Guide to B2B Payment Automation for Small Businesses: How-tos and More

How much time does your small business spend manually processing payments each month? What does it cost to process each payment? Business-to-business (B2B) payment automation, which many companies are already embracing, could be the key to helping you save time and money.

And yet, a significant number of businesses continue with manual processes and the difficulties they introduce. In fact, according to PYMNTS, only 5% of mid-sized firms have fully completed the automation of all AP and AR processes.¹

Unfortunately, a lack of automation can come at a high price for businesses. According to the Institute of Finance & Management, manually processing a single invoice costs a business up to $16. But automating this process can reduce the cost to as little as $3.²

Beyond cost savings, automation means fewer human errors, faster transactions and better fraud prevention. This article will explain what B2B payment automation is, why it’s valuable for a growing business and how you can start to automate B2B payments in your own company. We'll also discuss the Wise Business account. The global account that can help your company with all things cross-border.

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What Is B2B Payment Automation?

B2B payment automation is the process of using software and digital systems to handle business-to-business payments without manual effort.

Automating how your company pays vendors and receives payments from clients usually means moving away from paper checks, emails and spreadsheets. Instead, you use an electronic platform that manages the entire payment workflow, including invoice receipt, approval, payment execution and reconciliation.

Rather than your AP clerk printing checks or entering bank transfers by hand, an automated system can, for example, automatically schedule an Automated Clearing House (ACH) transfer to a vendor on the due date and record the transaction in your accounting software.

Automated B2B payments often integrate with your accounting or Enterprise Resource Planning (ERP) system. This way, invoices are captured digitally, approvals can happen online and payments are sent electronically through methods like ACH, wire or virtual card. The system can then mark the invoice as paid and update your ledgers, all with minimal human intervention.

Importantly, B2B payment automation is not just for major enterprises. Today, there are many cloud-based solutions that a 10- or 15-person company can use to automate payments without a big IT project.

Whether through your bank’s online bill pay, a dedicated accounts payable automation tool or a service for international payments, even small businesses can set up B2B payments automation to streamline their finances.

Why Automate B2B Payments: Key Benefits to Consider

Automation might sound like a big step, but it brings tangible benefits that directly impact your business’s bottom line.

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Next, we’ll look at how businesses actually make payments, whether manual or automated, and which methods are most popular today.

6 Most Popular B2B Payment Methods

Paper checks might have once been king, but now, businesses have all kinds of B2B payment methods at their disposal:

1. Paper Checks: Some businesses still mail checks when they’re paying another business. While some firms prefer the physical record this provides, checks are slow, require manual handling and carry a higher risk of fraud.
2. ACH Transfers (Bank Transfers): ACH transfers are electronic bank-to-bank payments commonly used for domestic B2B transactions in the U.S. They’re low cost, clear in one or two days and work well for recurring payments such as monthly bills or supplier invoices.
3. Wire Transfers: Wire transfers move money between banks, often through networks like swift for international payments. They’re faster than ACH (usually same day), but have higher fees, and they can’t be reversed once sent.
4. Credit and Debit Cards: These can come in handy for smaller purchases or online services. While they’re convenient and the rewards can be appealing, merchant fees make them less attractive for vendors handling large invoices.
5. Electronic Payment Platforms and Digital Wallets: Many businesses use electronic platforms or B2B portals to pay freelancers, overseas vendors or manage e-commerce transactions. While these options tend to be user-friendly and integrate with accounting software, they may charge fees and are more commonly found in B2C settings.
6. Real-Time Payments (RTP): Real-time payment networks (like RTP in the U.S. and SEPA Instant in Europe⁴) let businesses send and receive money within seconds, any time. FedNow now supports instant B2B payments in the U.S., and as adoption grows, companies may automate these for urgent needs like last-minute orders or emergency payouts.

The best option for your business will depend on a lot of things, but electronic options are clearly gaining momentum, largely thanks to the benefits of payment automation.

In the next section, we’ll discuss how you can start automating your payment process.

How to Automate B2B Payments in Your Business

Here’s a simple roadmap to get started with B2B payments automation:

1. Evaluate Your Current Payment Process: Start by mapping your current payment process, from invoice receipt to payment. Watch for pain points like slow approvals or complex reconciliation. Identifying these manual bottlenecks helps you choose the right automation features.
2. Digitize Your Invoices and Records: Automation relies on digital data, so now it’s time to switch from paper to e-invoices or scanned copies. Centralize incoming invoices using a dedicated AP email or tool, and build a vendor database with payment details. This setup allows your system to retrieve the necessary information without manual entry.
3. Choose the Right Payment Automation Solution: Considering how many options there are for payment automation, remember that the best choice depends on your business needs. For international payments, services like Wise Business offer multi-currency support. Most modern tools are cloud-based, support various payment types and sync with accounting software.
4. Configure Workflows and Controls: Once your platform is set up, configure approval rules and payment schedules. Add vendor details and payment preferences so the system handles each transaction correctly. Pick a platform with flexible controls to help you stay efficient without losing oversight.
5. Integrate with Accounting: You also want to be sure your payment system connects with your accounting or ERP software. Approved payments should automatically update your ledger and close the invoice. Popular tools like QuickBooks or Xero often support direct integration or data imports to keep everything in sync.
6. Test on a Small Scale: Before going all in, run a test on a smaller scale. Try automating payments for a few vendors or low-cost expenses to verify everything works: payments go out, vendors receive them and records update correctly. This gives you a chance to catch setup issues and allows time for your team to adjust.
7. Train Your Team and Roll Out: Change takes adjustment, so train your team on the new process and highlight how it simplifies their work. Roles may shift, too; someone who once handled mail might now review exceptions or cash flow. Once everyone’s ready, roll out automation widely and inform vendors about any new payment methods, like switching from checks to ACH.
8. Monitor and Optimize: After implementation, keep an eye on important metrics to see how the system is working. If payments are delayed or exceptions are frequent, it’s time for adjustments such as updating approval rules or encouraging vendors to switch to electronic payments. Use reporting tools to spot trends and improve over time. Remember, automation works best when it’s regularly refined.

Keep in mind that you don’t have to achieve 100% automation overnight. You can start with partial automation (maybe just the payment execution while still doing approvals manually), and then gradually automate more pieces as you get more comfortable with it.

What matters is that you’re taking the first step away from purely manual payments, and once you do, the advantages will become evident quickly.

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B2B Payment Automation: Frequently Asked Questions (FAQs)

What is the B2B payment method?

B2B payment methods are the ways in which businesses pay each other for goods and services. This term doesn’t refer to one single method, but rather encompasses all the common payment options used in business-to-business transactions.

Classic B2B payment methods included paper checks and cash; however, most B2B payments now occur through electronic methods.

The leading B2B payment methods are:

• Bank transfers (ACH transfers in the U.S. or equivalents in other countries)
• Wire transfers for more urgent or cross-border payments
• Credit or debit card payments
• Electronic payment platforms

In terms of speed, cost and convenience, each option has its pros and cons. For example, ACH transfers are relatively cheap, but they’re not instantaneous. On the other hand, wire transfers are same-day, but come with higher fees.

Businesses choose the method that best fits the transaction, accounting for factors like the amount, the urgency and whether they’re paying someone overseas or domestically.

In recent years, many companies have been shifting from the old methods (especially paper checks) to digital methods. Much of what is driving this shift is the need for faster processing, better tracking and lower risk of fraud.

So, if someone asks what the B2B payment method is, they’re likely referring to the array of payment options businesses use, with an understanding that electronic payments (ACH, wires, etc.) are now the primary methods in use.

What are the most popular B2B payment methods?

The most popular B2B payment methods today are primarily electronic.

They include:

• ACH transfers
• Wire transfers
• Credit card payments
• Virtual cards

Not to be overlooked, some businesses still use paper checks, especially in the U.S. However, in some countries, including China, Japan and South Korea, checks are almost non-existent for payments now.

Finally, online payment platforms have gained popularity for certain scenarios, such as paying a freelance contractor overseas or handling marketplace transactions. Real-time payments are also on the horizon as a popular method, although their adoption is only just gaining momentum.

How to make a B2B payment?

It generally only entails a few quick steps to make a B2B payment, but the exact process will depend on the method of payment you choose.

Here’s a quick overview of how to make a B2B payment:

• Obtain an invoice or payment details
• Pick your payment method
• You’ll need to gather certain information for each payment method:
  • For ACH or bank transfers, you’ll need the recipient’s bank routing number, account number and possibly the name on the account. If it’s an international transfer, you might need the swift/BIC code or an IBAN.
  • For wire transfers, similar info as ACH, plus possibly the recipient bank’s address or intermediary bank details (for international wires).
  • For checks, get the payee’s name exactly as it should appear and their mailing address.
  • For card payments or online payments, you’d typically need the vendor’s payment portal link or a way to input card details (some vendors can process credit cards over the phone or via an online invoice).
• Execute the payment
• Confirm and reconcile
• Keep records as proof of the payment