For entrepreneurs, their companies’ B2B payment systems are likely to the least interesting aspect of their business. They’re the plumbing in the building, the arteries under the skin. Without them the business can’t operate but no one starts a business because they want to operate a B2B payment system… unless they’re creating a company that makes B2B payment platforms.
Increasing numbers of companies though, are now doing just that. The market is filled with businesses offering companies different ways to receive orders, send invoices, and make payments. All of those platforms promise security, a clear approval process and the ability to keep records that are easy to review and simple to reconcile.
The services have arisen because all other forms of making and receiving B2B payments have come up short. Paper checks, still the most popular way in which businesses settle their bills between themselves, are easy and convenient but also slow and more expensive than they look. They also leave a paper trail that has to be ordered and organized, and they can easily be stolen and altered. What they gain in simplicity, they lose in a number of other ways.
ACH transfers are cheap and fast but they’re fiddly for businesses to set up and inappropriate for the one-off purchases that often make up a business’s order book. While any firm will look to build a base of regular buyers, companies will also want to keep new customers coming in and make sales to businesses with single needs. They’re not a complete solution and fraud prevention is only as strong as the account security access.
Wire transfers might be easier to set up and perform but at more than $30 each, they’re also expensive and only cost-effective for single, large orders. Those are also the kinds of orders that are most likely to raise warning signs. Like ACH transfers Wire transfers can be defrauded by illegitimate account access and they’re also a common demand of invoice fraudsters. While ACH transfers can be reversed and checks can be blocked, once a wire transfer has been made it can be very difficult to recover the money.
So the growth of payment platforms has taken place to try to plug any security weaknesses while providing ease-of-use, creating payment records that are accessible, and adding an approval process that possess reliable checks and balances into the steps between the invoice and the payment.
Companies then have some difficult choices to make. They have to balance ease against security, up-front costs against administration expenses, speed of payments against approval systems, and the ability to take one-off (one-time) orders against an organized system for regular customers. While the best approach might be to use different systems for different kinds of clients, the accountants in an accounting department would blanch at the disorganization requiring different B2B payments systems in one firm.
The only solution for a business is first to review the different payment systems. As checks are fading away, they should look at the options available from the payment platforms, comparing features, costs, complexity, security and volume. Whatever decision any business makes, they must train staff to be wary of suspicious-looking orders and payment requests.
Payment systems might not be the most exciting part of any business, but receiving a new order from a new customer is always a thrill. Providing a product or service that is loved by your customers is a thrill. Businesses need to be certain that the thrill to their customers and clients, and those B2B’s they do business with can be enjoyed without turning into an expensive disappointment. This enjoyment is best found in the security of a company’s invoicing and payment system.