B2B Payment Automation: How to Do B2B Payments Better

Colby Ezell / Vendor Payments / October 26, 2022

There are very few businesses out there that don’t rely on some sort of partnership with another organization. That “do it alone” attitude has lost its place in the business world. In fact, one study says that 60 percent of businesses believe that 35 percent of their annual revenue is influenced by external parties.

Partnering with other organizations, whether purchasing raw materials, buying access to software, or outsourcing business functions, can help you increase your company’s profits. But with these relationships come challenges, many of which relate to vendor payments. The good news is that the entire business-to-business (B2B) sector is shifting as a whole. Most companies are implementing automation software that can make the entire payment process easier for all parties involved.

If you’re behind on integrating new technology into your B2B supplier payment processes, you’ve come to the right place. Keep reading to learn how to do B2B payments better.

Accounts Payable Challenges for B2B Payments

Business-to-business companies often face unique challenges when it comes to the Accounts Payable (AP) process. In order to streamline and optimize automated B2B payments, it is essential to understand the various challenges that can arise.

  • Reporting errors: Generally, accounting mistakes stem from human errors. With traditional B2B payment methods, there are many manual touchpoints where mistakes can be made.
  • Delays and late payments: Manually processing invoices takes employees a lot of time. When the Accounts Payable department gets backed up, you may see delays in payments which can cause you to lose out on early payment discounts and even incur late fees.
  • Preferences of payment methods: When working with many other B2B companies, you might encounter various payment preferences. Some vendors may require ACH transfers, while you prefer paying with a virtual card. Some suppliers may even still request paper checks.
  • Maintaining positive supplier connections: Late payments can negatively affect your relationships with B2B vendors. This may be caused by missing invoices, entry errors, or overwhelmed Accounts Payable departments. Regardless of why your company makes a late payment, it can cause issues with your vendors, such as withheld goods or reduced discounts.
  • Complicated international payments: Many issues arise related to international B2B payments. Cross-border regulations, unfavorable exchange rates, multiple layers of taxes, and international bank fees are just some of the international challenges a company may face.
  • Struggles becoming fully digital: Moving to fully automated B2B payments initially requires adjusting your processes. Employees will need to learn new workflows, which may cause mistakes or redundancies in the beginning. These growing pains were exaggerated for organizations that were forced into adopting B2B payment automation in a rush by the pandemic. Even once a company fully automates B2B payments, problems often arise from missing vendor banking information or invoices.

Still, automating B2B Accounts Payable is the only logical move for business owners today.

What Is B2B Payment Automation?

B2B payment automation is the process of using technology and software to streamline invoice processing, payment approval, and payment delivery to vendors or suppliers. Automating this process addresses and minimizes many common challenges that organizations face with B2B Accounts Payable.

Automating B2B payments can save time and money while reducing the risk of errors. In addition, payment automation can help businesses improve their cash flow and manage their finances. Several different B2B payment automation software or service providers are available, and each has unique features and benefits.

How B2B Payment Automation Works

Automation software or service providers streamline B2B Accounts Payable for organizations. While the exact steps may vary slightly, the process typically looks something like this:

  1. Request for approval: Before payments are sent, a request for approval will be delivered to the assigned approver. Some software includes the option for easy batch approval.
  2. Make payments: B2B payment automation software will store vendor payment preferences. Once payments are approved, they will be sent to your suppliers through their preferred method.
  3. Optimize monthly rebates: By utilizing virtual cards, B2B payment automation can earn your business cashback each month.
  4. Organize data: Automated B2B payment data will be collected and stored as valuable data that is easily exported and analyzed by accounting departments.

Benefits of B2B Payment Automation

While automation does require an initial setup and an adjustment period for accounting teams, the benefits a business sees from B2B payment automation are definitely worth it. Some benefits include:

Lower Payment Processing Costs

Automating invoices is a great way to save time and money. You can expect your cost per invoice to drop dramatically, potentially eliminating the cost of printing supplies and mailing costs altogether.

Streamline Processes

The initial setup may take some time, but you only have to do this once. After that, the entire payment process will be completely automated, limiting the requirement for hands-on attention from employees. Data will be extracted automatically, reconciliation will be immediate, and batch approvals only require a quick confirmation. Streamlining B2B payment automation will ensure your vendors get paid on time, every time.

Secure Payment Discounts

If you automate B2B payments, you increase your chance of taking advantage of discounts offered by vendors for early payments or other specific payment terms. Also known as dynamic discounting, this can save your business money just for paying on time.

Harness Cashback Incentives

On top of finding discounts, B2B payments automation can help you take advantage of cashback incentives that are sometimes offered when making supplier payments with virtual or traditional credit cards.

Lower Risk of Errors and Fraud

The use of virtual cards also lowers security risks when making online payments to B2B vendors. In general, having complete visibility of the entire B2B Accounts Payable workflow, you catch fraudulent charges quickly and put an end to duplicate payments, unapproved vendors, or false billing.

Improve Relationships With Vendors

Paying your supplier bills on time will help foster a strong relationship with your vendors. These healthy connections with other businesses will help you raise your revenue in various ways.

Learn From Data Analytics

The data capabilities offered by automation software are unrivaled. Your accounting team will be able to search invoices by date, invoice number, payment amount, or multiple other factors. Easy-to-read payment data can help you plan for the future.

Do Away With Paper Records

When you automate B2B payments, you do away with the need for hard-copy records. Digital storage is not only easier to sort through and analyze, but it’s also cheaper and better for the environment.

How P3 Can Help Automate B2B Payments

There are many different software solutions or third-party automation providers that can help your business step into the twenty-first century and transition to automated B2B payment solutions. For example, P3 Cost Analysts has years of experience helping business owners like you reduce the costs of paying vendors.

Whether you’re still paying other businesses by check or you see the potential to maximize more rebates through virtual card spending, P3 can help. At P3 Cost Analysts, we will help you do B2B payments better!

Our AP automation tool integrates with any system you’re currently using, helping speed up the learning curve when implementing new processes. From there, you and your team can handle all your B2B payments in one easy-to-use interface.

We will help you maximize monthly rebates, reconcile payables immediately upon batch approval, pay vendors how they wish to be paid, and more. And with no subscription fees, what do you have to lose?

Get Ahead of the Curve With Automated B2B Payments

As technology advances and changes the standard operating procedures of B2B commerce, you don’t want to get left behind. Unfortunately, the challenges that face Accounts Payable will only get more complex as technology advances. But, when you move to automated B2B payments, your company can take advantage of the latest software to stay competitive in an ever-changing market.

The benefits of B2B payment automation are tenfold, but the stress of changing processes may cause some business owners to hesitate. However, with experts like P3 Cost Analysts guiding you through the process, you’ll wonder why you didn’t automate sooner.

Learn more about our vendor payment solutions by scheduling a free consultation with one of our experts.

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