B2B payments are shifting as a result of modern business. Technology is now the driving force behind how we are compensated. In the consumer market, electronic transfers have nearly totally replaced paper checks, but business-to-business payment methods have been slower to change. Do you know where to begin when looking for a B2B platform to meet your company’s needs? We’ve put together this comprehensive guide to help you through the B2B payment process and the most common solutions available today.
Many SMEs and solo traders have had to put their overseas activities on hold this year due to ongoing lockdowns and restrictions across Europe. However, with the announcement of a vaccine and the start of a new year, many people are looking forward to a more positive and prosperous 2021. As the world returns to some semblance of normalcy, many small firms are wanting to expand their international payments and services. But how can you be sure you’re not overpaying for your international transactions, and what procedures do you need to stay compliant?
Here are some of our best recommendations.
The Most Popular B2B Payment Types
1. Credit Cards
A credit card is one of the most common methods for B2B payments. They offer a simple and low-cost option to enable transactions and keep cash on hand. Card payments can also be easily traced at the end of the month using an electronic or print statement.
2. Automated Clearing House (ACH Payments)
The Automated Clearing House, or ACH, is another type of B2B digital payment that is faster and more efficient than traditional paper-based systems. This form of transaction uses a routing number and bank accounts to send money electronically from one enterprise to another. ACH payments are ideal for B2B recurring payments due to their simplicity.
3. Wire Transfers
Wire transfers are a digital type of payment that supports B2B transactions, similar to an ACH. For e-commerce and other digital transactions, organizations frequently use wire transfers for real-time payments.
4. PayPal and Other Online Payment Services
Using an online platform from a well-known fintech company is another type of B2B digital payment solution. PayPal, Google Pay, Venmo, Dwolla, and Skrill are examples of firms you may be familiar with. These platforms enable the electronic transfer of money across countries. This is often conducted between two people and does not need the use of bank accounts.
Now’s the Time to Embrace Digital Wallet
Consumers use digital wallets to make online purchases more than any other payment option, and they provide a win-win situation. Consumers gain from a secure, easy, and quick payment method. Accepting digital wallets results in higher conversion rates and consumer happiness for merchants.
Digital wallets are the preferred payment option among worldwide e-commerce customers, accounting for 44.5 percent of all transactions in 2020. By 2024, digital wallets will account for 51.7 percent of all e-commerce payments, according to our estimates. Acceptance of digital wallets has become a new need in the realm of online commerce.
Do Your Research
To handle foreign payment account, some nations demand additional information. Check the precise rules for the country to which you’re sending money. Some nations (outside the European Union or the European Economic Area, for example) enable the receiving bank to levy a fee. It is always a good idea to double-check the fees associated with your transfer and budget accordingly.
Don’t Limit Yourself to the Bank
Traditional banks, because of their size, are unable to provide the same breadth of payment options or cutting-edge global payment technologies as FX specialists. When utilizing a bank to make a transfer, there may be a lack of price transparency, which means you may end up accepting whatever exchange rate they had at the time. Working with FX professionals and dedicated money transfer services can provide you with more accurate pricing, timing recommendations, and a better result.
Develop a Currency Strategy
Foreign currency must be dealt with by international businesses. It’s also difficult because currencies are constantly fluctuating in value. When a customer pays via the internet, they prefer to see the price in their own currency. In fact, if you just offer prices in one currency (for example, US dollars), more than 30% of your foreign buyers will cancel the transaction right away.
There are two currency plan alternatives for B2B transactions, like paying a vendor. You can first pay them in your own currency. This eliminates the need for you to alter the currency on your end. It also protects you from foreign currency risk by ensuring that you pay a fixed amount for each transaction. Your supplier should gladly accept payments in their own currency and provide the same benefits as before. Some vendors will even give you a discount if you pay in their own currency. A Forex forward contract is a smart approach to limit your risk if you decide to accept payments in foreign currencies.
It’s All About the Timing
It can be useful to figure out which periods of the day or week are more suitable for international transfers and which periods should be avoided if at all feasible. Profitability can rise or fall during certain periods based on daily, weekly, and monthly trends and patterns. For instance, market volumes and prices might fluctuate dramatically first thing in the morning, so it’s probably best to avoid foreign exchange transactions during these unpredictable times.
Pay with Assurance
Using a reputable service for business payments guarantees that you can make secure international payments quickly and easily. You’ll get mid-market exchange rates in real-time, with no additional markup.
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