Skip to content
7 min read

A Quick Guide to B2B Payments

One of the most crucial matters a business must address is its ability to send and receive payments for purchases and sales. Failing to make receiving payment as fast and easy as possible harms profitability and cash flows. On the other hand, any obstacles to paying suppliers and vendors can worsen relationships.

The B2B payments space is evolving rapidly. Advanced online payment solutions now exist that speed up the B2B payment process while cutting costs and reducing disputes.

In this article, we’ll go over why the old way of payment is bad for business. We’ll then explore how digital technology has allowed for fantastic new B2B payment methods, then look at how a particular new payment method benefits companies and their suppliers and vendors.

The Old Way of B2B Payments

For decades, businesses have processed every transaction — whether sending or receiving payment — manually. They would send or receive cash or a check.

These were the only methods available in the past, but they were rife with problems. For example, paper checks take time to arrive at the supplier, and errors can slow down a transaction by several days. Plus, checks can get lost in the mail.

Additionally, there were security risks. Suppliers and customers disclosed bank information to each other, posing security threats to both parties. That doesn’t include the opportunities for fraud that checks present, either.

Payment methods that rectified some of these problems did exist back then — but they were often too complex and prohibitively expensive for many companies.

Thanks to technological advancements in the B2B payments space, this is all changing.

B2B Payment Goes Digital

Nowadays, digital B2B payments offer companies various ways to send money faster and more efficiently. Nearly 93% of companies now use electronic methods to send money.

These methods continue to evolve as businesses demand more efficiency and effectiveness in sending and receiving payments.

ACH payments and wire transfers are already common.

However, virtual credit cards, or VCCs, are among the best options.

VCCs are digital versions of credit cards that businesses can create for specific purposes — usually paying a particular invoice from a vendor. Once a firm uses the card to pay for its purpose, it is no longer usable to reduce the risk of fraud.

Additionally, businesses can specify the exact dollar amount for the credit card and an expiration date to further decrease the risk of fraudulent use.

VCCs streamline the Accounts Payable (AP) process by cutting out much of the manual work. Suppliers like to accept them, too, because they get paid much faster and in a secure manner.

Why Companies Should Pay with VCCs

Let’s look at some reasons your company should implement VCCs into your B2B payment processing.

1. Reduce time and errors
Writing and sending an individual check doesn’t take that long, but that time adds up when you’re processing a high volume of payments.

VCCs save all that time, freeing up your staff to work on more important matters. In fact, a Deloitte report found that nearly 82% of buyers claim that VCCs speed up their payment process. They saw payment speed increase by about 1.4X on average.

VCCs also save time on exception processing because they can only be processed at their exact amounts. There is a much-reduced chance of making errors, such as overpaying or underpaying an invoice.

2. Cut costs
Alongside the time savings and monthly rebates (covered later), you save on the costs of checks — checks, ink, toner, envelopes, postage, and so on. Deloitte found that card-based processing costs companies an average of $20, compared to the $73 cost of the traditional purchase order method.

These savings leave you with more profits to reinvest. When combined with the time saved, simply implementing VCCs into your B2B payments creates significant opportunities for growth.

3. Optimize cash flows and working capital
Nearly 82% of businesses fail from poor cash flow management. After all, profitability doesn’t matter much if you don’t have cash on hand to pay bills.

Fortunately, paying with a VCC doesn’t involve upfront cash disbursement — yet the VCC sends the money to your supplier instantly. Consequently, your supplier is satisfied while you simultaneously improve your cash flows and working capital.

You simply settle the debt with your VCC provider down the road, similar to a consumer credit card.

You can use your extra working capital for short-term needs, earning you more returns on investments in your business and allowing for faster growth. Plus, you have time to wait for payment from customers to pay your VCC off.

Additionally, VCC providers tend to offer reporting features that let you keep track of your card use, making it easy to keep a handle on your cash flows and transaction data.

4. Strengthen security
A report from the Association of Finance Professionals showed around 74% of companies were targets of payment fraud in 2020.

VCCs can combat fraud and bolster security. You link the VCC solely to the invoice you need to pay, preventing anyone from spending the card’s funds on other matters. For additional security, VCCs let you set the exact dollar amount to be spent and an expiration date by which the card must be used.

If that wasn’t enough, VCCs are also single-use. Once you spend the funds, the card number is no longer available for use.

5. Earn cash rebates
Many VCC providers offer the opportunity to earn cash rebates on your business’ purchases — similar to a consumer cashback credit card.

Such rebates give your firm a slight cash flow boost or a delayed discount, depending on how you’d like to look at it. Once again, you can invest your rebates into your business or bolster your business’s savings.

6. Useful beyond invoice payments
Companies most often use VCCs to pay invoices.

However, employees making purchases unrelated to invoices can request a VCC from a manager in the exact amount needed for the purchase.

For example, if an employee is traveling for business, you can issue them VCCs to cover their exact travel costs. The employee will be limited to the VCC amounts, saving you money compared to a standard business credit card.

Your AP department can then track the transactions in real-time to maximize employee accountability, too.

Why Suppliers and Vendors Should Accept VCCs

Suppliers and vendors should strongly consider accepting VCCs as payment as well, and here are some reasons why.

1. Streamlines AR process
Accepting VCCs streamlines your AR. It reduces costly and time-intensive paper check processing.

As mentioned above, taking VCCs as payment reduces errors and the need for exception reporting. The payment will always clear since the VCC company is sending you the money.

2. Decreases time to payment
Your customers can pay you instantly with a VCC without physically handing you cash.

Thus, they’re more likely to pay you right away, decreasing your outstanding receivables and improving your cash flows.

You’ll save time and money pursuing late and unpaid invoices, too.

Plus, there is no risk of checks getting lost or stolen in the mail or waiting for other forms of digital payment to process. The money is in your hands the moment the customer clicks “pay.”

3. Better payment details
VCCs provide thorough details on every transaction in the email remittance, unlike ACH payments. Such transparency makes it easier for you to reconcile your AR.

Additionally, you can resolve any questions or disputes much faster — or avoid them entirely — because there isn’t any information hidden from view.

4. Security
To accept both checks and ACH payments, you must reveal your bank account information to your customer.

With VCCs, however, you no longer have to reveal your bank account details. There’s a lower chance of your sensitive financial information falling into the hands of potential cybercriminals.

5. Make Sending Payment More Accessible For Customers
The more ways you can accept payment, the more easily customers can pay you.

As VCCs increase in popularity, accepting VCCs will make payment as easy as possible for customers. You may be able to become the preferred vendor for many of your customers — meaning you could increase profits and cash flows simply by offering to accept VCCs as payment.

End-to-End AP Processes with Big Data, AI, and Machine Learning

Today, much innovation in B2B payments — and AP in particular — focuses on developing automated, end-to-end AP processes to cut costs and save extensive amounts of time.

Three technologies are the focus: AI, machine learning, and big data.

Firms like Scrypt AI are developing ways to implement AI, machine learning, and big data into AP to create these automated processes.

Breakthroughs in AI and machine learning make it possible for these automations to mimic human behavior and decision-making, saving organizations a substantial amount of time and money on AP processes. Many of these solutions allow for you to integrate digital payment methods — such as VCCs — creating an AP process that’s almost entirely automated.

The old methods of payments were highly inefficient, costing companies money and time that could be better spent elsewhere.

However, thanks to new B2B payment innovations implemented by Scrypt AI, both parties involved in a transaction benefit. Companies can save time, cut costs, improve cash flow, and more by paying with VCCs. On the other side of the equation, suppliers can streamline their AR processes, cut time and money spent on chasing payment, enhance security, and gain more insights into transactions.

As firms continue to innovate in AP, automation will be one of the most significant trends — producing dramatic increases in efficiency across companies and even entire industries.