What are B2B payments?
We often talk about B2B payments, the risks associated with them, and how to mitigate those risks. However, before exploring how technology can help, it is essential to start with a key question: what are B2B payments?
B2B payments are transactions carried out between companies, whereby a purchasing company pays a selling company in exchange for goods or services through a transfer of monetary value. In general, B2B payments are more complex and slower than B2C (business-to-consumer) payments for several reasons:
- They require internal approvals and administrative validations.
- They may involve purchase orders, delivery notes, purchase orders, payment batches, and reconciliation processes.
- They are usually linked to credit terms (30, 60, or 90 days).
- In addition, B2B volumes are typically much higher: large amounts, numerous invoices, discounts, commercial disputes, exceptions, and more, which translates into greater day-to-day operational effort.
What are the most common B2B payment methods?
The most common B2B payment methods remain bank transfers, promissory notes, and direct debit collections, although alternative methods are emerging to improve payment efficiency:
- Bank transfers: In terms of total B2B payment volume, they are among the most widely used methods, but they are also among the least secure. Once funds reach the recipient’s account, they are difficult to recover in cases of incorrect beneficiaries or incorrect amounts.
- Promissory notes: These depend on issuance by the customer and may establish payment dates later than those agreed, further delaying payment. However, they offer greater security, as they are issued on a company-to-company basis.
- Direct debit: This is the most common format in Europe and the direction in which many companies are moving. The supplier automatically debits the amount of overdue invoices, and the customer has a limited period to dispute the charge. Only an initial authorization is required at the start of the commercial relationship.
- Corporate credit cards: These are typically more expensive for suppliers to accept and are often used during debt recovery processes after invoices have gone unpaid, as they facilitate payment through digital payment gateways.
- Digital wallets and digital payment services: These allow buyers to make payments via digital devices.
While there are limited alternatives in terms of B2B payment methods, companies face additional challenges when managing B2B credit.
What challenges do companies face when managing B2B credit?
The gap between invoice issuance and payment collection can create tension both in commercial relationships and internally across departments. Key challenges include:
- Slow processes with limited visibility: when payments pass through multiple manual stages, the result is slow processing and limited visibility into payment status, complicating cash flow forecasting.
- High manual workload and increased risk of errors: reconciling B2B payments often requires matching payment batches, invoice references, discounts, and incidents. Manual processes increase the likelihood of errors, duplicates, and misapplied payments.
- Customer friction and poor payment experience: corporate buyers also suffer when payment processes are cumbersome or unclear, leading to delays and frustration that can affect customer experience and loyalty.
- Costs and risk: traditional processes involve administrative costs and risks such as fraud, lost checks, application errors, and return fees, as well as potentially high direct costs such as transfer fees or commissions.
Effective credit risk management, combined with digital Order to Cash solutions, mitigates these issues and allows companies to focus on what truly matters: selling more with lower risk.
What are the benefits of digital credit risk management solutions?
Without modernizing the process from invoice issuance to payment collection, companies cannot achieve the strategic advantages already enjoyed by others:
- Reduced manual work through automated email notifications, early debt collection reminders and AI-driven agent interactions.
- Faster collections by automating processes, reaching all customers efficiently and enabling payment options such as payment gateways during collection efforts.
- Greater control and security through insights into customer payment behavior and estimated collection dates for each invoice.
- Improved customer experience by using AI-driven processes to adapt communication strategies and payment options.
- Easier reconciliation by automatically linking payments to open invoices, reducing accounting workload and minimizing errors.
- Enhanced visibility through customized debt and collection reporting, centralized in a single platform for finance teams and executive committees.
What do AI-powered credit risk management SaaS platforms provide?
A key aspect of digitizing the B2B process is adopting tools with strong security protocols and proven market experience. Rather than relying on historical defaults or static scoring models based on outdated financial data, AI enables:
- End-to-end Order to Cash management, connecting credit assessment, customer monitoring, credit limit management, debt collection, bank reconciliation and financial and risk reporting.
- Real-time scoring based on actual daily customer behaviors, including payment delays, frequent disputes and changes in payment patterns that signal financial stress.
- Payment prediction through dynamic scoring and invoice-level estimated collection dates, improving cash flow forecasting and financial planning.
- Intelligent collection automation that prioritizes tasks, determines whom to contact first, selects the most effective communication channel and tone, and identifies the optimal timing.
Choosing a SaaS platform that manages credit risk through AI and automated processes is critical to accelerating collections. Yndika has helped countless companies transform their B2B experience by going beyond scoring and task automation, enabling teams to focus on higher-value activities such as negotiation, strategy, customer relationships, and growth.
