Find everything you need to know about business payments.
The majority of consumers and businesses expect to use their debit cards or credit cards as payment methods. If you don’t accept these in your business, then you are missing opportunities for more revenue because these potential customers or clients will go elsewhere.
This is especially important if the majority of your transactions are online or you are a freelancer that works in a virtual environment.
Research has shown that invoices get paid up to 11 days faster when you accept credit cards.
Customers and clients want to get the task of paying an invoice over with as quickly as possible because they have more important things to do.
By using their credit card, they can finish in minutes rather than taking much longer to write a check, fill out an envelope, and mail it. The faster you get paid, the more cash you have available for your business needs.
Most online payment processing companies are increasing their fees while banks are charging more to process checks.
You may also find that your transaction costs are higher when you have to account for paper supplies and labor that goes into traditional payment methods. Instead, by switching to a low-cost credit card processing service like Due, you will be able to minimize this expense and, as a result, increase your profitability.
The addition of features like chargeback protection also helps keep costs down that are often associated with payment disputes.
Despite more people using their debit and credit cards online the concern over fraudulent or suspicious activity is a continued concern.
However, most payment providers use algorithms and live monitoring to identity as well as encryption to prevent any fraud or data compromise.
Businesses of any size have to think about solutions. They will have to identify the various problems of the business, analyze them, design a process, research the market, then turn that solution into a product that other people can buy and benefit from. If all goes well — and the product works correctly and is marketed well — every business runs into one problem of their own: how to receive payments for their products or services.
Retail stores that sell directly to customers have it easy. They have cash desks that can receive any manner of payment. Paper and coin, checks, and credit cards, the new credit card chip readers attached to giant corporations that collect the debt and, for a fee, transfer it to the retailer’s bank accounts. But for B2B, businesses selling to other businesses, the payment process has always been much more complicated. Most businesses sell to fewer buyers than the big retail chains. In the B2B arena, the businesses may never even meet their customers, and previously many businesses didn’t have the ability to accept and bank payments in cash. These payments can be steep and neither buyer nor seller wants to pay the credit card fees, if they can avoid them. A business, especially a very small business such as a freelance business – certainly doesn’t have cash desks where their customers can line up with their purchases and their credit cards at the ready.
Instead, businesses that sell to other businesses often have to go through complicated processes of issuing invoices, collecting payments and returning receipts. The paper trail has to be clear enough to ensure that requests can always be tracked, monitored and approved, and that payments can always be reviewed and audited. Nowadays, the “paper trail” may not be actual paper, however the trail has to be a followable trail.
The request for a payment has to travel from one business to another business. From the business seller to the business buyer. The payment has to then be transferred from the business buyer’s bank account to the business seller’s bank account. Then, the product or service has to move in the right direction, and arrive on time as well.
All of the movement of billing, payments, products and services has to happen in a way that’s secure and trustworthy. Customers might stand in line at a retail store with their purses in their hand, but they don’t expect a thief to run past them snatching at their money. The stores are able to check the ID of the customer right there in the store. The store can reasonably assume that the credit card details they collect and submit every day are kept safe by the credit card companies, and the payments from the customer will be delivered to them in full, and not intercepted en route. Even the cash payments which are collected from the retail store and moved to the bank or processing center are taken in moving safes – accompanied by armed security guards.
Over the years, companies have offered businesses all sorts of solutions to the problems of safely collecting and transferring payments between other businesses. Some of the solutions have turned out to be better than others and all companies seem to have advantages and disadvantages. In this guide, we’re going to look at the payment options available to businesses at this time, who sell to other firms.
We’ll start with a brief look at the history of B2B payments, explore the issues that the different systems have to grapple with and we’ll see how these issues have been resolved. We’ll look at the recent advances in technology that have allowed notable progress for online payment solutions, and reveal what measures the systems have put in place that bring security to businesses which operate in environments as complex and as changing as the Internet.
We’ll then look more closely at the various payment methods that are currently being used by most business to business firms. We’ll discuss the main platforms available that allow companies to both invoice for goods and services, and collect payments, and we’ll mention some of the particular companies that offer these services.
In Chapter 3, we’ll talk security. Sometimes measurements of the amount of money stolen in cybercrime has been difficult; not every theft is reported. In 2013, the FBI received reports of losses totaling over $781 million. Nearly one business in five reported a theft of $50,000 or more, and 7 percent of U.S. organizations were robbed electronically of more than a million dollars. McAfee, the computer security firm, says that they believe the annual cost of cyber theft around the world could be in the neighborhood of $400 billion.
Obviously, not all of those losses are a result of B2B payments. But the large transfers that take place between businesses, as well as the considerable deposits from these businesses themselves, are huge targets for thieves, from mafia hotspots in Moscow to geek basements in Arizona. We’ll explain the methods that payment firms use to keep these transfers safe and explain what businesses do to ensure their own security. In the following chapter, we’ll reveal several warning signs that can suggest your payment processes are in danger and who is responsible for watching out for these signs.
B2B payment systems are rarely the most exciting part for a business to deal with. Either end of the process – invoicing or payments – and this includes completing this process for freelancers and entrepreneurs, has to be controlled and monitored. Most chief executives and founders would prefer to spend their hours sitting with their designers and plotting the development of their product with their coders. A business would rather be negotiating deals than figuring out how to receive the payments when those deals are closed.
But just as a house is not a comfortable place to live if the plumbing system is blocked and the electricity system has never been connected, so a business can’t survive if it hasn’t chosen the right payment process and kept it secure. Understanding a payment systems, and choosing the right one for your circumstance will make your life easier. You’ll be able to enjoy the benefits of a great system when those payments are made, your product or service is delivered on time, and your fees are collected.
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