

4. Modern B2B payment solutions are driving strong business outcomes

By reducing costs, increasing efficiency, accelerating payments, and providing more convenience, B2B payment solutions are helping businesses increase productivity and profitability. That’s the goal, right?

5. Businesses are focusing internally at first

When businesses adopt new payments solutions, they start off using them internally, covering things like employee payroll and benefits. As they become comfortable using the new systems in-house, they are more willing to try them in other areas (e.g., accounts payable).

What to Look for in a B2B Payment Vendor

By now, you understand why a traditional approach to B2B payments falls short and how modern solutions provide a better way forward.

Unfortunately, you can’t just switch to any digital payment solution and expect everything to turn out perfectly. You need to do your due diligence and find a platform that works best for you.

Here are six things to look for when searching for a B2B payment vendor.

1. Utility

If your company does a lot of international business, you need a solution that’s built to streamline cross-border payments. If your company extends trade credit to your customers, you need a solution designed to solve that problem. First and foremost, you need to look for a payment platform that meets your specific use case.

2. Reliability

It’s one thing to find a tool that appears to meet your needs. It’s quite another to find a tool that you can rely on every day. According to BNY Mellon, 54 percent of businesses say that reliability is the biggest factor when considering moving to a new payment platform. This makes sense: Payments are so important. You need a tool that you can count on.

3. Integration

One of the biggest problems with B2B payments is the lack of visibility into your finances. Today’s leading payment solutions integrate with popular accounting tools, such as FreshBooks, QuickBooks, Xero, and Harvest. Not only will the right solution make payments easier, it’ll also give you a better view of your complete financial picture.

4. Ease of use

The whole point of changing your approach to B2B payments is to make things easier. The right solution should be quick and intuitive. For example, some leading solutions enable sellers to get paid on invoices right away—and in just a few clicks. On the flip side, buyers are given 60 interest-free days before payments are due, and they can extend those terms for a fee.

5. Ease and speed of approval

You’ve found the perfect payment solution. Awesome! Now, you find out that the application process is cumbersome and odds of approval are not in your favor. Not good! Avoid this problem by finding a payment solution that has a simple, straightforward application process so you can find out whether you’re approved right away. Leading providers can underwrite B2B buyers within minutes, helping them increase their buying power right away.

6. Vendor reputation

Once you’ve found a solution that suits your needs, do a bit of research on the vendors you’re considering. Read some reviews, and compare reviews on different websites to get a good idea of what customers are saying. See if you can find any specific funding information. Browse the vendor’s website to see what resources and what level of support they offer. You should be able to find a ton of information on the vendors worth considering.

If you can’t find any genuine positive reviews, or if you can’t find many reviews at all, that could be a red flag. It might mean that the company is new and doesn’t have a reliable track record. Or, it might mean the company is hard to engage with, and not many users have actually worked with them. Of course, since we’re talking about finances here, it might also mean that the company is more of a scam than a business. A lack of reviews doesn’t always mean that something is wrong with a vendor—it might just mean the company is new—but it can be a helpful indicator of how trustworthy they are.

Best Practices for B2B Payments

Every business is different, which means that there is no such thing as the “perfect” approach to B2B payments. What works well for your company might not make any sense for another business, and vice versa. That said, there are still some universal tips to keep in mind that should make your B2B payments process a whole lot smoother whether you’re the seller or the buyer.

When you’re the seller:

1. Invoice clients immediately after work is completed

Instead of waiting until the end of the month to bill your clients, invoice them as soon as work is completed. That way, you should be able to accelerate payments from a few of your clients, at the very least.

2. Encourage customers to pay you electronically

Not only are checks expensive to process, they’re also easy to misplace—and that’s assuming they don’t get lost in the mail. When customers pay electronically, not only is it convenient, it’s also much easier to keep track of payments—and can be much cheaper, too.

3. Consider early payment discounts and late payment penalties

If you’re struggling with cash flow issues, you can increase the chances your customers pay you on time by offering early payment discounts. On the flip side, you can penalize late payments by charging interest on overdue accounts. This approach won’t work for every business, so do your due diligence to make sure it works for yours before you go down this route.

4. Determine whether you should accept credit cards

If your business processes a lot of transactions, it might make sense to accept credit cards. If you don’t invoice that many customers, you probably want to avoid accepting credit cards unless you are comfortable absorbing significant fees.

5. Consider offloading your risk

If you’re a B2B merchant and you offer net payment terms to your buyers, you’re essentially acting like a bank: you’re advancing funds to your buyers and accepting the risk that they won’t pay you back in a timely manner, or at all. Look for ways to minimize or eliminate the risk of non-paying or late-paying buyers by partnering with a B2B credit and payments partner like Fundbox to offer trade credit without shouldering all of the risk yourself.

When you’re the buyer:

1. Pay with a credit card to rack up rewards points

If a seller accepts credit cards, you have a business credit card, and you have enough cash in the bank to pay your bills on time each month, you might want to pay invoices with a credit card to accumulate rewards points. A few percentage points here and there can translate into significant savings spread out over a long period of time.

2. Don’t settle your invoices until they are due

Imagine you get an invoice in the mail today and payment is due in 30 days. Unless there are payment discounts you can take advantage of, you shouldn’t pay your bills until they are due. It’s an easy trick to extend your cash flow a little longer.

3. Let a vendor know if payment will be late

Many businesses across all industries run into cash flow problems from time to time. If you are unable to pay your invoice on time, give your vendor the courtesy of letting them know about your financial situation. Assuming you are on good terms with a vendor, there’s a chance you’ll get lucky and they’ll be flexible on this issue—as long as it doesn’t become the norm.

4. Pay electronically when you can

Sending checks through the mail takes time. You also have to pay for envelopes and stamps. Paying electronically not only eliminates these costs and helps your team reclaim a lot of time, it also makes it much easier for your accounting department to track cash inflows and outflows.

5. Ask your vendor about better payment terms

Often times, a vendor will work with you on your payment terms. They might not tell you this up front, but if you need a little longer to pay or you’d like to pay a certain way, your vendor might be more than willing to work with you to keep your business. Ask your vendor what type of net terms they typically offer, how you can qualify for the most favorable terms, and whether they use any trade credit payments partners.

Start your relationship on the right foot, build a positive track record with your vendors, and don’t be afraid to ask them about alternative payment plans, longer trade credit terms, and whatever else will help improve your business relationship from your point of view. Over time, as you continue to build a solid relationship, you may be able to renegotiate and improve your terms even more.

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