Top B2B Payment Trends
While the digital universe has transformed the way businesses operate in nearly every area, B2B payment technology has lagged behind in most respects. In fact, you’re probably handling your accounts payable and receivable in exactly the same way they’ve been handled by small business owners for decades, Excel spreadsheets included.
For the most part, this is due to a combination of regulatory and compliance concerns and a hesitation to try out new payment technology. But even the most traditional business methods can’t resist disruption forever, and an explosion in innovative consumer payment technology has built momentum for technological change in the B2B realm. Here are three B2B payment trends set to transform the way you handle payments in the future.
1. Mobile Payments
As millennial consumers threaten to make a verb out of “Venmo” and even big retailers like Dell and Microsoft accept Bitcoin, mobile payments are well established. Until recently, the B2B world has mostly taken a “wait and see” approach, but settling business invoices is set to become the next big mobile payment trend. The integration of mobile options is in many ways long overdue, as most businesses have long since transitioned from settling invoices via paper checks to online solutions.
In 2004, more than 80 percent of companies paid other businesses with paper checks, but that number had plummeted to only 50 percent by 2013, and has dropped even further in the years since. With an explosion in cross-compatible accounting platforms and versatile software that can integrate seamlessly with mobile technology, the latest wave of B2B payment apps will finally put a focus on leveraging mobile’s convenience and ease of use. From drawing up invoices to issuing receipts, you should soon be able to settle a business bill just as quickly as you would a restaurant check.
2. Immediate Payments
In hand with mobile payment trends, immediate payments are about to crest the horizon of the B2B world. It’s not surprising that the sector has so far resisted immediate clearing and settling of B2B payments, as regulators have a tight grip on those transactions largely through the avenue of ACH and wire transfer rules. But regulators have indicated they’re interested in a more nimble and contemporary outlook on payment compliance in the digital age, and software developers are taking note.
Notably, ACH authorities have indicated a willingness to begin transitioning the standard away from its once-per-day settlement schedule toward a more responsive regime, with ACH transactions being cleared multiple times per day to facilitate rapid payments.
For now, most B2B immediate payments are likely to occur through credit card transactions and other “closed system” routes like intra-bank. However the specifics shake out, you will soon have the option to settle invoices as soon as they’re drawn up, which will transform the way you manage daily cash flows.
3. Dynamic Discounting
Pre-set discount agreements for early paying of invoices has long been a standard feature of B2B payments, but not always to the benefit of small business owners. Larger enterprises haven’t hesitated to throw their weight around and demand fixed discounts from smaller businesses, shutting off a potentially powerful tool for micromanaging your revenue streams in the short term.
In contrast to fixed discount regimes, dynamic discounts will allow you to tweak invoice discounts in real time. Such fine-tuning would allow you to encourage prompt payment of smaller invoices for a quick cash injection, while avoiding taking a percentage hit on your larger receivables. Looking ahead, nimble flexibility is the name of the game for B2B payments. From mobile invoicing to instant receivables, you’ll soon have a whole new spectrum of payment options for optimizing your small business procedures.
At Tailored Transactions, we specialize in credit card processing for the B2B industry. Our highly trained consultants can show your business how to substantially reduce your credit card processing fees. Or help you setup your initial B2B merchant account and answer any questions that you may have.
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