B2B payment automation is the process of using technology to manage and automate payments between businesses. This technology reduces the need for manual input, making the payment process faster and more accurate. According to a 2024 report, 45% of accounts payable professionals surveyed planned to achieve full automation of their accounts payable processes within the next 12 months.

Below, we'll discuss how B2B payment automation works, how it can improve operations, and how to implement it.

What's in this article?

• Types of B2B payments
  
• What is B2B payment automation and how does it work?
  
• Why is payment automation beneficial for B2B businesses?
  
• What processes can be improved with B2B payment automation?
  
• How to implement B2B payment automation in your organisation to drive growth
  
• How Stripe Payments can help
  

Types of B2B payments

Here are some of the most common payment methods used for B2B payments.

What is B2B payment automation and how does it work?

B2B payment automation means using software and technology to automate the B2B payment process. Here's how it works.

Invoice processing

• Automated invoice capture: The system captures invoice data electronically over email or electronic data interchange. Advanced systems can also scan and extract data from paper invoices using optical character recognition (OCR) technology.

• Invoice matching and approval: Automated workflows match invoices against purchase orders and delivery receipts. The system then routes the invoices to the appropriate personnel for approval.

Executing payment

• Payment scheduling: Based on the agreed terms, the system schedules payments and selects the best payment method. Businesses can set up rules to optimise payment times to take advantage of early payment discounts or delay payments until they're due for cash flow purposes.

• Payment processing: The system automatically executes payments as scheduled. Payment details are securely stored and managed to prevent unauthorised access.

Reconciliation and reporting

• Automatic reconciliation: After payments are made, the system automatically matches each payment with its corresponding invoice and records the transaction. This helps maintain accurate, up-to-date financial records.

• Reporting and analytics: The system creates detailed reports and analytics on payment activities, providing insight into spending patterns, supplier performance, and potential cash flow improvements.

Compliance and security

• Regulatory compliance: The system ensures all payment processes comply with relevant regulations such as tax and Anti-Money Laundering (AML) laws.

• Fraud prevention: Advanced security measures, including encryption and multifactor authentication, protect against fraud and keep transactions secure.

Why is payment automation beneficial for B2B businesses?

Payment automation can provide a wide range of benefits for B2B businesses. Here's a closer look at some of the potential advantages:

• More accurate financial records: Automation lowers the risk of human error, ensuring accurate data entry, calculations, and compliance while preventing costly mistakes.

• Improved cash flow: Automation accelerates payment cycles, reducing the time it takes to process invoices and make payments for faster collection and better money management.

• More time for major work: Automating tasks such as invoice processing, payment initiation, and reconciliation decreases the need for manual data entry and frees up staff for more important activities.

• Clearer visibility into cash flow: Businesses can track payment status in real time for more visibility into cash flow and outstanding payments.

• Smarter financial decision-making: Automated systems generate reports and analytics with valuable insight into spending patterns, supplier performance, and financial trends.

• Stronger supplier relationships: With automated reminders and on-time payments, companies can avoid late fees and maintain good relationships with suppliers. Some automation platforms can also take advantage of dynamic discounting.

• Greater supplier trust: Businesses can use automated systems to offer clear communication about payment status for better supplier relations.

• Room to grow without added overhead: Automated systems can easily scale to accommodate changing needs and higher transaction volumes.

• Easier expansion into new markets: Automation facilitates cross-border payments, opening up new markets and opportunities for expansion. For example, automation platforms can support multicurrency transactions and local payment methods, while automatically handling currency conversion and country-specific compliance requirements. This removes much of the manual work involved in paying international suppliers or getting paid by overseas customers.

• Greater protection against financial loss: With payment automation, the system can prevent fraudulent activities such as duplicate invoices and unauthorised payments.

• Reduced risk of penalties: These systems also help businesses adhere to regulatory requirements and industry standards, lowering the risk of penalties.

• Cost savings that outweigh the investment: B2B payment automation pricing varies depending on the provider and scope of features involved, and can include setup fees, monthly subscriptions, per-transaction charges, or a combination of these. While there's an up-front investment, many businesses find that the reduction in manual labour, errors, and late fees helps offset the cost over time.

What processes can be improved with B2B payment automation?

B2B payment automation can transform several processes across your business, including the following:

• Procurement: Automation can enhance the procurement process from requisition to payment by generating purchase orders based on inventory levels, managing selected vendors, and processing electronic invoices. It also helps businesses compare suppliers and manage negotiations through systematised workflows so they can get the best prices.

• Accounts payable and receivable: Automated systems can digitise invoices, match invoices to purchase orders, schedule payments, and execute transactions. In accounts receivable, they facilitate timely billing and faster collection by sending reminders for payments and processing incoming payments. These systems prioritise security and typically rely on encryption, tokenisation, and multifactor authentication to protect sensitive payment data and reduce the risk of unauthorised access.

• Customer relationship management: These tools can track customer interactions, analyse customer behaviour, and personalise communication. They contact customers at optimal times in their journeys and provide instant customer service through chatbots. Automation can also maintain an updated database that helps predict customers' needs and improve service delivery.

• Supply chain management: With automation, businesses can fine-tune logistics operations, track inventory in real time, and manage supplier relations by predicting inventory needs, initiating restock orders, and tracking shipments from departure to delivery.

• Compliance and risk management: Payment automation helps companies maintain compliance by tracking regulatory changes and adjusting internal processes accordingly. It can also analyse transaction patterns to prevent potential fraud.

• Reporting and analytics: Automated reporting tools can gather data from across business processes and generate detailed reports. This provides businesses with fast, actionable insight, which facilitates agile decision-making and long-term planning.

• Contract management: Creating, executing, and analysing contracts can be fully automated in a secure environment. Automation keeps contracts consistent and up-to-date with legal standards, and manages them throughout their lifecycles.

How to implement B2B payment automation in your organisation to drive growth

Implementing B2B payment automation is a multistep process that requires careful planning and strategy. When it's done correctly, automation can refine operations, improve accuracy, and drive business growth. Here are a few best practices to get started with B2B payment automation:

• Assess your current processes: Analyse your existing payment workflows to identify bottlenecks and error-prone areas. Collect data on payment volume, transaction types, and average processing times to understand the scope of automation required.

• Define your goals and objectives: Determine what you want to achieve with payment automation – whether it's reducing costs, making processes faster, improving accuracy, or all of the above – identify the processes that would benefit most, and prioritise them based on their potential impact.

• Choose the right solution: Explore the B2B payment automation solutions on the market and consider factors such as features, scalability, integration capabilities, and cost. Then, test how different options fit with your existing systems. Prioritise a solution that can grow with your business and a vendor with a proven track record and excellent customer support.

• Develop an implementation plan: Set a realistic schedule that allows time for data migration, system integration, and staff training, clearly define roles and responsibilities for everyone involved, and keep stakeholders informed throughout the process.

• Implement the solution: Customise the software to your specific needs, integrate it with your existing accounting or ERP systems, transfer relevant data from your existing systems, and thoroughly test the tool to confirm it functions properly and meets your requirements.

• Train your team: Provide your staff with complete training on the new system and processes, and stay open to feedback so you can address any concerns or challenges during the transition.

• Monitor and fine-tune: Monitor key metrics such as processing times, error rates, and cost savings to measure the platform's effectiveness, and regularly review and refine your processes based on data and feedback to improve performance.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, Stripe's consumer network.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payment performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.