Last Updated July 30, 2025
Essentially every company relies on other businesses for their own success in some capacity. As a business owner, you likely buy supplies, raw materials, or services from vendors, and you must trust that their payment processes are simple and organized. And of course, all these goods and services require that your business pay the other business in a timely fashion.
Therefore, understanding which B2B payment methods your clients and vendors prefer, as well as which are better suited for different types of transactions, will go a long way in helping you make and receive invoice payments in a timely and effective manner. Appropriate planning of your B2B payments will help you manage your cash flow and keep your business financially healthy.
How Do B2B Payments Work?
B2B payments occur any time one business pays another for goods or services. Because B2B transactions typically involve much larger payment amounts, the seller will issue an invoice to the buyer with payment terms specified, describing the payment due date, acceptable payment methods, and any other necessary information.
The buyer will review the invoice to ensure the purchase details have been outlined accurately. Depending on the type of transaction, multiple stakeholders within the business may need to approve the invoice before it is paid. If there are any disputes, the two sides will need to communicate with each other to resolve the disagreement or invoicing error.
Once any issues have been addressed (or if there are no issues with the invoice), the buyer will submit payment using one of the vendor’s accepted B2B payment methods. Once the money clears and is settled, the invoice is considered paid. Failure to pay in a timely manner may result in late fees or even possible legal action.
How B2B Payments Differ From B2C Payments
Breaking down B2B vs. B2C payments primarily comes down to a few key factors. First, B2B payments are usually much larger than B2C payments. While it is relatively rare for a B2C payment to be several thousand dollars, this isn’t unusual in the B2B world.
B2C payments must usually be made at the time the purchase is made. Even if the customer uses a credit card or arranges financing, some type of payment is typically made at this time. With B2B transactions, on the other hand, payment periods tend to be extended. Full upfront payment is rarely required. Instead, payment is usually due anywhere from 15 to 90 days after the invoice is issued, depending on its terms.
B2B payments can also be a bit more complex than a B2C transaction. Invoices for B2B transactions are more detailed than a B2C receipt, with itemized descriptions of products and services. They may also include early payment discounts or late fees. Depending on the type of business and transaction, payment may need to be approved by multiple stakeholders.
Most Common B2B Payment Methods
There are several B2B payment types that could be used for these transactions. There isn’t necessarily a best B2B payment method for every purchase. Instead, the best B2B payment method will depend on factors like the size and type of transaction.
Wire Transfers
Wire transfers are a fast and highly secure type of electronic funds transfer. While wire transfers aren’t used as often as other payment methods, they are very common for high-value transactions. Wire transfers are also a preferred payment method for international B2B payments.
The speed at which a wire transfer can deliver payment to another account also makes this a good option when a business needs to submit a payment within a tight deadline. For domestic payments, a wire transfer can be processed in less than 24 hours, often allowing for same-day payments. International transfers may take a few days because of time zone differences, conversion rates, and other factors, but this is still much faster than other options.
ACH Payments
ACH (automated clearing house) transfers are another efficient and straightforward way to transfer funds electronically. The funds are withdrawn from the payee’s accounts and deposited directly into the recipient’s bank account. ACH payments are commonly used to pay a business’s bills and employees, including freelancers or contractors. Many businesses use ACH payments as an alternative to checks.
ACH payments can usually be processed in one to three business days. While some banks offer same-day ACH processing, this usually requires an extra fee—something to consider for your business’s cash flow.
Credit Card Payments
Credit cards aren’t used as often as other B2B payment options, largely because of the processing fees charged by credit card companies, which usually range from 3-4% of the total value of the transaction. In addition, the credit limits imposed on business credit cards usually make them unsuitable for larger purchases.
Because of this, business credit cards are generally used for smaller individual purchases, such as paying for meals or hotels during a business trip.
Digital Payment Services and Apps
B2B online payment methods have risen in popularity over the last few years, with platforms like PayPal and Venmo offering fast and convenient payment solutions. Most digital payment services include options for same-day transactions.
Similar to credit card payments, however, the processing fees that are often charged on B2B transactions through these platforms make them less attractive for large payments.
Electronic Checks
Electronic checks act as a digital version of a paper check. Just like with a traditional check, the money will be withdrawn from the paying business’s bank account and deposited into the vendor’s account. Electronic processing can speed up the payment process in comparison to paper.
Paper Checks
Paper checks remain a surprisingly popular B2B payment method, largely because they provide a physical record of a financial transaction. In addition, they remain a familiar and trusted method for many businesses, particularly those that are less comfortable with digital payment methods.
Despite their “tried and true” use, paper checks can take longer to process. Physically mailing a check can be time-consuming and less secure than other payment options. Not being able to control when a vendor actually deposits the check can also create some uncertainty for the payee’s cash flow.
Common Challenges Associated With B2B Payment Cycles
While there are many payment methods that can be used for B2B transactions, many businesses experience their fair share of challenges in collecting payments. Here are a few common challenges:
- Lengthy payment terms could hurt your cash flow while you wait to receive payment from customers, unless you use invoice factoring to get a cash advance.
- Not having an automated system for creating and sending invoices could further delay payments.
- Manual invoice creation could result in errors that lead to disputes with clients.
- Lengthy invoice terms may require you to send automated payment reminders to clients.
- An inability to collect unpaid invoices can disrupt your ability to pay your own bills.
- Vendors and buyers sometimes have different preferred payment methods, leading to more inefficiencies.
- Certain B2B payment methods have high transaction fees and/or slow processing times.
The Importance of Automating Your B2B Payment Cycle
Invoice automation is one of the most valuable tools a business can use to improve its B2B payment cycle. By doing so effectively, you can improve your ability to manage invoices and get paid more timely, which will ultimately improve your cash flow and profit margins.
When you automate the invoices you send to your clients, you can reduce the processing costs associated with printing and mailing invoices or entering data manually. Automating data entry and the calculations to create an invoice can also reduce the risk of human error—a surprisingly common issue that can result in client disputes and delayed payments.
Automatically creating and issuing invoices will reduce the amount of time it takes your clients to process invoices and submit payments. Many automated systems also offer real-time tracking for invoices and their statuses. You can easily see which invoices have been paid, which are approaching their due dates, and which are overdue. This level of visibility makes it easy to schedule payment reminder emails as needed.
For your own payments, an automated system can help you avoid late fees and penalties, and possibly take advantage of early payment discounts, when available. Streamlining your office team’s workflow will help you maintain positive relationships with clients and vendors, giving you more predictable payment cycles.
In-Summary: Types of B2B Payments
There are several B2B payment methods that you could use for your transactions. In reality, most businesses will find themselves using multiple payment methods, depending on the types of transactions they are involved in.
By understanding the pros and cons of different payment methods, as well as aligning yourself with what your own vendors and clients prefer, you can better manage your cash flow with timely payments that minimize processing fees and other overhead.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
