What is B2B Billing?

B2B (business-to-business) billing is the legally binding process of securing payments between two parties, i.e, the business that’s offering the service/product and the business that purchases it. B2B billing is typically more complicated than B2C billing. B2C billing, or business-to-customer payment, is where businesses sell directly to a customer.

Business invoicing, alternatively used for B2B, involves generating invoices, handling payment terms, and managing due amounts in transactions between organizations.

As companies realize the importance of understanding customer needs, the customization of B2B billing becomes rampant. It encompasses the intricacies of credit terms, bulk orders, and recurring payments.

It is essential to note that B2B billing and B2B payments are separate processes. B2B billing is the process of invoicing for the goods or services offered. Meanwhile, B2B payments involve the actual transfer of funds from one business account to the other. 

What is the B2B Billing Process?

Although the B2B billing process varies from company to company, it typically follows a standard model of invoicing and collecting payments. It comprises several stages, each with its own complexities.

The B2B billing process starts with the business placing an order, then an invoice is generated against that order and sent to the buyer. After that, the payment is approved and processed, and the transaction is tracked.

Let’s have a detailed look at the B2B billing process below.

Step 1: The Order is Placed

The business places an order for the goods or services it wishes to purchase. Thereafter, the purchase is booked and is officiated with a contract mentioning the terms and conditions.

Step 2: Invoice is Generated and Delivered

Once the order is placed, an invoice is generated against it. It includes the details of both the buyer and seller, such as the type of service or product purchased, the price, quantity, tax if applicable, and payment conditions.

Businesses these days lean more towards electronic invoicing systems. These E-Systems automate and expedite the B2B billing process. They facilitate faster invoice generation and delivery, quicker payment processing and provide real-time insights.

An electronic invoicing system easily integrates with the purchaser’s accounting software, enabling efficiency and accuracy.

Step 3: Payment is Approved and Processed

The payment approval workflow commonly involves multiple layers and coordination with several departments. Within the buyer’s company, the finance and procurement units handle much of the payment approval process.

This process speeds up with the help of automated payment platforms, which also ensure compliance and security.

After the payment is approved, it advances to the next stage: processing. Here, the buyer has several payment methods to choose from to make the payment. These include bank transfers, ACH, electronic fund transfer (EFT), wire transfers, or credit cards.

Wire transfers or EFTs are commonly used for larger amounts due to the lower fees.

Step 4: The Transaction is Tracked

When the payment is processed, the corresponding amount is posted to the user’s account. Records are updated on both sides: the buyer’s and the seller’s. This is to ensure that the security rules are abided by and any legal repercussions can be avoided.

An automatic system allows for immediate recording of any accounts-related deals. Along with that, ensuring regulatory compliance is of utmost importance. Security standards, like Know Your Customer (KYC) protocols, need to be met by all parties to authenticate the B2B operations.

What Are the Best Practices for B2B Billing?

A comprehensive B2B billing software does more than just transfer funds. It offers flexibility, automation, and an easier transaction process in business-to-business workflows. However, to attract and retain customers, businesses can always look to improve their billing software practices.

Hence, let’s look at the list of best practices that, once incorporated, will help businesses flourish in their B2B dealings:

Digitalized Invoices

Digital invoices is a trend every business should include in their B2B billing processes. Transitioning from stamps and mail stacks of paper bills to fast and secure online payment is a game changer. It not only saves you a trip to the bank and reduces the need for physical handling but also minimizes errors and guarantees that your invoices are precise and up-to-date.

With the help of digital invoices, businesses can create a digital audit trail that’s simpler to monitor and manage.

It sends notifications for late or missed payments, integrates with accounting software, and pulls data directly into invoices seamlessly. This allows for a faster payment cycle and an enhanced income stream.

Flexible Payment Options

Offering multiple payment options helps expand your business operations, strengthens ties with your customer base, and reduces risks associated with reliance on a single payment method.

A well-rounded billing software includes payment options like checks, wire transfers, ACH payments, credit and debit cards, Buy Now Pay Later (BNPL), PayPal, and more.

However, it is worth mentioning that each payment method comes with its positives and negatives. For instance, credit and debit cards are convenient and widely used but can have higher transaction fees.

Similarly, ACH transfers are friendly on the pocket. They are also secure but aren’t suitable for international transactions. Additionally, they have a slower processing time. Wire transfers support international payments but generally come with high costs and are difficult to cancel once initiated.

All in all, having a range of payment options is beneficial and helps customers choose their best option.

Adherence to Security Laws

Digital transactions and data protection go hand in hand. With constant developments in regulations, businesses can find it difficult to stay up-to-date.

Since compliance is an integral part of the B2B billing process, businesses can leverage payment platforms that have built-in security features. This helps businesses adhere to security laws that are automatically updated as laws change. As a result, they can ensure the safety of their financial transactions and protect sensitive client data.

Adoption of Fraud Protection

Fraud risks are one of the major concerns businesses have when it comes to digital transactions.

To ensure your business doesn’t fall prey to these risks, there are a few measures you must implement. Firstly, a strong multi-factor authentication system upgrades security and makes it harder for potential scammers to access information.

Secondly, implementing KYC protocols maintains the legitimacy of your business. Leverage fraud analytics that alert to any suspicious activities and review them.

How Does SubscriptionFlow Facilitate B2B Subscription Billing for Businesses?

SubscriptionFlow is a popular B2B business payments solution that facilitates billing and invoicing to help businesses generate more income. It offers smart features that guide businesses in refining all aspects of their B2B subscription billing processes.

Here’s a breakdown of these features:

Billing Automation

Businesses can easily manage the creation and delivery of their invoices with SubscriptionFlow’s advanced automation. It assists a smooth recurring billing flow with flexible subscription plans and billing cycles.

Moreover, SubscriptionFlow handles proration amounts frictionlessly. Clients can upgrade, downgrade, pause, or cancel their plans, and the changes are easily updated. With such efficiency, businesses can secure timely payments with minimum errors.

Self-Service Portals

B2B businesses can benefit from SubscriptionFlow’s personalized customer portal. From managing subscriptions and viewing invoices to updating payment information, it can provide convenience to each client.

Through the integration of self-service portals, customers can have a positive experience that lets them gain control. It reduces the need for customer service inquiries, reducing their burden.

Invoicing Customization

It is the era of putting your customers at the forefront and offering customization. SubscriptionFlow honors that and helps businesses create different invoice templates according to each client segment. This enables them to cater to the needs of each customer, enhancing their business operations.

Not only that, but businesses also have the option to generate consolidated invoices for account hierarchies. For instance, usually when a client makes multiple purchases, each purchase is assigned a separate invoice. Not with SubscriptionFlow. You can combine all invoices into a single, consolidated invoice, simplifying the billing and payment processes.

Reporting and Revenue Management

SubscriptionFlow offers access to an intelligent dashboard that helps businesses get insight into their business activities. It consists of smart reporting and analytics related to customer behavior, business performance, and subscription data. These include key indicators like ARR, CAC, CLV, MRR, and more.

Utilizing the insights gained from these metrics, businesses can monitor the capital that’s coming in, make informed decisions about their subscription strategies, and implement them accurately.

Furthermore, businesses can make more revenue through smart payment recovery features. They help reduce churn by locating payment issues.

Integration Flexibility

With SubscriptionFlow, businesses have the option to connect to a wide range of advanced integrations. These include CRMs, ERPs, accounting platforms, tax management software, marketing automation tools, and other comprehensive integrations.

These integrations optimize data synchronization, making it easier for businesses to manage workflows. Not only does this create a positive impact on customer experience, but it also offers businesses more control. They can maintain tax amounts, obtain regular updates, and sync all their subscription management operations.