Time to Forget About Checks
When was the last time that you as a consumer wrote a check to pay for something you bought from a store? While checks are rather antiquated for B2C transactions, they remain a common form of payment in B2B sales. In an environment where disruption is the norm, business payments have mostly remained the same. According to the PYMNTS, 64% of B2B payments are made by check.
Some still believe that checks have their place in business, providing benefits in the payment or accounting cycle, but the downsides are really starting to shine through. The possibility of human error alone should be enough to make a business cut out checks from their process. There can be errors in writing the check, errors in delivering it, errors in cashing it – not to mention the long delay in clearing time for check payments.
Why are Online Payment Services Necessary?
B2B payments are payments made between two vendors in exchange for products or services, where one vendor pays the other in the form of a digital payment. Online (digital) payments are gaining a lot of traction thanks to their convenience, time saving, and added security benefits.
The 4 Most Common Online B2B Payment Types
An ACH is essentially the electronic version of writing a check. The transaction is simple, the payment is pulled from one bank account and deposited into another. This works well with scheduled recurring payments between businesses. The only caveat is that this method requires both parties providing their bank information – which some businesses (those still preferring checks) are not yet comfortable doing.
The benefits of ACH appear in the fact that once the set up between payer/payee is made, it doesn’t have to be made again. This one-time set up means that going forward the payment happens with little to no effort for either party.
Credit cards payments have long been an accepted form of payment. This payment type tends to be a reliable way to ensure payment can be accepted, however credit cards are notorious for two things; one, high fees and two, high fraud rates. Credit cards also have spending limits, which can be a problem for high-volume business sales.
Very similar to ACH payments, wire transfers involve money moved from one bank account to another through a “wire”. The main benefit of wire transfers is the speed in which they can be executed. That is, after its all set up! Wire transfers require many steps to set up and execute. But, once set up, the funds are transferred almost immediately.
Electronic Funds Transfer
EFT stands for Electronic Funds Transfer, and they are an electronic payment type that allows you to debit from or deposit payments straight into another bank account. No different to ACH or wire transfers, EFT Payments let you send payments directly to your vendors and suppliers via bank transfer or collect payments directly from your clients and customers without sending anything through the mail. You can set up EFT payments for single-entry or recurring payments.
How B2B Online Payment Solutions Get You Paid Faster
Cash flow is the difference between paying your employees in money and paying them in promises. Long payment cycles can severely impact and hinder a company’s cash flow. Online payment solutions allow for faster payment cycles in a number of ways. For example, these types of software allow for emailed invoices to customers as soon as a job or service is complete. The customer can then pay with a single click and the funds are transferred electronically. The result? The time it takes to get paid drops drastically ensuring you have funds to keep the lights on.
How Can B2B Online Payment Solutions Make the Payment Process Easier?
You’ll save time. You’ll save money. The difference in time saved between producing and receiving paper checks versus just clicking a button is a surprisingly big one. Not to mention, processing paper checks is extremely expensive, whereas online payments have low transaction fees.
Are you still not convinced? It’s easy to think about it as if you are a consumer shopping for shoes online. You do your research, you put the shoes in your cart, you input your credit card information and the funds automatically are debited from your bank account. On the other side, the retailer selling you those shoes didn’t have to mess around with checks, the funds from your bank are automatically deposited into their bank account. Simple as that.
The same theory applies for B2B online payments, the process is similar, just different services/products offered/purchased and there are different types of online payments available.
Getting Started with Online Payments
We've got a complete article on transitioning to online payments, but the first step to getting started with online payments is to try it out. You do not need to move all of your payments at once, and you do not need to disrupt all of your existing processes. Why not start a free trial with Plooto today and see how online payments can transition your business for the better!