Best B2B Payment Solutions for SMBs

At a glance:

In the world of business, transactions can be complicated and involve a lot of money. Small or medium-sized businesses make payments to each other called B2B payments, which stands for Business-to-Business payments.

Businesses use special platforms or systems to make these transactions easier, safer, and cheaper. These systems are the rules that help businesses know how much to pay, when to pay, and ensure that the payment is made safely.

Businesses can make these payments in diofferent ways, using cards, like debit or credit cards, just like when you buy something online. They can also use manual invoices, or automated bank payments, which are set up to transfer money automatically from one bank account to another. And then there are digital wallets, where you can store card details and make payments online.

Businesses can use different platforms for these payments. One of them is GoCardless, which makes it easy for businesses to make and receive payments, especially if they have to do it regularly. Other platforms include PayPal, Stripe, Square Payments, and Wise. Each platform has its own strengths and weaknesses, and businesses choose the one that suits them best, taking into account how much the platform charges for its services, how safe it is, and how easy it is to use.

Best B2B payment solutions for SMBs are cost-effective, secure, and efficient online platforms for small and medium businesses engaged in B2B transactions. They offer seamless invoicing, easy software integration, and secure transactions, often with automation features. Catering to evolving business needs, the best B2B payment platforms should facilitate international trade with easy cross-border transactions and offer transparent pricing and fee structure.

Whether it’s placing an order with a supplier or contracting an agency to take charge of your marketing strategy, there are a huge number of B2B transactions that occur on a regular basis.

When it comes to volume, B2B payments by far eclipse their B2C counterparts. Businesses tend to order in greater bulk and at a higher value than consumers. For the sake of convenience and security, B2B transactions are often facilitated digitally. In fact, a 2020 Gartner report states that 80% of B2B transactions will take place over digital channels by 2025. 

And when you make or receive any payment as a business, it’s important to consider any transaction fees you may incur. This is where B2B payment systems come into play. These allow qualifying merchants to take advantage of lower processing fees for large transactions typical of B2B payments.

As well as considering these rates, you should also consider whether the payment system can accept various payment methods and how it deals with invoicing. Keep reading to find out more about B2B payment solutions and how they can support your business.

What are B2B payments?

B2B payments are transactions that occur between two businesses rather than between a business and a customer (B2C) or two individuals (P2P or Person to Person). B2B transactions tend to be larger and involve different processes that make them more complex than B2C payments.

Benefits of B2B payment solutions

Embracing B2B payment solutions can benefit your business and your clientele in a number of ways. These include:

• They provide security assurances.

• Added automation helps to streamline your business cash flow.

• Digital records of transactions are created automatically and stored centrally, enabling businesses to better keep track of their accounts receivable.

• They ensure a frictionless buying process that helps to improve your customer relationships.

Popular B2B payment methods

The cash flow requirements of the entities involved in B2B transactions are invariably more demanding and complex than their B2C counterparts. As such, flexibility is extremely important in B2B payments. Businesses that service other businesses benefit from offering various payment options to help their clientele better manage their finances. 

B2B transactions leverage a range of payment methods, each offering distinct advantages and potential drawbacks. Understanding these can aid SMBs in selecting the most suitable method to streamline their financial operations:

Cards: Card payments are universally accepted, facilitating domestic and international transactions. They provide quick payment transfers but can incur high processing fees and are prone to failure creating customer churn and a high level of manual admin. Furthermore, potential security risks require robust fraud detection systems.

Invoicing: Invoicing is an efficient method to maintain transaction records, enabling easy financial management. However, it can be time-consuming and invariably results in late payments as you are relying on your customer to take manual action before you are paid. With a service like GoCardless, you can automate the whole payment collection process, meaning you always get paid on time.

Automated Bank Payment: Automated bank payments, such as Direct Debit, streamline payments by automatically transferring funds from the payer’s to the payee's bank account. While this method eliminates late payments and improves cash flow, setup can involve layers of complexity. GoCardless by contrast does all the heavy-lefting for you, meaning you can be set up and ready to take payments the same day.

Digital Wallets: Offer ease of use and instant payments, boosting customer satisfaction. However, they rely on internet access, being card-based come with relatively high fees, and potential security vulnerabilities must be addressed through effective cybersecurity measures.

Cheques: Although traditional, they offer tangible proof of payment and can be beneficial for large amounts. However, they are gradually falling into disuse due to their slow processing times, higher risk of fraud, and environmental concerns associated with their paper-based nature.

Best B2B payment solutions

Let’s look at some of the most trusted B2B payment solutions today.

GoCardless

For B2B payments, GoCardless offers easy access to bank payments, allowing businesses to lower costs, reduce failure rates, and eliminate late payments. Ease of use and automation allows businesses to save time on payment processes. GoCardless makes things easy for merchants, providing a single dashboard to access all their payment data. 

Furthermore, GoCardless integrates with 350+ business software solutions, such as major accounting platforms such as Xero, further expanding automation and saving businesses time and money on financial admin and credit control. 

Finally, GoCardless can seamlessly collect international payments in over 30 territories for direct deposit into UK bank accounts at the most favourable exchange rates for businesses with overseas customers.

PayPal

One of the most common and well-established B2B payment processing platforms is PayPal. Some main features you can access with PayPal include accepting online payments, barcode scanning, inventory tracking and e-commerce capabilities. They also offer online invoicing and even buy-now-pay-later financing options. One of the key strengths of PayPal is that it is widely recognised and accepted worldwide.

You’ll probably want to start a business account if you’re using PayPal as your B2B payment system, and pricing for this varies depending on the specific features you require.

Stripe

Another big player in the world of B2B payment methods, Stripe, is a US-based company that aims to make online transactions simple. Their focus is on ease of use, and new users should be able to get to grips with the interface relatively quickly. In addition, they offer an API that allows you to customise the platform and streamline the process, but you’ll need a developer to do this.

Stripe operates on a pay-as-you-go basis, meaning that you are charged as a proportion of your transactions. Depending on your sales volume, this could end up being cheaper or more expensive than paying a flat monthly fee. Stripe could be a relatively expensive method for B2B payment processing, particularly for those with very large transactions.

Square Payments

Square Payments is a B2B payment system that works well for businesses that also have a lot of B2C transactions since they offer a free POS system that allows you to keep track of customers and sales. In addition, they have competitive transaction fees and do not impose any chargeback fees.

The downside of Square Payments is that they do not serve high-risk businesses, so you may not be able to use this if you operate in an industry such as travel or finance. Moreover, their capacity for cross-border payments is limited, so it may not be the best choice for multinational businesses.

Wise

Wise (formerly known as TransferWise) could be a good option for B2B payment methods if you're a small business that makes transactions with international companies. They specialise in processing international payments without additional fees, allowing you to open multi-currency accounts to accept payments in various currencies.

Setting up your Wise account is initially free, but there are some fees involved with funds or converting to a different currency. In addition, they do not allow you to accept credit card payments, forcing you to use wire transfers instead. Wise may not be the best choice for businesses that carry out many card transactions.

What to consider when choosing a B2B payment solution

Businesses have the luxury of choice when it comes to choosing a B2B payment solution. But that’s not to say that every solution on the market is equally suited to your operation. Here are some things to keep in mind when choosing the right B2B payment solution for your business:

• What fees and charges are associated with the payment solution? How will they impact your cash flow?

• How are you charged? Are there up-front fees? Do you pay a percentage of each transaction or both?

• What safety and security assurances does the provider offer?

• Does it make the transaction quick, easy and frictionless for the customer?

For more information, read our comprehensive guide to choosing payment methods. 

Creating an online payment system that gives customers the assurance they need while enabling healthy cash flow can be a real challenge for SMEs. Fortunately, it is not a task that you need to face alone.

Key takeaways

• There are various B2B payment solutions that can support businesses by providing competitive fees, security assurances, streamlining cash flow with automation, maintaining digital records, and improving customer relationships. 

• Popular B2B payment methods include manual bank transfers (invoicing), card payments and automated bank payments (Direct Debit) and, less commonly these days, cheques. 

• When selecting a B2B payment solution, businesses should consider factors such as fees and charges, the payment structure, safety and security assurances, and the ease of the transaction process for customers​. 

• Among available solutions, GoCardless offers easy access to automated bank payments with an interface that integrates with 350+ business software solutions, thereby saving business time and money. 

Case study

Capital on Tap has been leveraging GoCardless to collect monthly repayments from over 200,000 small business customers, effectively supporting their operations. GoCardless enables customers to schedule their payments conveniently and guarantees timely transactions, improving efficiency and cost-effectiveness for Capital on Tap. Damian Brychcy, Chief Operating Officer, noted that the system significantly reduced the overhead and cost of managing repayments by 90%.

Brychcy added, underscoring GoCardless's ability to scale domestically and internationally. Furthermore, GoCardless's Protect+ feature has enabled Capital on Tap to challenge unfair chargebacks, recovering approximately £34,000 that would have otherwise been lost.

Adam Cozens, Managing Director and Co-founder of Perky Blenders, one of Capital on Tap's customers, praised both companies' simplicity and trackability, stating,

Capital on Tap and GoCardless are looking forward to implementing innovative features, such as Variable Recurring Payments powered by Open Banking, to simplify and accelerate payments. Brychcy concluded:

We can help

Establishing a payment solution is simple with GoCardless, which is designed for efficiency and ease of use. The automation features of GoCardless considerably lighten your team's workload, managing invoices and other related tasks without fuss.

The process of getting started with GoCardless is speedy and straightforward. With no contracts or long-term agreements, you can get started today risk-free. Setting up an instant, one-off, or recurring payment on the merchant dashboard is a matter of a few clicks. GoCardless does everything for you, creating and sending all required forms and reducing your workload substantially. Expand this automation via more than 350 partner integrations, including Xero and Quickbooks.

Frequently Asked Questions — FAQs

What are the most popular B2B payment methods?

Among B2B transactions in the UK, traditional bank transfers are commonly used for their security. Digital platforms like PayPal are favoured for their global reach, while credit cards offer speed and convenience. However, GoCardless stands out, simplifying recurring payments and optimising cash flow for SMBs. So, popular B2B payment methods include bank transfers, PayPal, credit cards, and Direct Debit services like GoCardless.

What payment method is good for small businesses?

For small businesses in the UK, a good payment method balances convenience, security, and cost-effectiveness. Traditional bank transfers and credit card payments are common for reliability and ubiquity. Digital platforms like PayPal are also prevalent due to their ease of use and international scope.

GoCardless emerges as a compelling option, particularly for recurring payments. By leveraging Direct Debit, GoCardless offers a cost-effective solution that can help small businesses improve cash flow, reduce transaction fees, and automate payment collection, making it an excellent choice for small businesses.

How do I set up B2B payments?

Setting up B2B payments in the UK involves selecting a suitable payment method, such as bank transfers, credit cards, or digital platforms. GoCardless is an excellent choice for recurring payments, automating Direct Debit payments for cost-effectiveness and improved cash flow. Establish clear payment terms and always conduct transactions over secure, GDPR-compliant systems.

What is the trend in B2B payments?

The B2B payment landscape in the UK has seen a marked shift towards digitisation and automation, largely driven by the need for enhanced efficiency and cost-effectiveness. More businesses are adopting automated payment solutions like GoCardless, which excels at managing recurring payments through Direct Debit. This trend streamlines payment processes, optimises cash flow, and reduces transaction fees. 

Furthermore, the demand for real-time payments and the need for improved data security are steering the evolution of B2B payment systems, reflecting a broader shift towards more innovative, secure, and customer-friendly payment solutions.