3 Reasons Your Small Business Needs a B2B Payment Software Solution

I never intended to be any small business's worst nightmare. But I'm somehow, inadvertently, the Freddy Krueger of small business cash flow.

That's because I'm terrible about paying people on time. Loan me $20? I'll forget to pay it back. Send me an invoice? I will misplace or forget it. Not only is the customer always right, he's always late (at least in my case).

There's a way to handle small business nightmares like me: digital business-to-business (B2B) payment solutions. Don't want to wait several months for that check to be mailed? Consider investing in billing and invoicing software, or another of the many digital payment solutions available.

A B2B payment solution is any tool—software or hardware—that makes it easier for small businesses to receive, make, or process payments. Everything from Square readers to Stripe to accounting software technically counts as a payment solution.

Half of all small businesses close their doors within the first five years. A B2B payment solution can get you paid faster, so cash flow problems don't shut you down. But speed isn't the only benefit.

How B2B payment solutions get you paid faster

Cash flow is the difference between paying your employees in money and paying them in promises. And cash flow's arch nemesis is long payment cycles, or, as many small and midsize businesses (SMBs) call them, payment cycles.

"When you're running a business—especially a small B2B—the biggest challenge is being cash flow positive," says John Doherty, founder of Credo.

That's a challenge, as it can take customers up to two months to pay once they've been billed. And in those two months, it's entirely possible your cash-strapped business can fold.

Enter digital payments. A B2B payment solution, such as a billing and invoicing software program, cuts your payment cycle by more than half.

For example, billing and invoicing software can email invoices to customers as soon as a job is finished. The customer can pay with a single click. As a result, the time it takes to get paid drops drastically.

That was the case for Gil Gildner, co-founder of Discosloth. When Discosloth adopted a digital payment solution, they watched their payment cycle shrink.

Currently, Discosloth's average payment cycle is between two to three days.

Cash flow isn't just about survival, though—it's also about keeping an eye on the future by supporting your current growth.

"If you get paid quicker," notes John Doherty, "you can make sure you invest that cash back into growth, and pay yourself and your employees."

How B2B payment solutions make the payment process easier

You'll save effort, as well as time, with a B2B payment solution. The difference in effort saved between messing with paper checks and just clicking a button is a surprisingly big one.

The effort required in dealing with paper checks tends to snowball:

• On your end? Paper checks mean mailing invoices (several hours a week), waiting for customers to respond (weeks to months), and the nuisance of getting piles of checks to the bank (which can be require a lot of effort, especially if you're driving during rush hour).

• On the customer's end? It means one more task they'll inevitably forget about, not to mention the unpleasant experience of contemplating how much they're paying and the pain of getting it into the mail.

A B2B payment solution, on the other hand, allows for one-click payment, or automatic recurring payments. It's as easy as online shopping.

In Gil Gildner's case, that ease of use also helps with other parts of Discosloth's strategy, including not having a physical office.

Discosloth's agile, geographically distributed team doesn't need a mailbox to do their jobs and get paid on time.

Thanks to the recurring payments feature of many digital payment programs, John Doherty's team also expends less effort on payments.

"Digital payments are part of an automation strategy," Doherty says. "There's no reason to spend time when I can automate invoices and do something else."

How B2B payment solutions make your transactions more secure

Speed and ease are important, but security trumps everything. Digital payments are safe, maybe even more so than paper checks.

You heard me right: As scary as hackers are (and as much as they dominate the news cycle), the security built into most B2B payment solutions is as good as anything physical.

Mail theft, particularly of checks, is on the rise in major cities such as Los Angeles, New York, and Miami. Worse yet, it's now filtering to smaller towns, as well. The methods are the stuff of Wile E. Coyote cartoons, with thieves using fishing line and tape to reach into mailboxes and pull out checks.

Digital payment solutions protect your transactions from such Acme-esque shenanigans.

Not only are digital payments free from the threat of do-it-yourself mail thieves, they're better monitored than your average mailbox.

Digital payment solutions make their money off of secure transactions, so they have have teams of people—as well as algorithms—watching for suspicious activity. The data transferred through digital payment solutions is also encrypted (scrambled), which is more than you can say for the routing and account numbers listed on every check.

What you can do to switch to a digital B2B payment solution

Interested in taking advantage of a B2B payment solution? Here are a few steps to get started:

• Check out Capterra's billing and invoicing software directory when you're ready to start looking at solutions.

• If you're concerned with security, ask potential payment solutions if they're PCI DSS (Payment Card Industry Data Security Standard) compliant. PCI DSS is a set of standards for data security set by the major credit cards. Any payment solution that accepts credit cards should meet the 12 PCI DSS standards for secure transactions. Check out PCI's website for more information. Scroll down a bit on this page and you'll find resources specifically for small businesses.