Breadcrumb

What Is a B2B Payment System?

Written by

The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20222 min read

If your business follows a B2B sales model, you’ll need to set up a payments system catering specifically to a business-oriented clientele. What is a B2B payment system, and how does it differ from B2C payments? From timing to methods, here’s what you need to know about taking B2B payments.

What is the meaning of B2B payments?

Put simply, the B2B payments meaning refers to any money exchanged for goods and services between businesses. Business-to-business (B2B) payments follow their own procedures and best practices. In comparison to customer-facing sales, B2B transactions often involve higher sales volumes and recurring orders. There might also be more individuals involved in each transaction as sales move through multiple departments for processing and approval.

Any good B2B payment system must accommodate these unique needs. Industries that typically process high volumes of B2B payments include wholesale trade, manufacturing, and professional services.

What is a B2B payment system?

Many B2B transactions involve long payment cycles, recurring purchases, and a chain of internal approvals to contend with. A B2B payment system is designed to tackle each of these unique challenges, typically with automated software. Digital systems move each transaction through its necessary steps, from raising invoices to processing payments.

Electronic invoicing and automated payment processing are two key facets of most of today’s B2B payment systems. By automatically issuing invoices to your business customers, you can cut down on costly admin. Recurring payments also make it easy to pay invoice balances and monthly instalments, particularly for subscription services.

Types of B2B payment methods

As with any sale, businesses can choose to accept the payment of their choice. However, using cash and paper cheques is increasingly uncommon. Today’s typical B2B payment methods include:

Credit cards: Card payments are one of the most popular options for B2C payments, but are less common for large, recurring B2B transactions.
Wire transfers: Global businesses like Western Union facilitate wire transfers which electronically route money between business accounts. The process is speedy, but does come with a high fee attached.
Online payment gateways: Small businesses benefit from using online payment gateways like PayPal, Stripe, and Square. Some of these integrate with digital invoicing for a streamlined B2B checkout process.
Direct debit solutions: GoCardless offers a pull-based direct debit solution, which is ideal for taking recurring payments and handling supplier invoices. Businesses can take authorised payments directly from the client’s bank account, avoiding card fees and invoice processing delays.

How to choose a B2B payment system

If you’re in search of a payment processing solution, you’ll need a B2B payment vendor that ticks all the right boxes. For small businesses, setting up a PayPal business account might suffice, while others will need a more comprehensive platform. Here are a few factors to consider as you compare your options.

Integration: Does the system integrate with your accounting software, existing payment gateways, and management systems? The best systems will link all these tools together for a clear overview of finances.
International trade: Many B2B payments involve cross-border transactions. Does the payment platform automatically convert multiple foreign currencies into AUD? Is it compatible with your supplier and vendor regions? What are the fees for international transactions?
User friendliness: The best B2B payment systems offer a payment portal not only for your Accounts Receivable department, but also for your clients. Enable faster, more reliable payments by giving customers a simple way to pay.
Payment methods: Which B2B payment methods does the system process? Does your business accept card payments, bank transfers, or payments from digital wallets? Be sure top B2B payment preferences are all supported.
Automatic invoicing: By invoicing customers immediately after the transaction, you’ll encourage timely payments. You can also find a system that sends automated follow-up messages as payments become due.

By comparing all options, you should be able to find a B2B payment solution that works best for your business’s size and structure. GoCardless can help your business save time and money, enabling recurring payments with a pull-based direct debit system.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.