B2B Ecommerce supply chain

Payment Options for B2B Commerce Versus Outsourcing Accounts

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A lot has been happening in the FinTech world to make payments between B2B companies easier. That said, there are still advantages to outsourcing the accounts function of your business to a third party. Here we explore both alternatives. 

B2B eCommerce and the Supply Chain

B2B equals business-to-business. B2B eCommerce encompasses eCommerce transactions that take place between two businesses. eCommerce means that this takes place digitally, or online, in other words. Products move from the manufacturer to the consumer. However, there are several intermediaries that facilitate this process. This process is called the supply chain

The manufacturer produces goods for consumption. These are transferred to distributors, who usually handle a geographical area. They distribute the products to wholesalers who receive discounts for handling large volumes. From the wholesaler, goods are bought by the retailer, and thus become available to the consumer.

Orders between the different parts of the supply chain are processed digitally. This is more efficient than a manual process. Yet many B2B companies see a benefit in outsourcing their payment systems to a company that deals specifically with accounts, human resources, etc.  

Payment Options for B2B eCommerce

A report on what is trending for B2B eCommerce found that the majority of eCommerce companies still use outdated payment methods. Purchase orders and paper checks are used by half of all businesses, while even more still make use of trade credit. Credit cards are still popular with 95% of firms despite their fees and steep interest rates.

A quarter of companies have started utilizing mobile wallets and a tenth employed third-party financing. China, the United Kingdom, and the USA use eCommerce for payments half of the time in 2021. This has risen to 65% in 2022. B2B companies who are not up to speed may find their partners choosing to work with other companies that do transact digitally.

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Two methods for eCommerce payments are to transact through an online portal, such as a website, or in a digital marketplace. The latter is known as an EDI system (electronic data interchange). The use of these sites is irrespective of the value of the item, whether it costs $5 or $5 million.

See here for a comparison of WEX and other options for payments in B2B eCommerce.

The Benefits of Outsourcing Accounts for B2B

A B2B may outsource its finance and accounting function to benefit from expert accountants and tax consultants. Ideally, a company should have a bookkeeper, accountant, finance manager, and chief financial officer. It is far more cost-effective to outsource than to hire these specialists. Additionally, the consulting firm will have all the in-house expertise. Because they handle numerous clients’ books, they have economies of scale and are equipped for the task.

Labor costs contribute heavily to business expenses. Employees need to be paid salaries and wages and qualify for various benefits. Outsourcing reduces overheads.

The staff has to be managed daily in terms of supervision, leave, and sick leave. A business owner may not be experienced with bookkeeping or accounting and find it hard to oversee these staff members. With outsourcing, the owner can be confident that the company books are well-managed and that no fraud has taken place. 

Ultimately, it is up to each B2B company to decide whether outsourcing or e-Commerce works best for them. 

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