The effect of commercial cards on B2B payments
October 28, 2014

There are various ways for retailers and businesses to conduct transactions with other companies. Business-to-business payment is the primary form of transactions made in the nation's economy. It is also the leading source of check payments, with the Federal Reserve reporting that 93 percent of all check payments were coming from businesses. However, due slow nature of check transactions and the Automated Clearing House of bank transfers, getting quick payments is a difficult task. That's why commercial credit cards exist to address these concerns. Retailers should take advantage of their point of sale terminals to deliver optimal results for working with suppliers and other business customers.

The commercial credit card is essentially combining accounts payable with a line of commercial credit into a single card. According to Investopedia, commercial credit is an amount of money delivered to companies at any time to address specific business costs that are repaid for when funds are available. Commercial cards function like credit cards in that they allow payments to take place via card instead of cash through a line of commercial credit. Unlike other credit cards, however, a single line of credit can be used throughout a company while multiple credit cards are issued. The main advantage of using commercial credit cards is that, unlike checks, payments clear almost immediately, granting companies access to funds.

Retailers should offer the option to their suppliers and distributors of payment through commercial credit cards, as should other businesses. An integrated payments system can provide a direct line to the accounts payable through the commercial credit card. However, such a solution is not without problems of its own. According to PYMNTS, a large number of businesses rely on single-use credit cards to complete transactions in order to play it safe. However, that makes recording transaction history complicated, since the data was temporary and can't be linked to anything. Merchants should work closely with business customers to maximize efficiency in handling transactions.

Nexus: G-WEBCD2