When people think of payments, they tend to imagine consumer transactions, like paying for dinner or purchasing a sofa. But the vast majority of payments occur between businesses. Global B2B payments volume is more than $120 trillion annually, six times the volume of consumer payments.

Despite its outsized importance, B2B payments infrastructure is outdated and has benefited from few of the digital innovations that have transformed consumer finance. More than one-third of all B2B payment transactions are still conducted with cash or checks, costing businesses time and money, and dragging on the global economy.

In a recent survey, more than 40% of finance managers estimated their company loses around 5% of revenue each month due to payment processing inefficiencies. Ninety-two percent said they could increase earnings per share if they had better accounts receivable solutions.

Developing better systems for B2B payments is an enormous source of economic leverage that a growing number of businesses are already embracing. Many of them—like digital-native Atlassian or established B2B enterprises like Maersk and MAN—are turning to Stripe to modernize the way they process payments.

A better way to invoice

Inefficient accounting starts the moment one business sends a paper invoice to another—which is how 70% of all invoicing globally still takes place. Paper invoices are disconnected from software systems and trigger downstream friction that adds uncertainty to revenue forecasts.

To solve that, Stripe has developed online invoices with a built-in, electronic payment option. Companies like Snowflake and Typeform already use Stripe Invoicing to enable customers to pay directly, in the method and language of their choice, while remaining compliant with local regulations. Invoicing is connected with other systems and automatically ensures that invoices are consistent and accurate, and features recovery tools like card updater and smart retries that help optimize the percentage of successful payments. As a result, Stripe-hosted invoices get paid three times faster on average than typical invoices.

A better way to pay

Inefficient invoicing is one source of friction. Inefficient payment methods are another. Outside the US, companies often fulfill invoices through bank transfers. They’re low-cost and fast, but they create challenges for the receiving company around reconciliation and refunds. Bank transfers are also prone to error. It’s common for a business to pay the wrong amount, omit reference numbers, or enter incorrect bank account numbers.

Stripe recently rolled out a new version of bank transfers that addresses these challenges. It uses virtual bank account numbers (VBANs) to automate reconciliation, simplify refunds and return processes, and integrate directly with other systems like invoicing, subscriptions, and revenue recognition. Seventy percent of bank transfer users on Stripe have cut manual work on payments in half. The property management software company Yorlet estimates that Stripe’s new version of bank transfers will save 250 hours of manual reconciliation every year—time that’s better invested in optimizing the company’s core product.

Connecting systems

Many B2B payments take place on a recurring basis, such as a monthly subscription for a SaaS product. Businesses receiving these payments often try to reduce friction by establishing direct debit links with their customers—but setting them up can be difficult. To conduct ACH direct debits, for example, US businesses need to first verify customer accounts, typically through cumbersome microdeposits.

Stripe Financial Connections makes the verification step easy and enables businesses to establish direct online connections with their customers’ bank accounts. According to a recent survey among Stripe users, more than 50% of B2B businesses agree their customers would prefer to verify direct debits with Financial Connections than through microdeposits.

“We're excited to collaborate with Stripe to let our customers pay via ACH without having to wait days to verify microdeposits. It's great for our customers and for our development team, which can use a single integration to manage payments and bank account verifications,” said Alex Doroftei, head of global payments at Zoom.

From invoicing to payments, Stripe is creating a financial management platform for businesses. It opens the way to a more programmable future for B2B payments, and higher revenues.

“More efficient B2B financial infrastructure is a prerequisite for economic growth, especially given the current slowdown. We are investing in software that will make B2B payments and revenue management even simpler and less expensive in the future,” said Suzanne Xie, B2B payments product manager at Stripe.