Top 5 B2B Payment Hacks for Digitising Your Business in the New Year

by | Feb 24, 2022 | 0 comments

Digitization is one of the priorities for businesses in today’s times, and why shouldn’t it be? The trend of digitization isn’t just about embracing cutting-edge technology. It’s also proving to be more effective for businesses that want to improve productivity and efficiency. In terms of payments, more and more companies are turning to digital payments because of the following benefits:

  • Digital payments offer more security as gateways armed with various security features that make digital transactions safe to process.
  • B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
  • It’s easy to track digital transactions as payment details are safely stored in easy-to-access databases – reducing confusion and ambiguity.
  • There are numerous digital payment options available now, and offering all of them to customers can result in faster payments and improved cash flow.
  • Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.

So, now that you’re aware of the benefits of payment digitization, let’s get into the top 5 B2B payments hacks that will allow you to digitize your business in 2023.

1. Automate AP and AR processes.

There was once a time when businesses used to rely on manual accounts receivable (AR) and accounts payable (AP) processes. However, manual processes are inefficient, especially when compared to automated AR processes. Today, slowly and steadily, businesses are embracing AR automation. The automation of AR processes leads to a decrease in the time necessary for following up on overdue payments. Most B2B companies are automating AR processes for accelerating operations and managing their cash flows more efficiently.

Letting go of legacy processes like physical signatures and paper checks can be hard for AP processes. However, these processes add to the workload of AP teams and lead to lags in payments. Through AP automation, businesses can accelerate payment timelines and make and deliver invoices rapidly. Going digital can increase the likelihood of your business getting paid on time and improve customer experience regarding transactions.

SMBs are turning to digitization, but the transition is quite challenging. According to a survey, the invoices of more than 60% of SMBs feature late payments. The same study also revealed that 16% of SMBs report receiving late payments by over a month. To improve these statistics, more and more SMBs are turning to AR automation tools that can seamlessly sync with their existing ERPs (ERPs such as MYOB, XERO, Acumatica, Netsuite and Sage 300)

2. Reduce reliance on legacy processes such as paper cheques

Paper checks and other manual legacy processes played essential roles for businesses in the past. However, due to the inefficiencies of these processes, their popularity has suffered over the last two decades. In 2022, the trend continued, with commercial cheques dipping even further than before. However, despite their dwindling popularity, 91% of the leaders in the fintech sector revealed a startling fact – organizations are still being paid with cheques by customers.

This startling fact has a lot to do with the reluctance or difficulties businesses face to move away from legacy systems and operations that are complex and unfriendly. However, since the emergence of COVID-19 as a pandemic, many reluctant companies have had no option but to switch to electronic transactions and real-time payments. This switch has allowed these businesses to survive during the pandemic. Not making the switch may have led to disaster at a time when the economic upheaval caused by the pandemic has been immense.

In 2020, a study conducted by Mastercard revealed that 68% of SMBs lowered their use of paper checks and cash because they had to. The reason was simple – the deposits were time-consuming. The AFP 2020 Survey reported that almost 60% of practitioners would want to shift from cheques to digital B2B payments because of the benefits involved.

3. Switch to smart payments

Electronic payments are attractive for several reasons. However, despite the apparent advantages they offer over traditional payment methods, many businesses hesitate to make a move. This hesitancy stems from complications from switching to payment methods like automated clearing houses or ACH. Most complications involve the separate traversal of remittance information such as amounts, payment methods, and invoice numbers.

Due to the separate traversal of this information, suppliers can’t immediately view the charges associated. Most suppliers are reliant on accounts receivable specialists. Even for the specialists, it’s a hard job to match the payments with the correct invoices, as they have to undertake the matching process manually.

Thankfully, ‘smart’ payments can do away with these complications. Smart payments are a result of the emergence of remote and contactless payments. ‘Smart’ payments, can increase the volume of electronic payments, and the most significant advantage of this payment system is that it doesn’t add to the manual workload. Simply put, when money changes hands under smart payments, the data also changes hands simultaneously, and the money is applied automatically to the right invoice.

Let’s take a look at some more benefits that smart payments have to offer:

  • Smart payments are entirely automated, and they eliminate the need to set payment reminders.
  • Transactions are rapid, and there is no requirement for cash handling.
  • Smart payments are among the safest and secure payment methods in today’s times.
  • There are no extra processing costs involved for businesses and their clients.
  • Adopting smart payments delivers an improved customer experience.
  • Smart payments also lead to a significant improvement in operational efficiency.

4. Integrate AI and blockchain

In recent years, the e-commerce industry has seen the introduction of machine learning and artificial intelligence (AI). In 2023 and beyond, the B2B payments sector is also set to welcome them. AI technologies can be incredibly effective in accelerating processes associated with payments. These technologies can also reduce the workload of AP teams. Machine learning algorithms can also provide additional functions, such as assessing accounting data, suggestions for speeding up the processes related to payments, and learning trends.

The B2B payments sector is also witnessing the emergence of blockchain – the technology powering cryptocurrencies. If you’re new to blockchain, here’s what it means – it’s a distributed database shared among a computer network’s nodes. Information in a blockchain is stored in a digital format electronically. Blockchains maintain records of transactions that are decentralized and secure. The following are some of the advantages that blockchain payment systems would bring to B2B businesses:

Increased transaction safety: Blockchain transactions are significantly faster than conventional centralized system-driven transactions. As a result, hackers have very little time intervening in the transactions and stealing either money or transactional information. Also, every blockchain journal entry becomes irrefutable post-verification, and no one can change the entries. Blockchain transactions also involve the use of two security keys.

Fewer intermediaries: Major intermediaries often dictate the terms of financial transactions. For example, a transaction under the conventional system would involve intermediaries like the issuer, the exchange, the payment gateway, and the acquirer. All the intermediaries charge separately for their services, which increases transaction costs and makes the transaction time-consuming. However, blockchain-based payment systems don’t require intermediaries. When such a system is employed, buyers and sellers can participate in direct fund transfers without bearing intermediary costs.

High-speed cross border transactions: Cross border transactions typically take 1 – 5 days under the conventional financial system. However, blockchain-driven cross border transactions only take a few hours. In the future, we can expect even greater time savings.

5. Support as many payment methods as possible

The increasing number of payment methods leads to different businesses having different preferences. While some companies may prefer virtual credit card payments, others may be more inclined to buy now, pay later options. That’s why your business needs to support as many payment methods as possible. Flexibility in terms of payment will allow you to do business quickly, leading to greater customer retention and loyalty.

Additionally, innovative payment methods drive transaction costs down, and transaction speeds up. The best thing is that the costs are reduced for your customers. Sure, your business can still survive for the time being based on old-school payment methods. However, when you consider the fact that an ever-increasing number of companies are opting for B2B payments automation options, you’ve got to make the transition sooner or later.

So, there you have it – the top 5 B2B payment hacks that will allow your business to embrace digitization and all its benefits in not just 2023 but the years ahead as well. Of course, putting these hacks into practice will take you some time, and most likely, you won’t be able to do everything at once. However, it’s crucial that you start adopting these hacks to make business smoother for you and your clients.

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