While More Complicated, B2B Online Payments Can Be as Seamless as Your Online Bill Pay
January 20, 2022
5 min read
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Over the past few years, companies everywhere have been moving steadily to align their B2B payments processes with the consumer experience.
After all, AP team members are just like everyone else and use online bill pay to pay some or all their expenses every month. And they want the same level of usability and convenience with their corporate payments.
However, B2B payments are far more complicated than their C2B (consumer-to-business) counterparts, particularly for multifamily and commercial real estate firms. These companies tend to have:
Large volume of payees (vendors)
High dollar payment amounts
Documentation and audit trail requirements
Dozens of banks from which payments are issued
They also need stringent security, with controls about who can issue payment and when. Not to mention security surrounding the actual payment method itself.
Personal Online Bill Pay
B2B Online Payments Solution
# of Banks Paying Invoices/Bills
# of Invoices
10-30 per month
100+ per month
# of Payment Approvers
Multiple (Controller, CFO)
Audit Trail Required
Differences Between Online Bill Pay and B2B Digital Payments
A good B2B online payments platform can address all these concerns and provide the same level of control and ease-of-use that online consumer bill pay services do. This, in turn, can have huge time and cost-savings for the AP team because they are no longer chasing down check approvals and signatures, or cutting paper checks.
A Broader Range of Functionalities at Your Fingertips
While B2B online payments solutions vary, most offer the same basic level of functionality: Users can pay invoices electronically, see who got paid, and when payments were issued. They can also view historical payments. All online.
But that’s where most similarities end. Some B2B digital payment solutions, like NexusPayments, are equipped to pay hundreds of invoices electronically each month, not just a handful. They also provide other functionality, including the ability to:
Vet vendors for electronic payments
View the accepted payment methods used by each vendor
Identify transactions or payments by bank account
View the banks associated with each general ledger
Generate receipts for payments
These solutions also allow you to set up different approval thresholds, permitting CFOs and Controllers to view and authorize the most expensive invoice amounts for immediate payments. All approvals can then be tracked electronically.
Greater Levels of Security
B2B payments solutions have lots of layers of security, beyond what is often found in consumer-to-business payments.
First, they permit users to designate a select group of people who can approve payment transactions.
Second, a B2B payment platform often offers more secure payment methods, like virtual cards, which are issued by the payments company but usually backed by Visa or MasterCard. This card is emailed to the supplier for a specific amount – based on one or multiple invoices.
The supplier must then key in the exact amount into their Point-of-Sale system, or the transaction fails. When cleared, the money is then transferred to the supplier’s back account. Per the 2021 AFP Payments Fraud and Control Survey, virtual cards were subject to far less fraud attempts than ACH, wire transfers, and paper checks.
Lots of Banks to Fund Payments
Instead of one or two banking relationships, which is common for a consumer, many multifamily and CRE companies rely on 20 or more banks to pay their vendors.
Often, the banking relationships change and grow as the company acquires more properties.
Thus, the B2B payments company needs to be able to work with a broad range of banks to orchestrate payments – and handle changes seamlessly.
Some B2B payments companies, like Nexus, make it simple for users to add and/or change their funding banks online. Just like consumers, AP teams don’t want to tie up their time contacting a Call Center to take care of administrative payment tasks.
Leading B2B payment providers use measures like microdeposits to ensure that these bank accounts are set up correctly. With this process, the payments company will issue a debit and credit of less than $1, and a designated company official must confirm the microdeposit amounts before the account can be used to issue outgoing payments.
Managing Exceptions Online
C2B payments make it frictionless to manage common one-offs or exceptions to the rule. For example, most consumers can skip a recurring payment with a few clicks and then easily resume it the following month.
B2B payments companies need to meet this challenge – and enable similar changes.
For example, what happens when the AP Team issues a virtual card payment for an invoice, but the supplier has a credit on file. How does the money get refunded?
In the case of Nexus, that refund process is fully automated and simple to manage. The supplier can easily refund the money and the buyer can see the refund online – and reuse the funds for another payment.
Making it Easy for Suppliers to View Their Payments
For a B2B company to indeed reduce friction, they must enable all the participants (the buyer and the supplier) to stay in the loop on all payment transactions.
After all, it’s not cost-effective for the AP team to issue their payments digitally, and then spend hours fielding phone calls from their suppliers inquiring when they will receive payment.
That’s why B2B payments companies must have an easy-to-use portal where suppliers can access near real-time information about:
Buyers who can send them electronic payments
Payment method used
Payments sent/amount sent/invoice number
Complete remittance information
Consumer-like Experiences Are Here to Stay
B2B payments companies need to deliver the same type of frictionless experiences that consumer payments offer because AP teams can’t – and shouldn’t – check their expectations at the office door.
These AP teams use clicks to manage their personal payments every month and know what can be done – securely.
Those successful B2B payments companies recognize this and keep innovating to make their multifamily and commercial real estate customers feel more comfortable with the process.