What are corporate or B2B payments?

Introduction to corporate payments

Corporate or business-to-business (B2B) payments are payments made by a business entity. These payments can be made to other businesses, such as suppliers or software vendors, to other entities within the same group, to governmental authorities, or to individuals. The main types of corporate payments are treasury payments, accounts payable (AP) or supplier payments, tax payments, and salary payments.

Businesses are making an increasing number of these payments each year. By 2027, the average mid-sized business will make over 1,400 domestic payments, along with a similar number of cross-border transactions.

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Which teams manage corporate payments?

Corporate payments are often handled by different teams: the accounts payable team handles supplier payments, while HR manages salaries. At international companies, responsibility may be spread across several local entities.

Given their business-critical nature, finance teams are often tasked with overseeing these payments centrally to ensure that appropriate processes and controls are in place, reducing costly errors and preventing possible fraud.

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How do corporate payments differ from consumer payments?

New technologies like instant payments, mobile wallets, and account-to-account or open banking payments have helped to make payments easier and faster for consumers. Meanwhile, corporate payments have lagged behind. Many companies still rely on older, legacy systems and, in 2022, paper checks were used for around 31% of all corporate payments globally.

A lot of the factors behind this relative lack of innovation relate to the ways in which corporate payments differ from consumer payments. Here are some of the main ones:

Transaction size

Corporate payments amount to around $124 trillion per year globally, more than double the total value of payments initiated by consumers, primarily because the average value of a transaction is much higher.

Transaction complexity

Consumer payments involve the direct purchase of goods or services for a fixed, non-negotiable price. Corporate payments can involve bulk purchases, recurring payments for services, and the need for detailed invoicing and purchase orders. They can also vary in terms of the payment duration, discounts, and delivery timelines.

Reliability and security

While consumer payments are optimized for convenience and speed, reliability and security are key to corporate payments. This is because of the much larger transaction values, the importance of supplier relationships, and the greater impact of payment errors or fraud on business operations.

‍Compliance

Corporate payments often occur in the context of business relationships, negotiated contracts, and custom terms of service. This dynamic adds to the need for reliability in order to adhere to contract laws and maintain a positive relationship with business partners. They are also subject to more complex regulatory, compliance, and tax obligations which vary by country or region. This means companies require detailed invoicing, accurate accounting records, and audit trails for each transaction.

‍Payment methods

Corporate payments are typically made through bank transfers, which come in several different forms, along with non-digital methods like checks and newer real-time payment options. A key difference between corporate and consumer payments is the payment terms. Corporate payments typically have longer payment periods, such as 30 or 60 days, while consumer payments are expected to be immediate.

Payment processing

Given the added complexity, the end-to-end process for corporate payments involves several steps and can result in a significant amount of administrative work for finance teams if not managed properly. This does, however, create opportunities to optimize the process to your benefit.

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The corporate payment cycle

The corporate payment cycle is the process that businesses follow when making a payment, starting from issuing a purchase order to final reconciliation. It applies especially to accounts payable (AP) or supplier payments but certain steps apply to other payment types too. Here is an example of a typical process:

1. Creation of a purchase order (PO): The process starts when the buyer prepares and sends a purchase order to the seller outlining the requested goods or services, quantities, pricing, and agreed-upon payment terms. It acts as a formal offer to purchase.
2. Confirmation and invoice preparation: The seller confirms their ability to fulfill the PO and issues an invoice that includes details such as the amount due, terms, and payment instructions. If the seller is providing a service, this might be issued retroactively once the service has been fulfilled.
3. Delivery of goods or services: The seller delivers the product or service as specified in the PO. The buyer may require documentation such as shipping receipts before releasing the payment.
4. Invoice approval and payment processing: If everything is in order, the buyer approves the invoice for payment. In larger companies, this can be a multi-step approval process across various departments, such as procurement and finance. Any issues may lead to returns or disputes.
5. Payment execution: The buyer processes the payment using the chosen method. To do so, they might enter the payment in their corporate banking portal or use specialized software, such as an AP automation tool.
6. Payment tracking and confirmation: After processing the payment, the buyer may monitor its status to ensure successful execution and avoid potential late fees or relationship damage. Once the seller receives the payment, they provide confirmation to the buyer. Any errors or disputes during the payment cycle may require the payment to be retried or returned.
7. Reconciliation: Both the buyer and seller must reconcile the payment with their financial records. This involves verifying that the purchase order (PO) details, such as the amount and reference number, match those on the invoice and in the transaction shown on their respective bank statements. If these records do not align, a manual investigation will be needed.
8. Reporting and analysis: Both the buyer and seller may include the transaction in their cash reporting and forecasting for analysis. These reports are valuable for cash positioning – understanding the company's current cash status – and for predicting short-term cash flow.
9. Recordkeeping and compliance: Throughout the payment cycle, both businesses maintain detailed records of all documents, including POs, invoices, payment confirmations, and any correspondence, to meet legal, tax, and compliance requirements.

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Types of corporate payments

The main types of corporate payments are treasury payments, accounts payable (AP) or supplier payments, tax payments, and salary payments. For more information on each type, follow the link to the relevant page below.

• Treasury payments
• Account payable (AP) or supplier payments
• Tax payments
• Salary payments

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Types of corporate payment methods

Corporate payments can be made through various methods such as cash, checks, bank payments or transfers, and credit cards. Today they are typically processed electronically through banks, though checks are still widely used in the U.S. and some other countries.

Bank payments are the predominant method for making corporate payments today, either as credit transfers (push-based) or direct debits (pull-based) processed electronically. These payments can be categorized as either domestic or cross-border. Cross-border payments usually involve foreign exchange risk due to currency fluctuations.

For domestic payments, there are a number of local or regional payment schemes that each follow their own rules and processing cycles. There’s ACH and Fedwire in the US, the SEPA payment schemes in Europe, and separate schemes specialized in corporate payments in countries like the United Kingdom, Switzerland, Sweden, Denmark, and many more.

How Atlar simplifies corporate payments

The Atlar platform helps you modernize the way you manage payments while supporting a wide range of other operations in one system, from accounting to cash flow analysis and bank account management – all through a single, comprehensive interface that the entire team can use.

The team at Tibber switched from manual payment processes and legacy banking interfaces to using Atlar for corporate payments, saving 50 hours per month for a lean finance team. We’ve helped them and finance teams at GetYourGuide, Acne Studios, and many other companies to centralize and streamline their payments.

If your company is exploring ways to improve its payment processes, talking to our team is a great place to start. Book a 30-minute demo to discuss best practices and see Atlar’s payment capabilities in action.