Today, making cash transactions has become more efficient and easy.
For instance, small business owners have numerous options for making B2B payments.They are able to make and receive payments through checks, credit cards, electronic fund transfer, ACH transfers, and online systems.There can be no argument that each of these payment methods work much better than a direct hand on the cash process. However, it is necessary you analyze the advantages and limitations of each one of these payment systems before you pick the right one.
Let’s go through the different B2B payment types and understand which one you should adopt and why?
List of B2B Payment Processing Methods
Believe me, a paper check is a better alternative to cash, but it’s definitely not the ultimate option. Businesses paying or accepting payments via checks do not enjoy comprehensive safe payment process.
Paper checks just offer a little convenience over cash, but there are associated risks as similar to that of cash. Suppose, you lose your business check, anyone can easily misuse the opportunity and take all the money.
Normally, B2B dealings do not involve some few dollars. If the numbers are in thousands, then you’ll face a huge financial burden.
In addition to that, there will be a lot of paperwork and most of the times you’ll be unaware of when you’ll receive your checks.
Credit cards may appear a good option to paper checks, but you have to pay fees every time there is a (huge) cash transaction.The credit card payment system can prove expensive if you are a cost-conscious company.
You’ll have a lot of fees to pay for a business credit card –high-interest rates, annual fees, and late fees. In addition to that, your business credit card will not get any protection from the credit card act.
Maybe not all the times the amount involved will be higher. But if there is any such transaction,then you have to let go 3-5% of the total payment amount.It’s definitely a big loss for your small business.
Electronic Fund Transfer
Electronic fund transfer is one of the easiest but the costliest payment methods. For transferring money, you just have to put a call to the bank. You’ll save a lot of time and everything will be clean, however, you will be paying huge fees. For domestic wire transfers, the price range is $15 to $50, while for international wire transfers, it is $35 to $65.
The wire transfer process is quick and reliable but is not suitable if your business is running on a thin budget. There are other B2B payment methods that you can make use of, which are inexpensive and legit.
ACH stands for The Automated Clearinghouse. Clearly, the ACH and wire transfers appear similar, but they are two different systems.
As the name itself says, you can automate the process. That means if you are making regular monthly payments, then you need not have to worry about missing the deadlines. However, you need to do a lot of paperwork. Additionally, if it’s a B2B payment process there will be some fees associated with transactions. Sometimes you will be required to wait for some business days before the funds are made accessible.
Another disadvantage is, ACH transfers are difficult to reverse. Suppose, you put an extra amount, then the chances are you may lose all your money.
The greatest advantage of being in the digital market is the access to online systems and they make tasks easier and simpler to perform.
Today, you have a variety of online platforms that would allow you to transfer money in just a few taps. We have PayPal, Stripe, Venom, Authorize, etc. The process is quick and easy, however, similar to the credit cards, you’ll be charged certain fees for each transaction.
The online payment system is certainly time-saving but is not inexpensive. You have to pay something for making the transactions.
Which is the best system for making B2B Payments?
Comparatively, to all these payment systems, a business prepaid card is the most suitable option.
Today, most of the business organizations are using business prepaid cards for managing their financial operations. This flexible card solution supports global B2B payment process and there are no fees associated with it. Also, the payment process will be completely secure and transparent. You can easily monitor each transaction in real-time.
If your vendor/supplier is having the same payment model, then you can make their payments anytime, anywhere. Making payments on time, you’ll develop a better relationship with them and that is required to run a successful business.