Numerous factors contribute to building a successful business. Being able to satisfy your customers and give them what they want is a significant advantage. One of the most in-demand services today is providing multiple payment options that are quick and accessible.
Recent studies from the Federal Reserve revealed that 83% of businesses are already using faster payment methods, and 66% of companies say they’re likely to choose faster payment options more often in the future.
After navigating several economic obstacles, 62% of businesses said cash flow management was one of their most impactful challenges and reported they needed greater flexibility and speed in their payment options. And 45% believe faster payments will lower their costs. They also want quicker/instant payment options to pay bills (36%) and make payroll (32%).
The Federal Reserve said, “Access to faster payment options, including instant payments, is now seen as indispensable rather than a nice-to-have.”
Another challenge is tailoring the payment solution to the client. Businesses have different needs at different times, and your company needs to be prepared to offer clients and vendors the options they want.
Payments 101 for small and midsize businesses (SMBs)
As your business scales, it’s important that your company offers multiple payment options to your clients and vendors. A one-stop-shop payments platform that provides end-to-end transparency and visibility, and gives you flexibility over the payments process is ideal. You want the ability to choose a payment method, pay bills, and track payment info—all from one platform you can access from anywhere at any time.
Finding the best tech partner
As your business grows, you should be looking at partners and vendors you’re working with to ensure they can help you scale the operations for your business needs.
Cash flow is essential to business survival. You should look for technology partners that can provide a variety of choices to help you manage cash flow, such as offering options for same-day and next-day payments and the ability to defer payments by using credit cards.
Danny Goossens, CEO of Translators USA, says that BILL, a leading financial operations platform for SMBs, has helped them manage payments more efficiently. “Our vendors love BILL. I can even pay them faster when they need it. Want it expedited? I can do that. Overnight the check? Sure! I love the diversity of payment possibilities that I have with BILL.”
Look for a tech partner that:
- Focuses on improving efficiency and productivity by having all your payments (domestic and international) on a single platform that allows you to easily and quickly track their status.
- Gives you better control of your cash flow by offering options for same-day and next-day payments and the ability to defer payments using credit cards.
- Reduce costs. Some platforms offer low- or no-cost payment options.
- Syncs with your accounting software to reduce manual data entry and increase team productivity.
- Reduces risk. Secure digital payments eliminate the risk of check fraud and paper check theft.
Exploring the best payment options for your business
Most businesses need to find a flexible payment platform offering the best balance of cost, payment options, and payment speed. Here’s an overview of various payment options to help you make the best choices for your business. While today, companies can choose from multiple B2B payment options to offer vendors, it’s challenging to know which method works best for them at what time.
Standard payment options for B2B companies:
- ACH
- International wire
- Paper checks
- Credit card
- Virtual card
- Real-time payments
ACH
ACH stands for the Automated Clearing House network, a secure system for bank-to-bank transfers of digital payments. ACH transactions don’t happen in real time. Typically, they take several days to process, but are faster and involve less manual labor than writing paper checks. They also have lower fees than processing credit card payments.
Average payment time: 3 to 5 days
Cost: Typically, less than $1.00
Advantages:
- Inexpensive
- Faster and more secure than paper checks
- Less manual labor
Other considerations:
- Typically used for domestic payments since few banks support international ACH
- Not all vendors accept ACH payments
- Cut-off times for same-day or next-day payments vary per provider
- The typical maximum allowed is the $1 million same-day transfer limit
Optimal use case: Use this low-cost, secure digital payment option to pay domestic suppliers who accept ACH payments when payments don’t need to be made and received urgently.
Benefits of using BILL ACH
- ACH via BILL is more secure than paying via a bank’s ACH, as both parties never need to share their bank account info with each other—each party manages their own banking info within the BILL portal
- Ability to track the status of your payments and estimated time of delivery
- Ability to expedite same-day or next-day payment delivery for a nominal fee
International wire
In an international wire transfer, the payer sends electronic payments to a payee in a different country, either in local currency or U.S. dollars (USD). If sent via a bank, an international wire may cost as much as $60 per transaction and typically involves completing time-consuming wire transfer forms.
Intermediary banks often add lifting fees, whether paying in local currency or USD. While domestic wires are nearly instantaneous, international wires typically take from 1 to 5 business days.
Average payment time: Typically, 1 to 5 business days
Cost: $38 wire transfer fee in local currency (industry average). Note: Based on the average published fee for outgoing international wires in local currencies, charged by the top 10 U.S. banks according to the FDIC. This fee excludes currency conversion rates.
Advantages:
- Faster, easier, and more secure than paper checks
- Can pay in local currency or USD
Other considerations:
- Can be more expensive, especially if using a bank wire
- Requires recipient to provide banking account information to the payer
Optimal use case: For payments to international vendors, typically for large amounts.
Benefits of using BILL international payments:
- $0 wire transfer fee and competitive exchange rates when paying in local currency; plus, you avoid lifting fees from intermediary banks
- $14.99 wire transfer fee when paying in USD
- Payments can be sent from the United States to 137 countries and 106 currencies
- Recipients can self-enter bank account information in the vendor portal to keep their information private
Paper checks
Paper checks are the most traditional form of payment, but they are becoming less popular in today’s digital age. Paying by check is slow and requires a lot of manual effort.
Paper checks use a check-clearing system to process payments, which usually takes several days to clear the batch process. Checks also require a lot of extra work (from approvals to mailing) and create overwhelming stacks of paper.
Perhaps the biggest issue with checks is the mailing process, which has little to no tracking information or confirmation of delivery. Traditional paper checks also include the sender’s banking information, creating a security risk if they are lost or stolen.
Average payment time: Depends on the check-clearing process and delivery method
Cost: Includes the cost of the paper checks, mailing supplies, stamps, manual labor, etc.
Advantages:
- Familiar payment method that some vendors still require
- Doesn’t require the recipient to share banking information
Other considerations:
- Paying by check is a time-consuming, manual process
- Slow, generally dependent on USPS mailing time
- Less secure than digital payment methods
- Checks can get lost in the mail
- Usually tracking is not available, so there’s less transparency
Optimal use case: For paying vendors who don’t accept digital payments and still require checks.
Benefits of using BILL paper checks:
- No need to manually sign or send checks
- Checks are automatically printed and mailed for you
- Your bank information is not exposed
- Reduced risk of fraud and rich remittance information are included for easy reconciliation
Credit cards
Businesses that want to optimize cash flow by deferring payments to their next credit cycle prefer to pay by credit cards. Credit cards are also popular because many allow you to collect perks, such as points, miles, or cash rebates, while you pay your vendors. Although credit cards are one of the fastest payment options, they typically have a transaction fee.
Average payment time: Funds typically settle within 1 business day
Cost: Fees are typically a percentage of payment
Advantages:
- Can defer payments to the following credit card cycle to better manage cash flow
- Earn rewards from your credit card issuer
- Faster payments than ACH or check
- Common payment form
Other considerations:
- Some vendors don’t accept credit cards
- Standard credit card fees charged to either business or vendor
Optimal use case: For businesses that want to earn credit card rewards when paying bills and defer payments to better manage cash flow.
Benefits of paying by credit card through BILL:
- BILL’s version of credit card payments—Pay By Card—lets you make payments within BILL using a credit or debit card, even if vendors don’t accept card payments
- Payments are sent to vendors as ACH, check, virtual card, or wire, depending on how you’ve set up your vendor in BILL
- Payments by credit or debit card from major card companies
- Visibility into when payment is expected to arrive
BILL’s option to use Pay By Card is also helpful for startups. The finance team at blinkcns, a biotech company, says being able to pay by credit card with minimal fees helps them save time and better manage cash flow, which is beneficial for extending cash availability.
Virtual card
A virtual card is a 16-digit, one-time-use credit card token that serves as a proxy for a physical credit card with a persistent number. Because the card number/token can be used only once, virtual cards offer a layer of protection and security to card payments since they specify the payment amount and expiration date.
Virtual cards are typically distributed to the vendor via an email that contains remittance information about the invoices being paid. Once received, the vendor enters the single-use card number into their merchant processing system to get paid.
Average payment time: Typically delivered within 1 to 2 business days
Cost:
- Varies depending on the financial institutions
- Virtual cards can help reduce costs associated with traditional payment methods, such as check processing fees or wire transfer charges
Advantages:
- Send payments faster than ACH or check
- Payers can easily track and reconcile transactions associated with virtual cards through digital banking platforms, saving time and resources
- Secure; since virtual cards are typically generated for a single transaction or for limited use, they can help reduce the risk of fraud or unauthorized transactions
Other considerations:
- Not all vendors accept virtual cards for payments
- Vendors may incur credit card processing fees
Optimal use case: For payers who want a fast, secure, cost-effective payment solution that streamlines processes and contains detailed transaction details.
Benefits of BILL virtual card:
- No transaction fees for payers
- Remittance info such as invoice numbers and customer details make reconciliation easy
- Payments can be delivered faster than sending a check or ACH
- Payment specialists who monitor and assist in making payments
Real-time payments
As businesses scale, the need for companies to be able to make fast or instantaneous payments increases. Real-time payments (RTP) allow real-time credit transfers between financial institutions 24/7, 365 days a year, including holidays and weekends. With RTP, payments are cleared in seconds, so your vendors can count on near-instant payments.
Average payment time: Money gets deposited in seconds
Cost: Typically, 1% of the payment
Advantages:
- Payments typically happen in seconds
- Payments can be sent 24/7, 365 days a year, including weekends and holidays
Optimal use case: Best for payers who need to make last-minute payments and for receivers who need early access to funds or require urgent/time-sensitive payments, including after business hours or on weekends and holidays.
Benefits of using BILL real-time payments:
- Both payers and receivers can get access to real-time funds through BILL RTP options
- For instant payments, BILL partners with RTP-eligible banks (most major banks) and offers debit card payouts for those without an eligible bank account
- A small fee of 1% (for payees) to leverage instant payments
- Payments can be sent and received 24/7, even on holidays or weekends, which helps businesses manage cash flow in real-time
Choose a payment platform that will grow with your business
As you grow your business, you must be agile and flexible and take advantage of today’s advanced technology. This includes being smart about choosing a payment platform.
Look for a robust and flexible payments platform that can scale with you and meet your future needs. Choosing the right technology partner that offers a variety of payment options helps you be more strategic managing your cash flow and optimizing your business for success.
