The Benefits of Digital Payments for B2B

Mar 22, 2023 by Zazil Martinez

The shift towards digital payments has led to fast and efficient business growth opportunities. However, most business accounting and finance departments still need to catch up in adopting this payment method. By eliminating paper checks, the AR process becomes more effective, leading to faster payment cycles and efficient collections.

Businesses view the payment experience as another customer touchpoint. Still, technological shifts have proved that digital payments bring fast and efficient growth opportunities for businesses.

Consumer payments have seen a digital revolution so drastic that people hardly set foot in a bank anymore. Most money transfers happen via apps and online platforms. Contactless payment is the present, not the future of digital payments.

But business accounting and finance departments still need to catch up when adopting this payment method. Most transactions and processes are still done via manual, paper-based methods.

We've seen a lot of challenges confronting the digital B2B payment space due to the pandemic. The sudden shift to digital solutions and remote processes exposed the costly infrastructure gaps and inefficiencies of a financial system worth hundreds of trillions of dollars. Yet, businesses depend mainly on in-person processes, slow-moving checks, and expensive paper invoices.

If, like many CFOs and AR managers, you're looking into digital payment platforms and electronic remittance solutions, read on as we walk through the benefits of shifting to digital payment solutions.


What are B2B Digital Payments?

Digital payments, especially when completed via bank networks, transfer funds electronically from your customers' accounts to your business bank account. Your customers can make payments quickly and efficiently while ensuring your cash flow remains consistent. Accepting digital payments frees up time, money, and energy to grow your business.

With digital payment platforms like Paystand, you can set up recurring billing and automate payment collection, streamlining this process.

B2B digital payment methods let you process payments extremely fast, allowing instant cash application and automatic reconciliation. This process has proved to cut data entry errors in payment transactions and ensures your books are accurate. At the same time, digital payment platforms integrate with ERPs, making it easy to automatically scan for duplicates or incorrect payments to combat fraud risks.


Paper Checks vs. Digital Payments

Paper-based payments are a hassle for businesses and their customers. Among their disadvantages, collecting and processing paper checks is costly for most companies. It costs between $4 and $20 to process a single check.

Not only are paper-based payments expensive, but it also takes about 15 days for a check to clear. Accounting for mail float, errors, and potential delays, you can wait a month for payment. This negatively impacts Days Sales Outstanding (DSO) and hurts cash flow.

The fact is, this payment system is inefficient.

Businesses accepting paper check payments have several complaints:

  • Paper checks slow down the payment cycle and regularly cause delays.
  • Checks make businesses and their customers more susceptible to fraud.
  • Reconciliation is too time-intensive and error-prone.
  • No guarantee that a check is tied to an account with enough funds.
  • Customers can put stop-payments or close the account
  • Spending time driving to the bank because remote capture is not offered.
  • Difficult to track incoming checks or know when the payment will arrive.

If that wasn't enough, accepting paper checks has become increasingly difficult for businesses during unexpected crises. Companies operating remotely need someone in the office to collect and reconcile paper checks arriving by mail. This becomes even more complex with cross-border payments.

But most AR systems know this. That's why 88% of businesses use an ERP.

ERPs need to be automated, and many businesses rely on a manual payment system. Companies accept a paper check, process it, and manually input the data into their ERP. And they do this for every check.

The B2B payment cycle takes about 35 days, and 47% of invoices are paid late. ERPs will always be inefficient unless businesses move beyond paper-based payments.

Digital payments provide a seamless experience. The time and expense required to process cashless payments can drop by 60%. Digital B2B payment methods are also safer, easier to collect, and effortlessly automated. Best of all, when you collect payments digitally, that money goes straight into your business account with little to no delay at a fraction of the cost. From your customer across the street to the vendor on the other side of the globe - payment speed is the same.

Accounting departments can also leverage enhanced payment data to optimize processes, filter potential risks, and make departmental budgets, among other advantages of digital payments.

These are some of the benefits of digital payments over paper checks:

  • Convenient customer experience. Digital payments let customers use a self-service platform and pay invoices from anywhere. They can even pay directly from the emails and invoices they receive with a 1-click "Pay Now" button.
  • Lower risk. Digital B2B transactions are much more secure than traditional ones. They're processed by secure gateways, which are hard to tamper with. Most platforms are regulated and protected to keep your money safe.
  • Easily traceable. Both merchants and customers have easy access to payment information. Details of payments are stored in merchant-specific databases. This avoids ambiguity and confusion while tracking payments, so you always know where the money is.
  • More options mean faster payments. Offering customers many payment options can lead to getting paid faster, improving cash flow, and allowing companies to expand.
  • Save money on processing fees. Many payment methods imply fees and soft costs, especially paper checks. One of the benefits of digital payments is that most solutions have fixed fees. This allows for better planning, and businesses can choose the model that better suits their needs. Some B2B digital payment platforms even forgo transaction fees and use a payments-as-a-service model, like Paystand.

What Does This Mean for B2B Organizations?

Many industries, such as law firms, insurance, and construction, still rely on paper checks for payments. By eliminating the option to pay via paper checks, the AR process becomes more effective, leading to faster payment cycles and more efficient collections.

Payment preferences lean towards digital transactions, fueled by the need to operate faster, remotely, and safely. While some companies choose to keep traditional payments in their catalog, these might lead to more expensive and inflexible transactions in the long run.

Since 2020, several industries have shifted to digital, contactless payments to stabilize revenue and expand their business. This is likely because 87% of customers prefer digital payment. It's faster, more convenient, and safer.

By now, we've seen some of the benefits digital payments have provided businesses. With payment alternatives for every need, it's easy to see why more companies are integrating multiple digital payment forms into their systems.


Finding a Digital-First Payments Platform

Which digital payment platform should you choose?

Every business should have access to Payments-as-a-Service technology. The ideal B2B digital payment platform should adapt to your business needs and streamline your company's payment processes.

At Paystand, our low-cost, frictionless B2B payment system automates manual processes, lowers transaction costs, and speeds up time-to-cash.

We're becoming a one-stop platform for every business transaction. From Zero-Touch virtual expense cards for a controlled and easy way to keep track of resources to a system that integrates ERPs for invoicing, payment processing, and reconciliation without the usual fees charged by credit cards or banks.

Here are some of the functionalities that Paystand provides:

  • AR Management. Digitize the accounts receivable flow with an enhanced employee and customer experience. Improve ROI, and maximize efficiency by speeding up time to cash, lowering costs, and automating receivables.
  • Virtual Terminal. A virtual terminal facilitates card-not-present transactions. It allows the merchant to make payments on behalf of the customer. This speeds up transactions and makes contactless card payments possible.
  • Payment Portal. Let customers self-service and pay using multiple payment methods (ACH, Credit/Debit cards, Smart ACH). Our portal eliminates juggling various payment gateways and manual processes. Traditional lockbox services are now replaced with a much more convenient digital solution.
  • Fund on File. Securely store payment information so customers can be re-engaged for future charges. We tokenize and encrypt personal data before storing it in a PCI-compliant way. This safeguards customer data while keeping recurring payments and subscriptions safe and streamlined.

Taking AR to the Next Level

Paystand is building the most advanced commercial payment network available to improve bottom-line savings for businesses. Our Payments-as-a-Service model creates a smart billing and payment system that can digitize receivables, automate processing, shorten payment cycles, and lower transaction costs for mid-market and enterprise businesses.

This is a one-stop solution for smarter finances. If you want to know if Paystand and your company are a perfect match, book a free demo today.