In a world where we can easily shop online and quickly check out, paying marketplace sellers should be just as easy. But as you've likely encountered, B2B marketplace payments are full of challenges. You risk alienating your sellers and overworking your AP department when payouts aren't handled effectively.
In this blog post, we'll look at how the inefficiencies of B2B marketplace payments affect both your sellers and your AP team in different ways. We’ll then identify how AP automation alleviates these common pitfalls to ease day-to-day tasks and give your marketplace a competitive advantage that keeps sellers on your platform.
Any booming online marketplace depends on the sellers who use their platform. With so many marketplaces online today, a seamless end-to-end payment experience could arm you with just the right edge to attract sellers to your platform and keep them from jumping to your competition. To get there, your platform has to overcome two major payment obstacles.
Many marketplaces rely on legacy payment solutions that create a disjointed onboarding experience for sellers. For example, sellers can get discouraged when they're required to create and maintain a separate account and password to get paid.
And legacy solutions often don't have the capabilities to collect tax information during onboarding (supposedly for the sake of speed in the signup process). In reality, this just delays tax preparation and collection, creating unnecessary back-and-forth communication with your sellers in the future.
You could be hurting your relationship with your sellers becauase of a lack of payment options and fragmented communication about those payments.
Sellers want options when it comes to how and when they get paid. If your B2B marketplace payments aren’t varied, it means you can’t match your sellers’ preferences. Of course, speed plays a big role in this: Offering faster payment options means your sellers get their money quicker.
And if you’re paying sellers abroad, you’ll find that legacy systems can't always pay in local currency. Even worse, sellers don’t always have full transparency into conversion rates and processing fees.
Your sellers also want to know when they can expect their payment. If that information isn’t being communicated to them, they may be reaching out to you to get the answers. But it's likely your sellers would prefer not to take time out of their day to contact your accounts payable team. Just think of a few of your most widely used apps and how they work. When you order a ride from a rideshare service, you can see when it’s expected to arrive. When you order products online, you can track the package all the way through delivery. Sellers now expect the same type of automated communication from your platform.
Automation is rapidly becoming the answer to meeting the demands of B2B marketplace payments for teams. Routable research shows that 54% of online marketplaces rely on payment automation to keep up with more volume. Without a fully automated, seamless payments system in place, AP departments struggle to meet their goals. Here are a few common B2B marketplace payment challenges that your teams may be facing right now.
If you're processing payouts through your bank, your teams may be experiencing a broken workflow. Banks usually don't integrate with accounting software, and if they do, it's unlikely that data will be updated in real time. This disconnect creates a tedious reconciliation process with the need to go back and forth between systems, effectively duplicating AP work.
Related stories: Five reasons why AP software is better for payouts than your bank
As for the approval process before disbursing payments, it's more efficient to integrate it directly into your payout system. Without real-time integration, approvals are done outside the system, usually by email or other manual methods. This creates even more work and slows down the payout process further.
Any online marketplace wants to see continuous growth. But if you have all these manual processes, it's easy to see how difficult it will become to manage any increase in payment volume. Once payouts reach the hundreds per month, AP will be bogged down trying to keep up with the manual tasks associated with each payment. This allows mistakes to creep into the process, creating even more reconciliation work.
When asked, 79% of marketplace executives say they expect innovation to speed up payables processing. It makes sense that they're looking at automated systems to address these issues. Here's how automation knocks out the challenges of B2B marketplace payments.
Streamlined, branded onboarding. Customizing a branded payouts experience instills trust in your business with your sellers. Since they’re experiencing an onboarding environment in your brand, they’ll have more confidence when adding their banking information. And they'll appreciate not having an additional account and password to keep track of. AP automation solutions like Routable also request tax information from your seller during the onboarding process so 1099 filing is easier for your teams around tax season.
More payment options with status updates along the way. While some sellers will be happy with scheduled payouts, others want instant payments. Some will want ACH payments and some will even want checks. Letting sellers choose their payment method will help you stand out over competing platforms. AP providers can also automate payment status updates. Beyond the peace of mind this gives sellers, status updates reduce the time your teams spend answering seller questions about when they should expect to be paid.
Cross-border support. Some AP automation providers may also offer cross-border payment support. A fully automated service will offer the ability to pay sellers in their local currency or in USD with insight into conversion rates and fees.
API or non-developer tools to ease mass payouts. To automate mass payouts, real-time data is necessary to avoid reconciliation errors. It’s important for a system to offer you a few options to get this done. If you have developer resources, API access is the best option to have a fully automated, two-way data sync across systems. Otherwise, some AP providers offer a CSV upload option for creating and sending mass payouts.
Integrations into accounting software. These options provide a unified view of payables, with the net result being much less work for your teams. A real-time, two-way sync helps you reconcile faster because data across your systems are always up to date.
Addressing the challenges across your B2B marketplace payments setup requires adopting a payout platform that's custom-built for those needs. Rotuable covers the entire payout experience for your sellers and your AP team, from a seamless onboarding process all the way to settlement — whether you're paying 50 sellers or 10,000+. Your AP team can spend less time on tedious work with accounting software integrations, including NetSuite, QuickBooks, Xero and Sage Intacct. And your sellers can enjoy the flexibility to get paid how they want when they want, no matter where they live in the world.
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