According to a report by Vantage Market Research, the global market for dedicated business-to-business (B2B) payment systems is growing at a CAGR of 10.2% (2021 to 2028) and is predicted to reach a market size of $1.6 trillion by 2028.
The way one business transacts with another for goods and services is inherently different from a business-to-consumer (B2C) arrangement. While cheques used to be the predominant mode of B2B payments, their use is now declining rapidly, according to Rick Fletcher, Group President of Corpay.
There are ample reasons for this: the scope of services, quantity of products, method of payment, and the aspect of recurrence, for example. Given these factors, a business-to-business payout solution needs more wiggle room. To cater to these special considerations, dedicated payment systems now exist for B2B that manage vendor payments efficiently.
The fact that electronic payments boost efficiency, according to AFP Payments Cost Benchmarking Survey, seems to be the major reason for the shift.
Let’s look at some compelling ways that help you manage vendor payouts smoothly using electronic payment systems.
5 foolproof ways to manage vendor payouts smoothly
Electronic payments are rapidly becoming mainstream because of the many conveniences they bring to the table. If your business is putting a merchant payout system in place, use these 5 methods to ensure it works smoothly:
1. Schedule your payments
All vendors need some working capital and flowing cash to function and fulfill orders. Leverage modern business payout systems that come equipped with the functionality to schedule vendor payouts and help businesses stick to the timelines well. This provides a threefold benefit:
- Ensures that there is minimal disruption of the supply chain with timely payment.
- Reduces the chances of a dispute with the vendors since modern digital payments are transparent and timely.
- Vendors and businesses have no difficulty trusting each other with an established standard operating procedure in place for payments.
2. Streamline accounts payable
Accounts are, by far, the most painful and cumbersome part of any business. While using electronic payments does bring convenience, it is still inefficient.
In the end, because of the remnant paperwork and manual reconciliation, your vendors would still be roped into the errors that occur inadvertently.
You can avoid such errors by adopting modern payment methods that are contactless and remote-friendly (like UPI). The best part is that such transactions record every detail of every transaction online and in real-time; there is no need for manual intervention, even for reconciliation or remittance activities in Accounts.
3. Include multiple payment options
Let’s say Vendor A prefers to get paid instantly because their supply chain requires heavy liquidity. On the other hand, Vendor B is okay with waiting for your accounts cycle to align with vendor payouts. Such preferences create roadblocks in the smooth functioning of commodity exchange.
One way to overcome this is to include multiple digital payout options that would position your business to help your partners deliver on time.
Your business would then be empowered to initiate instant transactions depending on vendor requirements and also receive cashbacks or other benefits through the same channels.
4. Automate your payments
Most of the processes in vendor payouts are mundane and clerical. There is no need for critical thinking or the involvement of a human to execute them.
For example, say that your business pays a certain recurring fee to a water supplier to install water dispensers at your workplace. This setup needs to run like clockwork; it doesn’t require human intervention. Automate all such payments to offload that much work from your team.
Not only would this reduce the burden on your workforce, but also give them more bandwidth to attend to tasks that actually do require critical thinking.
5. Move away from cheques
A MasterCard study conducted after the COVID-19 pandemic highlighted that more than one-third of the vendors surveyed cited delayed payments, slow processing, and problems with cash flow when cash or cheques were used for payment.
To ensure that your vendor payout mechanism doesn’t create similar problems for your vendors, adopt digital payments that pay instantly and automatically expedite other related processes (sharing invoice copies with both the parties, AP processing, and more).
Advantages of using vendor payout services/software
In addition to helping your business manage seller payouts effectively, there are several other benefits of adopting a good vendor payout software or service:
- The transactions are relatively safer as compared to manual payments. You have the option to add additional layers of security through passwords, encryptions, vendor verification, and safety questions.
- Vendor payment management services (or software) get the job done faster than manual processing and with fewer man-hours and a limited workforce.
- In the long run, adopting software for managing vendor payments would help you optimise the costs of accounts payable and payments processing.
- Streamlining vendor payouts helps your business create a better cash flow — for itself and the vendors.
- Timely payouts with minimal errors and quick processing help build a good relationship with vendors, which is always good for your business.
Managing vendor payouts with Plural Payouts
Streamline your vendor payments process with Plural Payouts.
Plural Payouts is a high-powered payouts processing platform built for online businesses. Fast-track and manage all your mass payouts with high-performance features:
- Marketplace settlements to equip you with order placements, commissioning, vendor payments, and reconciliation.
- Split payments to help you receive your part of the revenue while splitting the rest with vendors automatically, as soon as the payments come in from customers.
- Subscription models to set up recurring payments with customers easily and get visibility on revenues.
- Plugin compatibility that lets you do more with ease — Shopify, Wix, Magento, Zoho.
Plural sets your business free from the shackles of staying tied to a single platform — the integration capabilities let you connect various apps and products to the payments system seamlessly.
Make your business ready for scaling with the right vendor payment infrastructure. Digital payments are the future of commerce. Let your business take the next step of evolution by adopting efficient and speedy ways of managing vendor payouts.
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Plural by Pine Labs has received an in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator.
Amrita Konaiagari is a Marketing Manager at Plural by Pine Labs and Editor of the Plural blog. She has over 10 years of marketing experience across Media & Tech industries and holds a Master’s degree in Communication and Journalism. She has a passion for home décor and is most definitely a dog person.