B2B Payments

What are B2B Payments?

B2B payments are financial transactions between two companies. When your business pays a supplier, vendor, or channel partner, that's a B2B payment. Unlike consumer transactions where individuals buy products for personal use, B2B payments typically involve larger amounts, longer processing times, and more complex approval workflows.

When a SaaS company charges your corporate credit card for monthly software fees, when you wire funds to a manufacturer for bulk inventory, or when you receive an ACH payment from a client for consulting services—these are all B2B payments.

How B2B Payments Work

A typical B2B payment flow looks like this:

1. Finance approves the purchase order

2. Vendor sends invoice with payment terms (net 30, net 60, etc.)

3. AP team processes payment via chosen method

4. Transaction clears through banking networks

5. Both parties reconcile in their systems

The complexity multiplies when you factor in international payments, multiple currencies, varying tax regulations, and different payment preferences across regions.

Payment Methods in Practice

ACH Transfers

The workhorse of B2B payments in the US. ACH (Automated Clearing House) transfers move money between bank accounts electronically. They're inexpensive but slow, typically taking 2-3 business days to settle.

Best for: Recurring payments, payroll, regular vendor payments
Not ideal for: Time-sensitive transactions, international payments

Wire Transfers

When you need money moved fast and securely, especially internationally. Wire transfers typically complete within hours but cost significantly more than ACH—often $15-45 per transaction depending on your bank.

Best for: Large one-time payments, international transactions, urgent payments
Not ideal for: Small recurring payments where fees eat into margins

Virtual Cards

Digital-only credit cards generated for specific transactions or vendors. Each virtual card has unique numbers, spending limits, and expiration dates. This makes them useful for controlling spend by vendor, category, or project.

Corporate Credit Cards

Still common for B2B transactions, especially smaller ones. Buyers benefit from the cash flow float (30+ days before payment is due), rewards programs, and chargeback protection. Sellers absorb the 2-3% processing fees, which makes cards less attractive for high-value transactions.

Paper Checks

Yes, they still exist. While declining, checks remain in use for certain industries that value audit trails and manual control. They're slow, expensive to process, and carry fraud risk, but some organizations—particularly in construction, healthcare, and government—continue using them.

The European Perspective

European B2B payments differ significantly from US practices:

SEPA (Single Euro Payments Area) standardized cross-border transactions across 36 countries. A payment from Paris to Prague processes as quickly as a domestic transfer—a significant advantage for European businesses.

Common Challenges

Cross-Border Complexity

International B2B payments face multiple friction points:

• Currency conversion fees often hidden in exchange rates

• Correspondent banking fees for transfers between banks

• Compliance documentation requirements vary by jurisdiction

• Time zone delays in processing

Payment Reconciliation

Finance teams spend significant time matching payments to invoices, especially when:

• Customers pay multiple invoices with one payment

• Partial payments arrive without clear allocation

• Payment references don't match invoice numbers

• Currency conversions create small discrepancies

For billing platforms and RevOps teams, automated reconciliation isn't a nice-to-have—it's essential to closing the books accurately each period.

Cash Flow Timing

B2B payment terms create a constant cash flow challenge:

• Your suppliers want: Net 15 or payment on delivery

• Your customers want: Net 60 or Net 90

• Your reality: A significant cash flow gap

This timing mismatch forces businesses to maintain credit lines or working capital reserves, adding financial costs to every transaction.

B2B Payments and Revenue Operations

For RevOps and finance teams, B2B payments sit at the intersection of several critical functions:

Revenue Recognition: When payment terms extend to 60 or 90 days, recognizing revenue correctly under ASC 606 or IFRS 15 requires tracking not just when invoices are sent, but when performance obligations are satisfied—independent of when cash arrives.

Dunning and Collections: Long payment terms mean more opportunity for late payments. Automated dunning workflows, payment reminders, and escalation paths become essential at scale.

Subscription and Usage Billing: SaaS companies collecting recurring payments need to handle failed payments gracefully—retry logic, card update requests, and automatic downgrades prevent involuntary churn.

Cash Application: Matching incoming payments to open invoices—especially when customers pay in bulk or remit short—requires either significant manual effort or intelligent matching algorithms.

Best Practices

Offer Multiple Payment Options

Different customers have different needs and constraints:

• ACH for recurring domestic payments (lowest cost)

• Cards for smaller ad-hoc purchases (convenience)

• Wires for large international transfers (speed and certainty)

Automate Reconciliation

Manual payment matching is error-prone and doesn't scale. Modern billing systems can match payments to invoices, flag exceptions for human review, and update accounting systems automatically.

Use Dynamic Payment Terms

Not all customers warrant the same payment terms. Consider:

• Payment history: Reliable payers earn extended terms

• Order volume: Larger commitments justify better terms

• Credit risk: New customers start with restrictive terms

Optimize for Global Operations

For international operations:

• Use local payment methods where possible (SEPA in Europe, ACH in US, BACS in UK)

• Consider pricing in local currencies to reduce customer friction

• Understand local regulations including GDPR, PSD2, and tax requirements

Common Questions

What's the difference between ACH and wire transfers?

ACH transfers batch process through clearinghouses (slower but cheaper), while wire transfers move individually between banks (faster but more expensive). ACH typically costs under $1 per transaction; wires cost $15-45 or more.

How long do B2B payments take?

It depends on the method: Credit cards settle in 1-2 days after instant authorization, ACH takes 2-3 business days, domestic wires complete same day, international wires take 1-5 days, and checks can take 5-10 days or longer.

What are NET payment terms?

NET terms specify when payment is due after the invoice date. NET 30 means payment is due within 30 days. Common terms include NET 15, NET 30, NET 60, and NET 90. Some businesses offer discounts for early payment, like "2/10 NET 30" (2% discount if paid within 10 days, otherwise full amount due in 30).

Related Concepts

• Revenue Recognition

• Subscription Management

• Payment Reconciliation

• Invoice Automation

• Dunning