By Joresa Blount Forbes
An extraordinary amount of money passes between businesses every day; the Business to Business (B2B) payments industry itself is worth around $127 trillion—but, despite its size, the industry continues to utilise outdated solutions that hinder its efficiency.
While numerous solutions have emerged supporting Business to Consumer (B2C) payments, not as many innovative ideas have been brought to the market for B2B payments. To learn more about why this might be the case, we sat down with Jordan Weber, the Chief of Staff at Currency. A subject matter expert when it comes to the B2B payments industry, Weber discusses some of the most prominent pain points in the industry.
The B2B Payments Industry is Stuck in the Past
Currency, a company that offers transactions as a service, specializes in large transactions and believes that “buying a bulldozer should be as easy as buying a book.” What attracted Weber to the B2B payments industry was the chance to unlock opportunity for people in an area of current inefficiency.
Weber says that one of the most significant problems in the industry is that “nearly 70% of payments are still processed by paper check. These traditional payment methods along with manual paper invoicing make the process inefficient and costly.”
By continuing these habits, businesses have to wait for at least three to five business days to receive their payments while also incurring unnecessary paper and postage costs. Frequently overlooked is the processing of traditional invoices, which is costly in itself. A report from Deloitte found that a typical accounts payable organization spends around $8 to process individual supplier payments. Paper invoicing also increases the likelihood of checks getting lost in the mail. Unfortunately, businesses, particularly freelancers, that rely on traditional invoicing find themselves reminding clients to pay punctually or sometimes never receive their payments at all.
Why the Industry Hasn't Changed
If the B2B payments industry is so inefficient, why has it not been disrupted yet? One reason may be because it is difficult to create and deliver the solutions the market needs.
“Securely processing large transactions through financing and other digital payment methods are difficult challenges to solve,” Weber said, “you’ll find platforms that can offer one but not the other. At Currency, we’ve built a platform that offers both.”
The false dichotomy of choosing between financing and other payment methods is frustrating for business owners, especially when big-ticket purchases are involved. Businesses should be able to have both, which is why CurrencyPay, a product of Currency, employs technology that brings many features into one platform.
Given the modern-day technologies that exist, the B2B payments space is relatively outdated. Aside from paper checks, other payment methods include ACH transactions, debit/credit cards, and wire transfers. Although they typically include a small processing fee, ACH payments are generally favored because they require less labor. Wire transfers also incur processing fees that can amount to $14 per exchange, and debit cards can charge as much as 1.5% of the total transaction.
That being said, the B2B payments industry is ready to surrender its tried-and-true methods with product solutions like CurrencyPay.
How Businesses Be More Efficient
It is important to look at what both buyers and sellers want out of their transactions.
“Both buyers and sellers are looking for a simple and secure way to transact without the labor-intensive costs. By updating to a platform that offers flexible payment options with a variety of backend integrations, businesses can save money on fees, and optimize their sales process,” said Weber.
Making a purchase should not be a stressful process. To make the purchasing process easier for consumers, it is important that businesses offer a variety of payment methods for customers. The more payment methods that your business accepts, the more likely you are to make a sale, which should optimise your overall sales operations.
The Industry Wants Change
The B2B payments industry is rife with inefficiencies and lost revenue. In order to remove some of these inefficiencies, it is imperative that companies implement modern-day innovations. Upgrading to a payment processing solution such as CurrencyPay will not only streamline transactions, but also will improve the overall consumer experience.