No business is an island. Your business needs other businesses to survive and thrive — and you need a way to pay those other businesses for their goods and services. Unfortunately, the process of managing B2B payments is often fraught with challenges. If you want to maintain positive working relationships with business vendors and avoid headaches (and heartaches) associated with B2B payments, consider the following common challenges and the best solutions:

b2b payments

Poor Interoperability Between Businesses

Perhaps the most common challenge of all B2B payment–related concerns is that transacting businesses tend to have contrasting natures. Payment terms, preferred choice of payments, decision-making rounds and more will differ between organizations, which makes processing payments remarkably difficult. For example, it is typical for vendors to prefer bank transfers, but you might prefer another form of payment to avoid the high transaction fees associated with transfers. When business systems do not operate easily together, payments will take more time and energy to complete.

Security Concerns

More businesses than ever are relying on digital systems to organize data and manage essential processes. On one hand, this can make it easier to track and complete B2B payments; on the other hand, it means that you need to be especially careful to build and maintain digital security to protect your business from data breaches and attacks. You should avoid sharing confidential information about your organization or its customers with any third party, as you have little to no control over another business’s digital security. An effort to maintain security might slow business payments, but it is better that payments occur slowly and securely than that they expose your company and customers to disastrous data breaches.

Broken Financial Workflows

Despite the availability of a number of advanced digital tools that allow for workflow automation, many businesses maintain a number of manual tasks that slow and even halt financial productivity and payments. For example, an organization might employ manual tracking of invoices or require communication about payments across teams. You should strive to eliminate manual tasks in your financial workflows as much as possible, and you should encourage any business partners you maintain to do the same.

Poor Transparency in Money Flow

If a company cannot predict with any certainty the availability of money, it will not be able to direct flow of money toward business payments. Before you worry about mistakes and challenges in B2B payments, you need to ensure that you have excellent transparency and tracking of your cash flow through every corner of your organization. Then, when it comes time for you to make business payments, you know where to acquire the money necessary to pay on time and in full.

Delays in Fund Settlement

Already, most business payments occur within a window of time — usually about 30 days — and you should not make it a habit to expect payment before the last day of that period. Unfortunately, some methods of business payment could delay payment even further by requiring a settlement period, in which amounts are reviewed and transferred. Before you make any budgeting plans regarding business payments, you should know exactly how long it will take to acquire your payments given the methods of payment determined by your contracts.

High Overhead Expenditure

To guarantee speed and security in business payments, most methods demand a percentage of the value of the payment in transaction fees. Some methods also charge a flat fee for the convenience of the service. You might investigate the overhead expenditure required of different types of payments and make a blacklist of certain payment methods that your business cannot afford. Then, during negotiations with business partners, you can make it clear which payment methods will be unavailable to them.

Insufficient Digital Maturity

If you are using paper at any point in the payment process, you are unnecessarily inviting chaos into your B2B relationship. Everything from contracts to invoices to payments should be digital, which makes it much easier for both parties to keep accurate records, pay on time and maintain a positive working relationship. You should start investing in a digital transformation that allows for greater maturity in your payment systems and in any other corner of your business where efficiency can be improved.

No matter what kind of business you run, you will interact with other businesses — and you need to develop seamless strategies for completing B2B payments. By recognizing the challenges listed above, you can make a plan for perfect B2B payments into the future.