CloudX Blog

9 Things To Know When Planning Your B2B Payment Processing Strategy

Posted by Chris Cosgrove

Sep 19, 2018 3:05:41 PM


Planning b2b payments strategy

Winding down Q3

As we throttle through what remains of summer, most accounting and finance leaders are dealing with the typical challenges of the corporate landscape during the the transition to the fall. We get it, time to wipe off the sunscreen, put away the beach chairs, and buckle down behind the laptop for some marathon sessions as Q4 and end of year planning exercises ramp up. It’s a good time to take stock of where you’re at presently, and begin the planning process for where you want to go as it pertains to B2B payment processing strategy. This article should help you have clarity about the things that must be a priority for your business as you explore B2B payment solutions for the upcoming year and give you a winning edge.


For certain, there’s never been a more complex time to assess all the goings on in the B2B payment processing arena. There are more ways to pay your vendors than you can shake a stick at, and though there are many options, not all are great and certainly not equal. As such, it’s the goal of this article to get you thinking about your options as you move forward this year so you can make solid decisions for your business..

Currently in the market you’ve got the following b2b payment types:


  • Paper check
  • ACH (Automated Clearing House)
  • Electronic Wire Transfer / EFT
  • Commercial Card
  • Virtual Payments

Paper Check

Checks have been in use for nearly 300 years, making it far and away the oldest item on this hit list, and while the fundamental points of the check haven’t really changed, some innovations along the way have modernized it to include, banking numbers for accounts, institutions, and the facilitation of MICR (magnetic ink verification recognition) technology along the bottom border.


Also known as automated clearing house, ACH is an electronic network for financial transactions in the United States that’s been around since 1974 and is governed by NACHA and US Federal reserve. It’s modernized how businesses conduct payments amongst themselves and has contributed to faster b2b payment cycles at a lower cost than checks.

Electronic Wire Transfer

Launched by Western Union in 1872 on its telegraph network, it's known for being reliable and is undergirded by SWIFT or Fedwire systems that have unparalleled immediacy and finality to the payment execution. This does come at a premium in terms of costs as we’ll see in a moment.

Commercial Cards

Commercial card refers to traditional corporate credit cards or purchasing cards. These are physical credit cards that empower business to transact and pay via existing credit networks from the likes of Mastercard, Visa, or American Express. They offer varying degrees of controls, flexibility, credit thresholds, and to an extent create float periods that are advantageous to payers. From the payee perspective, the drawbacks center on the merchant fees levied by the card network for processing the transaction and the intake portion from a processing standpoint.

Virtual Payments

Virtual payments are a newer outcropping in b2b payment types, but one of the most lucrative for payers. Essentially they create a single use credit card transaction that can fund the payment of one or multiple invoices. The upside here is that the payer harnesses the payment stream in order to tap into the interchange pool that enables them to create a stream of cash rebates into the business. Additional feature sets that are compelling are the visibility and controls latent in this payment type.

B2B payment types 

What are the nine things you need to know when you begin planning your B2B payment processing strategy?



1. Payment fees vary massively by b2b payment types.


As such, if you’re not quantifying what it takes and how much it costs to physically conduct payment, you’re not aware of how much that is helping or hurting your business.

  • According to The Accounts Payable Network, the average cost to process (authorize, print, and mail) is $5.14.
  • The average cost to process an ACH transaction per the Association of Financial Professionals is $.56 (between internal and external costs).
  • The average cost to process and EFT / wire payment is $14.42 again per the same AFP report.
  • The average cost to process a credit card transaction is nil from an internal (payer) standpoint but anywhere from 2-3.5% of the transaction which is incurred by the payee.
  • The same as the point above goes for virtual payments though,this generates a rebate stream back into the payer’s business anywhere from .5-1.25% of the eligible credit spend.

2. Check payments, though not inexpensive, are slow, and still make up the majority of b2b payment types in the US when considered categorically.


The reason for this really has to do with a few things we’ll look at in the following point, but primarily is centered around resistance to change and lack of any kind of mandate forcing change.


3. While it’s widely known that optimal b2b payment processing strategy centers on electronic payments, it’s ironic that many times there are numerous things that serve as roadblocks to actually adopting more efficient and beneficial b2b payment types.


Things as basic as corporate culture can effectively hit the brakes on initiatives that would otherwise create value and drive the organization forward. For others, legacy systems, such as AS400’s, can create all sorts of issues with manipulating and integrating data. This lack of flexibility can stymie the best intentions in terms of modernizing b2b payment processing for many businesses. Further, lack of clarity on security protocols or needs can also retard advancements made in this area.


4. Smart finance and accounting leaders recognize the time value of money.


When it comes to AP invoice processing, certain elements are fairly straight forward. Pay the bill on time and you don’t incur late payment charges that penalize you for missing your payment terms. Pay your bill early, and you can typically reduce the bill by some pre-negotiated or dynamic discount, typically in the 1-3% range.


However, for those who understand the implication of capturing early payment discounts, you’ll quickly grasp that the annualized return rate of netting a 2% discount dynamically or within a ten day payment cycles is the equivalent of bagging over a 36% investment yield. Not too shabby, and there’s a detailed breakdown of how that works right here!


5.The importance of visibility in B2B payment processing can’t be over-stressed.


This should be common sense for any kind of accounting manager, controller, or CFO, but having access to the pertinent payment details of a particular transaction is crucial. One of the key advantages to ePayments over traditional check payments is the latency factor. n other words, electronic payments methods provide better insight into the status of payments throughout their delivery and execution.


When sending check payments,for instance, there is a longer period of time for the receipt, processing, and settlement functions, which has some negative consequences from an insight perspective, but does have the benefit of check float, which matters more to some finance leaders than others.


However, things like ACH, virtual credit cards, and wire provide rich payment data and empower both payer and payee with a broader and timelier data set. Depending on what your perspective is, this is a value added area that is worth noting. The byproduct of enhanced insight into B2B payments is heightened cash management strategy and tighter alignment to treasury functions.In other words, an elevation of value for accounts payable from just data crunchers to key stakeholders in the process.


6. Get control over payment errors.


B2B payment processing whether in a fully, semi, or non-automated environment is going to have its fair share of transactions that contain some level of error. The fact is that the higher the volume of your transactions, the greater that number of errors will be, and from our perspective an ounce of prevention is worth a pound of cure.


B2B payment errors can range from anything as broad as a duplicate payment to incorrect amounts, incorrect vendor selection, to incorrect payment methodology (or one outside a vendor’s preference or agreed upon method), to a variety of others. Harnessing automation and business intelligence tools can help you quickly reduce your error rate, regardless of what it is. Things like duplicate payment detection can prevent redundant payments along with other areas like default payment instructions and much more. If you’re not actively pursuing improvements in this area you’re missing the boat and can set yourself up as Walter Sobchak so eloquently put it that, “’re entering a world of pain.”


7. Why virtual cards are pro.


We consider virtual credit cards to be the apex predator of the B2B payment solutions that are in the market. They boast extremely high security standards due to their nature of being temporarily active and that for single use. This level of security means that fraud instances on virtual payments usage is extremely unlikely.


Additionally, because payment data is transferring electronically, it can be disseminated dynamically and to both parties (payer and payee) and at a nominal cost. Obviously merchant fees are levied on the accepting organization, but in most cases it’s a cost of doing business and a means by which customer payments are facilitated.


Granted, reconciling the payments for the payee can be a trick but there are services in place now to accommodate and automate exactly that. The rebate stream generated is the real kicker here. When prior to virtual payments have corporate payments ever been able to be monetized other than in a dynamic discounting scenario?


8. Turns out companies are into reducing costs...go figure.


Here’s the bottomline on average payment costs by type:

Check - $5.14 to process, cut, and mail a check

ACH - $.50 per ACH payment factoring internal and external charges

Wire - $11-$15 per wire, yowza!

Virtual payments - Gratis, with the exception of the merchant fee passed on to the payee, anywhere from 2-3.5/4%, so touchdown for the payer!

If you’re lumping all your processing into checks and wire, that’s costly, painful and something you can obviate upstream through a better B2B payment processing strategy.


9. When it comes to B2B payment solutions, there’s a ton of different ways you can go, but not all ways are equal.


You certainly could cobble together relationships across the spectrum of payments, but how many people want to manage multiple relationships for different payment mediums…?

We think it’s better to identify a B2B payment solutions provider that can meaningfully address all of your payment needs across all payment methods. So that would mean one that could help you automate virtual credit card, check, ACH, and wire payments.


Additionally, another layer of value would be one that assists you with strategic functions like vendor outreach and payments solicitation. In other words, one that reaches out on your behalf to your vendors by levering a pending payment as a fulcrum to drive adoption to preferential payment methods. (FYI this is exactly something we do to drive virtual payment adoption rates higher so you get to taste and see that this payment stream is good).


Additionally, if it’s strictly down to payment delivery vehicles and you’re not trying to go upstream with payments by way of capturing dynamic discounts, you’re missing out even further. A solid B2B payments partner is going to have tools for you to enable you to create dynamic discount offers to your entire supplier base, whether or not you have pre-negotiated and established payment terms with your vendors. As such, if you’re not getting this out of our payments partner, you’re getting short-changed (sorry, but it’s the truth).





Hopefully this has shed some light on the b2b payment solutions landscape for you that will help guide b2b payment processing strategy as we get set to close out this calendar year. We have a treasure trove of great insights and content available here for you to continue to explore things like accounts payable automation and we’re always an email away, so reach out if you’re looking for answers!

Download The Four Keys To Maximizing The Strategic Value of Accounts Payable


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Topics: b2b payments, b2b payment processing, b2b payment types

Exploring Where Accounts Payable Software & ePayments Meet For SMBs

Posted by Chris Cosgrove

Dec 15, 2017 2:46:48 PM

prison mike.jpg

You know why they call me Prison Mike?

SMB’s can hardly be categorized “da belle of da ball” in the now famous Michael Scott, aka “Prison Mike” vernacular.  While they may have a bridesmaid and not the bride type rap, SMBs (small and medium businesses) make up nearly 97.9% of the United States’ 5.83 Million employer firms.  That is nothing to bat an eye at and until now has represented one of the last frontiers that is primed for process automation.

There are a variety of ways that automation is happening to the financial back office of the small business, whether you look at banking apps that simplify how checks get processed through mobile capture and manual indexing to things like accounting systems in the cloud that sync with your credit card provider to eliminate subsequent journal entries.

Some of the other, harder to reach areas include things that big corporates have been tackling for a while...invoice processing automation, epayments, and the like.  The intersection of these technologies, especially now through cloud based delivery methodologies essentially means a world of possibilities for small business leaders.  Not only can their processes be improved and transformed so they are virtually hands free and so that they have complete visibility, but they can literally be engineered to make their businesses make money.  This is no longer the realm of the big corporate only because cloud-based delivery has upended the traditional install based deployment model and paved the way for businesses of all shapes and sizes to follow in their footsteps.

With the expansion of repeatable integrations to key core SMB platforms like Quickbooks, Xero, Sage and such, moving data in and out is no longer a boondoggle and when we’re talking about automating how transactions get logged into a system that is otherwise reliant on manual entry, data manipulation and release is EVERYTHING.

Three Key Benefits to SMB’s Exploring Accounts Payable Software and ePayments

  1. Wave bye bye to data entry! - Through mobile (or desktop or MFP or email) capture, you’ll never have to enter another invoice into your accounting software.  Invoices and relevant documents get sucked into a capture process and enter your accounting software instance as if you had done the work.  Whether you want them be auto approved (assuming no GL coding is required and they match at a line level to open POs) you can shift gears to straight-through processing.  Gains in this area from a productivity standpoint are upwards of 80% to a manual process.
  2. Say hello to always knowing where your invoices are and what their status is! - This is a little thing called visibility and is kind of like a blind person receiving their sight.  If you don’t have sight, it can be difficult to imagine just how powerful seeing really is, but it is that profound.  Through a system integrated to your accounting software you can call up each and every invoice and understand every processing touchpoint, decision, payment name it, and never lose another invoice or miss a payment. POWERFUL!
  3. Count your blessings...and your benjamins! - This really pertains to those who would have the foresight to take automation all the way and get into payment optimization.  Through a simple epayments strategy tapping both virtual credit cards and ACH transactions you can divest yourself of approximately 50% of your check payments (maybe more).  Again, you save time, speed up the process, enhance controls, introduce visibility, and create a cash rebate flow back into your business fully flipping your back office cost center into a profit center.

If this seems too good to be true, well believe it.  We’ve seen numerous clients fully automate their process and enjoy the financial and operational benefits to automation and you can see that here!

Download The Four Keys To Maximizing The Strategic Value of Accounts Payable

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Topics: Accounts Payable Automation, accounts payable software, Invoice Processing, smb

Is AP Automation Worth It?

Posted by Chris Cosgrove

Nov 8, 2017 2:59:36 PM

Is AP Automation worth it? Depends what your building...

Count the cost!


It’s always a good idea to determine whether something you’re thinking about doing is worthy of the effort.  I mean, who goes blindly into a venture without first counting the cost...that’s just dumb!  Could you actually imagine some engineers, architects, developers, and construction workers looking at each other at a skyscraper site and just shaking their heads saying I can’t believe we can’t finish...the beancounters say there’s no funds left.  It’s ludicrous, because that would never happen (except maybe for that hotel in Pyongyang, but hey).

Though most Accounts Payable professionals don’t have extensive building construction expertise it is not entirely dissimilar in that the question needs to be asked before beginning the lift in terms of process automation.  Though AP automation is definitely a known entity, it’s more involved than in bygone years, especially with the advent of numerous B2B payment rails.  The thrust of what we want to bring into view today though is really the measurement by which one could assess the prospects of AP automation and determine whether it would be worthwhile.

Three perspectives that need to be considered:

  1. Financial costs - Certainly any project has a financial cost consideration to take from inception to completion, like our building example above.  In many cases, the end result is something that may have an intangible value, though that won’t cut it in terms of assessing the viability of bringing AP automation to bear.  In fact, most organizations that have brought transformation to their Accounts Payable function have done so for precisely two reasons: a. They had a desire to do things more efficiently and they knew that was possible and b. They had the foresight to realize that an improved process would have the directly proportional effect of driving their costs down, and thus they would eventually achieve a break even and ultimately return on their investment.  This whole model is well and good, though new ePayments mechanisms like virtual card are tipping the apple cart though as they afford businesses the opportunity to monetize their payment stream and literally flip AP into a profit center virtually overnight.

  2. Opportunity costs - What does not automating this onerous process mean to your business? How is a poor or suboptimal process impeding your doing business with vendors and ultimately your supply chain? Is it creating error in your process that is then getting found out through internal and external audits?  What are the impacts on your people, and not just your back office AP staff, but how are your approvers engaging with this and how much is the effort requiring of them and what is their time worth.  What comes of doing nothing in terms of improving and maintaining the status quo?  All of these questions need to be posited and then you must taken an honest inventory of the responses before determining what matters most.

  3. Resource / political costs - Some hills are worth fighting for and others worth dying for, though not all are worthy of a fight.  If you know you don’t have the personnel to pull a project off, in some cases an honest assessment before getting started is what’s absolutely required.  In other cases political infighting can doom a project before it finds its feet.  For some companies, areas and projects are more siloed and competitive and as such, getting an initiative can be challenging to say the least.  Either way you need to count the costs in this respect and determine how much support you have and how much ack ack you have coming at you and what the best path forward is.

From our perspective, staying mired in inefficiency, waste, and limited visibility is an absolute non-option.  So, granted that we’re biased in this area, but we’re also unapologetic advocates for improvement where possible, and via cloud based AP automation virtually any business can benefit from an improved process and one that monetizes each transaction coming through and going out the doors so to speak!

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

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Topics: Accounts Payable Process, ap automation

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