How can modern B2B payment solutions help your business in Singapore?
The demand graph of consumers never remains constant. It is constantly evolving. In the meantime, businesses are focusing on B2B payment solutions to meet customer demands on time.
The pandemic has paved a smooth path for contactless transactions to flourish. Consumers prefer digital wallets to initiate transactions. Now, what about the sector of B2B payment services?
B2B payment solutions are quick and convenient in initiating business transactions. If your business transacts with multiple companies, it’s worth shifting towards B2B payment platforms.
In this article, you’ll get to know how B2B payment solutions are beneficial for your business in Singapore.
Before understanding the role of B2B payment solutions in your business in Singapore, you must know what B2B payment services actually mean. The acronym B2B stands for business-to-business services.
When transactions are done between multiple businesses rather than with customers, it is known as B2B payment services. In simple words, B2B payment solutions mean the exchange of services and payment between two firms.
The B2B payment method is completely straightforward. The B2B merchant sends an invoice to other companies, which needs to be paid within the specified timeframe.
The merchants usually have monthly, quarterly, or annual payment terms. For instance, if your company facilitates IT solutions for other businesses, then it is also a part of B2B payment solutions.
Singapore is considered a significant hub for startups. With so many businesses around, the competition rises, and the payment process becomes complicated.
In a recent report, DBS mentioned that B2B payment solutions are expected to grow in Singapore at a 5% Compound Annual Growth Rate (CAGR).
However, it will take time to flourish because of the manual B2B payment services adopted by businesses in Singapore. Manual processes are time-consuming and involve risks of human errors.
Businesses in Singapore cannot stick to traditional B2B payment solutions for a long time. Installation of AP solutions to facilitate their B2B payment services.
AP solutions are suggested as they can help businesses stand apart in the competitive market of Singapore.
Businesses in Singapore are already into B2B payment solutions. But they are still using traditional B2B payment cycle work, which is less reliable. The traditional form of B2B payment services is mentioned below.
The initial stage of traditional B2B payment platforms is initiating purchase requests. The merchants detail their requirement of services to the other businesses. The purchase request marks the beginning of a buyer-seller relationship.
The purchasers can convey their intention to buy through different communication channels. Later, a physical purchase order is initiated by the merchants to confirm their purchase request.
In response to the purchase order, the B2B merchant initiates an invoice to the purchaser. Invoices play a major role in B2B payment services.
It is because invoices contain the agreed payment timeframe between the buyer and the seller. Once the deal is confirmed, the seller creates an invoice with the necessary details about their selling-purchasing process.
Invoices appear in paper form, either typed or hand-written. It is then sent to the purchaser via messaging or email. The buyer accepts the invoice.
However, the risk of fraud is involved in this kind of B2B payment solution because the buyer may provide the wrong account details. Also, employees may enter their personal account number in the invoice.
The third step involved in the traditional B2B payment solution is acceptance of the invoice by the purchaser. The finance department then reviews the invoice.
The finance team scans the invoice and enters the details manually in their accounting system. Further, they keep a copy of the invoice to keep it safe from being misplaced.
The CFO office has several key decision-makers in the cabin. They go through the review given by the finance department and begin the approval process.
Generally, the CEO of the company, along with 2-3 other employees, is authorized to approve the B2B payment process on behalf of the company. Once the invoice is approved, the finance team is informed.
Once the approval process is over, the finance department initiates the payment to the seller within the specified timeframe.
It lies in their hands whether to make payment immediately or wait till the agreed time for the B2B payment process. The payment is made either through cash or cheque.
The final step of a traditional B2B payment solution is a reconciliation of transactions. Once the payment is made, it is the responsibility of the finance department to record it in their accounts during the time of closing balance.
These were the steps involved in the traditional B2B payment platforms. Therefore, it is beneficial to opt for AP solutions to facilitate B2B payment solutions.
Businesses face several challenges while using traditional B2B payment solutions. Some of the major issues faced by businesses are mentioned below.
The traditional method of B2B payment services depends heavily on manual processes. Starting from the generation of invoices from the seller to receiving payment from the buyer, everything’s done manually.
Manual processes are time-consuming. Also, they are less reliable B2B payment methods. The finance department suffers the most due to the manual processes. They need to spend their time manually reviewing a bulk of invoices daily.
Once the payment cycle is over, it becomes difficult to track past details in the traditional B2B payment solutions.
This is because, during the entire course of the B2B payment services, nobody in the firm knows how, when, and for what money is transferred to the seller. Therefore, it is clear that traditional B2B payment methods lack visibility.
The traditional B2B payment solutions often become the cause of late payments because of misplaced invoices. Because there are a bulk of invoices to be handled manually, the finance team ends up creating a mess.
Sometimes, the seller even files a case against the buyer for misplacing the invoice and delaying payment. Delayed payments affect the goodwill of a company. It disturbs the buyer-seller relationship.
The chance of fraudulent activities is higher in traditional B2B payment solutions. Sometimes, the buyer may provide the wrong account number of the business.
Also, fraud can be done on the seller's side. The seller’s employee may provide his personal account number while adding details to the invoice.
Every human is prone to committing errors. Invoice details are entered manually in the traditional B2B payment methods. For instance, your employee has been overworking.
He may enter the wrong account details in the invoice out of fatigue. Also, he may enter the wrong amount of payment. In traditional B2B payment services, it is difficult to rectify human errors.
As we have seen above, the traditional B2B payment process is hectic. The seller generates an invoice in response to the purchase order. The buyer’s finance department reviews it.
After reviewing, the finance team transfers it to the higher authorities for approval. In case they have a number of invoices to be approved, the approval process becomes lengthy.
Every business in Singapore faces these drawbacks regardless of its size. AP solution is the solution for all the challenges thrown by traditional B2B payment solutions.
The trend of including automation in the B2B payment platforms is a never-ending trend. AP solutions save time for your business to focus on other growth opportunities.
The B2B payment solutions have made many advances with the merging of AP solutions. The finance department can easily review a bulk of invoices and can transfer them to the authorized approvers.
Also, automated B2B payment platforms are capable of initiating payment to the seller’s account within seconds. It has eliminated the requirement of manual tasks and is free from human error.
Therefore, it is beneficial for your business in Singapore to replace traditional B2B payment solutions with AP solutions.
What does it take to make B2B payments easier? The answer is, Volopay!
Volopay is the best financial management software. It includes features that help in organizing and automating business functions and also makes B2B payment procedures simpler.
With facilities and features like Virtual cards, multi-currency digital wallets, business bank accounts, and real-time transaction data, the procedure of making B2B payments becomes extremely simple.
Volopay’s virtual cards allow the heads to set spending limits and choose the kind of transactions that need to be made.
If it is a one-time payment, then you can use virtual burner cards, or if the payments are regular or monthly, you can use recurring payments virtual cards. Moreover, multi-currency digital wallets open your business to many major areas.
These digital wallets can be used to make payments in more than 65 major currencies. Plus, real-time transaction information, payment approvals system, and business bank account facilities are the best B2B payment solutions.
Make uninterrupted payments with Volopay!