B2B Payments: How They are Different from B2C and What’s Important
Business-to-Business (B2B) payments involve a similar transaction process to Business-to-Consumer (B2C) on the technical level in terms of the security and compliance that is necessary to transfer money from one entity to another to complete a transaction. But other aspects are different in terms of those involved compared to B2C payments. So, if you are dealing in B2B transactions, you need to understand the differences in order to ensure that you are providing the best experience possible.
Services and Products
B2B transactions are not necessarily product-focused but may often involve services like hiring a freelancer or working with a vendor. As such, there may be a wide range of prices because each client or project is at a different rate, depending on negotiations and agreements put into place whereas B2C transactions are the same from one customer to another.
Businesses are still interested in purchasing products for their businesses but they have a different approach to shopping than consumers because they are not looking for the same intangible result from the experience. Instead, it’s more about the value and efficiency in the purchase rather than connections to the consumption and purchase satisfaction consumers feel.
The B2B purchasing process is actually more complex because there tend to be more people involved in the process and sometimes multiple divisions within a company. This is especially the case if it’s a larger purchase. What also makes B2B payments more complex is the fact that typically customers do not pay upfront but wait until they receive the goods and services. In addition, sometimes there are prepayments or partial payments made based on contractually agreed payment terms. Typically, invoices are a requirement in a B2B process, often with differing payment terms, extending the amount of work that needs to be done to complete a payment process.
Traditional and Digital Payment Expectations
Many businesses are still seeking traditional payment methods like paper-based checks while others prefer to pay by debit or credit card as long as they can be assured that it’s secure. However, if businesses are interested in paying their invoices online and dealing with platform and ecommerce sites, they will have to learn to use digital payment methods. This is where you can show them the advantages of migrating to electronic payment options that include ACH (Automated Clearing House) methods like direct transfer or e-checks to tempt those traditional paper check users.
Finally, the overall infrastructure for B2B has more working parts that must integrate in order to offer an efficient payment system for both your business and your clients. That means bringing together your customer records, invoicing tools, accounting systems, and payment processes so that they support each other and reduce the time and effort. When you are offering products as part of your B2B system, you may also need to think about integrating with the business systems of the suppliers and logistics partners that are now part of the system.
It’s important you understand these differences if you plan on working within the B2B marketplace. Your clients are often more impatient than consumers about completing the transaction process so they want a frictionless experience so they can get in and get out while still being highly secure. That means creating a shopping and purchase experience that is quick, easy to use, and intuitive. Therefore, offering a way to pay invoices from an email that links directly to the payment method of their choice, including ACH/e-check and credit cards, will provide a way to satisfy more B2B customers and get you paid faster.
If it is so much extra work, why do it? It is important to understand that B2B buyers typically purchase numerous items at one time and have a significantly higher order value than a B2C customer. They are also reluctant to change. Be prepared to handle those differences with a highly secure system adept at working in larger amounts. Look for ways to customize your B2B payment system to include ways to account for bulk discounts, various payment time periods like Net30 or even Net90 terms, late payment reminders, special shipping agreements, regular reordering, and other complex pricing calculations through unique login credentials for each client. You’ll also need to make sure your B2B system includes estimates, quotes, and purchase orders to accommodate the necessary paperwork not found with B2C customers.
Change or Lose the Opportunity
All this must be considered and offered. If you don’t frame your payment system around the special needs of your B2B audience, they will go somewhere else that does acknowledge and deliver on those expectations. That’s why you need to understand the differences from the B2C payment environment because you don’t want to lose any opportunity to grow your business.