When discussing alternative payment methods like Stripe, the conversation tends to focus on consumer payments like purchasing goods and services from businesses. However, the majority of global payments are business-to-business payments.
It is conservatively estimated that B2B payments are six times the volume of consumer payments for an annual value of more than 120 trillion dollars. Despite the clear importance of B2B payments in the global economy, the new payment methods powered by digital technology that consumers enjoy, like Apple Pay, have yet to significantly impact B2B payments.
Many companies still use checks or even cash to conduct B2B payments. These outdated payment methods cost businesses money in payment processing inefficiencies and slow business operations.
This post will explore how Stripe can improve B2B payments for organizations and help them operate more efficiently.
Stripe: A Great Option for Business Payments
Businesses need a better payment method for B2B payments. It’s not just internet businesses that can benefit from a more efficient B2B payment method. All businesses must send and accept payments.
Let’s take a closer look at how Stripe is improving B2B transactions. You don’tdon’t have to be a business lead or finance manager to understand the direct benefits Stripe can have on your B2B payment processes.
Stripe is improving B2B payments in three distinct ways:
- System connection
Accounts receivable is vital to the revenue stream of your business. Sending paper invoices to customers is inefficient and ensures that payments will not be promptly received. This can make it difficult to accurately forecast revenue. Ideally, revenue streams should promptly deliver money to your business.
Better accounts receivable solutions exist than paper invoices and mailed checks or cash payments. Stripe enables your organization to send electronic invoices with built-in payment options.
Stripe Invoicing enables your customers to pay in the language and method they choose while remaining compliant with local regulations. In addition, Stripe invoicing connects with your other business systems to ensure invoices are accurate and consistent.
Plus, Stripe offers robust recovery tools like smart retries and card updater to ensure that your business is successfully paid. Stripe claims their online invoices are paid three times faster than average invoices. This means your business gets its money faster and is able to plan for future spending and innovation.
While inefficient invoicing is an issue for businesses to contend with, on the other side of the process, inefficient payment also creates friction for businesses. One of the most common ways to submit B2B payments and fulfill invoices is through bank transfers, especially outside of the United States.
While bank transfers are a fast and low-cost payment method, they also create challenges for receiving companies around refunds and reconciliation. In addition, bank transfers are notoriously prone to error.
Businesses commonly omit reference numbers, pay the wrong amount, or even enter incorrect bank account numbers. Stripe has addressed these issues with bank transfers with its latest innovation.
Stripe utilizes virtual bank account numbers to automate payment reconciliation, simplify returns and refunds, and integrate with other business processes and systems, such as invoicing and revenue recognition.
Stripe claims that the bank transfer feature of its service can cut manual work for payments in half. The time saved manually processing and managing payments can be better spent focusing on core competencies and driving operational innovation.
In most cases, B2B payments recur regularly. As a result, finance managers often try to reduce operational friction by establishing direct debit links with their customers in the form of ACH payments.
However, successfully setting up these payments can be challenging because customer accounts must be verified through time-consuming microdeposits. Stripe has a new service offering called Financial Connections to simplify this process.
Stripe Financial Connections makes it far easier for businesses to establish debit connections online with their customers. This new service not only makes the ACH process easier for sellers, but business customers also don’t have to go through the process or hassle of microdeposits to verify their account.
In some cases, microdeposits can take days to process. Not only does this hold up the business that wants to receive payment, but it also holds up the business trying to make payment. Stripe’sStripe’s Financial Connections enables all users to work more efficiently and effectively.
Stripe: A More Effective B2B Payment Option
Stripe is building a financial management system and platform that makes managing B2B payments simpler than ever before. There is no reason that B2B transactions cannot benefit from the convenience of digital payment technologies in the same way B2C and C2C payments have.
A fully digital B2B payment infrastructure is still not a reality, but Stripe is making strides for businesses around the world that want a simpler, more effective payment method that utilizes the breadth of modern technology.
For interested FinTech developers and banking professionals, there is still a significant amount of opportunity to be an innovative force in the B2B payment industry. Stripe is leading the way, but there is still a lot of opportunity for others.