All about current business payment methods

The range of business payment methods is widening. In the past 10 years, the advent of internet and mobile banking has brought about a profound transformation. As a result, older and more established options are coming under pressure. Old-fashioned cash is now seen as far from ideal. Yet organisations still deploy cash alongside a range of other business payment methods to pay employees' expenses.

Within an organisation, many payments have to be made. For all these expenses, the employee needs a payment method. 
For certain expenses, you can often only pay in one specific way. For example, a hotel booking can only be done with a credit card. While the florist might only accept a debit card. So it is important to offer several flexible business payment methods within your organisation. 

Properly tracking and processing all expenses is still a cumbersome task for finance teams. It takes a lot of time and effort to maintain proper control over transactions and declarations. Particularly if different payment options are used, it is difficult to complete the monthly statement on time.

That many new payment solutions have been added over the past decade has not escaped your notice. Yet within their own organisations, most have not yet made the switch to new business payment methods. 

It is usually on the long list of long-term projects. This while these new solutions often make it easier and, more importantly, more secure to do business transactions. To the dismay of many finance teams and employees. Time to take a look at all the payment options and their benefits.
❯ Cash money, the old-fashioned cash
❯ A regular payment card
❯ Business credit cards
❯ Online payment services
❯ Buy on account
❯ A direct debit
❯ Integrate business payment method

The old-fashioned cash

Many organisations still work with cash. Cash is then present at a location, with which, for example, a birthday present is purchased. When cash circulates in a company, you work with a cash book. The cash book should record all cash expenses. 

Many organisations would like to move towards a cashless way of working. And do away with cash entirely as a business payment method. The working with cash and cash books in fact brings many problems. 

Processing cash business payments is an administrative disaster. Besides the time-consuming process, it requires a complex set-up. How does the cashier know the position of the various cash accounts? Where does he or she get the cash for replenishment? Have you thought about how to transport the money safely? And, how do you check that the full amount has arrived in the treasury?
When organisations work with cash, there is often a set daily procedure:

1. There is a fixed starting capital in the coffers every day;
2. The employee receives money from customers and may incur expenses himself. This needs two safely stored and separate coffers;
3. At the end of the day, the employee counts the cash, makes the balance in the cash book and submits the cash to the manager;
4. Then, as a last step, the manager or cashier deposits the money with a bank or applies for a cash replenishment.

It is about ensuring that all cash movements are properly accounted for in the cash book. And, that all payment receipts are attached. As administration, you are still often chasing employees to submit their receipts. Working with cash seems like a quick solution, but there are (too) many snags. This creates inefficiencies in administrative processing.
But, within an organisation, cash payments will always have to be made from time to time. No matter how much you steer towards digital transactions as a company, sometimes you can't escape it. For example, when a shop unexpectedly does not accept a debit card or you make a purchase at the market. 

advantages: easy to use, almost always accepted in physical shops, no additional costs
disadvantages: susceptible to fraud, complex administration, risk during distribution 

More for finance managers...

❯  5 reasons to think about cash management
❯  What is a business prepaid credit card?
❯  Using prepaid Meastro payment cards

The regular payment card (also called debit card)

Everyone owns one - a debit card. You can also use such a debit card as a business payment option within an organisation. The best-known providers are Maestro and V Pay. Debit cards are issued by banks such as ING, Rabobank and ABN Amro.
In addition, an increasing number of e-banks have been added in recent years, such as Knab. As a third option, there are total solutions for business payments, such as SimpledCard. They combine business prepaid debit cards with claims management and integration into your accounting system. 
With a business bank card, you can withdraw cash and make contactless payments virtually anywhere in the world. Handy if you have lots of out-of-town appointments or are on a business trip. With a business card, you keep these expenses separate from your own private account. This ensures that employees never have to advance money themselves.
Contactless payment is a convenient option if you want to make quick business purchases in a physical shop. For small amounts, you don't need to enter a PIN to pay. A cup of coffee during a business meeting or a quick lunch when you are on the road will be paid in no time.
However, the amounts must be (cumulatively) under €50. On the fifth payment, a code is requested by default. 

❯  A debit card as a business payment method

With a regular debit card or ATM card from your corporate house bank, you can withdraw cash from an ATM or make electronic payments. The amount is then directly debited from your business account. 

If you don't want the debit cards to be linked to the main business account, you have to request an additional account first. Especially if you have multiple locations with different cardholders, this can quickly become complex. Managing such a branch card set-up then takes a lot of work. With low turnovers, the bank may also lose interest. 

Withdrawing money from a bank ATM is not always completely free. For example, the bank may charge a fee if you withdraw money from an ATM of another bank. So keep in mind that employees always do this at member banks to save costs. Electronic payments with a bank card (via iDeal, for example) within the eurozone are free, however.
How much money you can withdraw or pay per day or per week is often limited. Those limits can be adjusted, but only by the account holder. 

This restricts your freedom somewhat. For example, when you unexpectedly have to make a big expense. Then the amount in the account may be sufficient, but the pinable amount per day is not. A setting will then have to be changed in the system. This is often done via your bank's Support department, but not in real time. This then means you won't be able to complete the payment the same day.
In some cases, you can also use a debit card to go into the red. To do so, however, you need permission from the bank. It is then the case that the money you are short of is borrowed from the bank. This is obviously not free and is not ideal from a business point of view.

advantages: contactless, easy ATM debit, online payments with iDeal
Disadvantages: interest for being in the red, limited daily budget, not very flexible for multiple locations

❯  A prepaid Maestro card

A prepaid debit card is similar in many ways to a regular debit card but also has some characteristics of a credit card. 
You load a certain amount onto the card yourself in advance, the ‘credit’. You can then use that to pay in a shop or withdraw at an ATM. If that amount is used up, payment is no longer possible. This is always the organisation's own money. 
You deposit the money on a prepaid card from your business account to the card. This taxes the cash, but you avoid the cost of real credit. So there is no question of being in the red. By regularly topping up the card, you can spread the cash out well. 
You often have the same advantages and disadvantages as with a normal debit or credit card. Only with a prepaid Maestro, as a finance manager, you can decide how much money to spend per card. So you have better control over budgets. And that way, you avoid cards being linked to your main business account.

After all, you don't want to give just any employee access to all company resources.

advantages: all the benefits of a normal debit card, decoupled from the company account, no charges for being in the red
disadvantages: one-off set-up of supplements (according to spending pattern), not accepted by some online platforms 

A business credit or credit card

Credit cards are a popular and classic payment method within the business payment landscape. Within Europe, you can almost always pay ‘for free’ with your credit card. For cash withdrawals, on the other hand, you often pay additional fees. 
A business credit card is often used for business payments abroad as they are accepted worldwide. It is therefore ideally suited when you go on a business trip. In addition, it allows you to easily pay online

❯  A regular credit card

If you have a business account, you can also apply for a business credit card. You use this for all business expenses, such as business trips, refuelling, buying office supplies, for example, or other online purchases.
With a regular credit card from a bank, you borrow money to pay with. There are still different types here in terms of repayment methods:

1. 1. A classic credit card where you can pay back the borrowed money immediately or in instalments. You pay interest from the time of the loan period.
   2. A charge card where you have to pay off borrowed money within 30 days. During that time, it is interest-free. After this period, the interest rate becomes very high.

American Express cards are all charge cards. However, Visa and Mastercard this is usually the case. The amount is not immediately debited from your account. At the beginning or end of the month, you will receive a bill of all amounts paid in the previous month. Visa and Mastercard do often give you the option to repay the amount in instalments. 
When you pay a credit card bill the same month, you as an organisation often don't have to pay any additional fees for this. If you delay this longer, you will be charged an interest rate depending on the bank. A credit agreement must then also be signed for this. 
Although the credit card is used by many companies as a means of business payment, it also has many drawbacks. This is because applying for a credit card involves a lot of paperwork. It is not settled overnight. 
Once you have the paperwork behind you, the card is given a fixed limit. The amount depends on the card requested but is often already above €1,000. From a business perspective, it is not at all a pleasant feeling to let employees go out with so much “money”. Unfortunately, the limit itself cannot be flexibly adjusted according to need. 

There is also something like a daily-charge card. This a actually an intermediate form of a prepaid and a regular credit card. Here, you put a balance in an account from which all payments are immediately debited (debit) until the balance is zero. After that, it is advanced by the bank (credit). After the end of the month, the account is made up and outstanding amounts are deducted directly from your reference account (usually checking account).

Advantages: worldwide contactless payments, wide insurance coverage on purchases
Cons: fixed limit, not flexible, lots of paperwork when applying

❯  The prepaid credit card as a business payment method

So with a regular credit card from a bank, you borrow money to pay with. With a prepaid credit card this sits a little differently. 
A prepaid card is a payment card where the money is held in a securely protected third-party account. 
So with this prepaid variant, you can only spend money that you have advanced yourself. If you transfer money to the card via a normal bank, until recently you were often bound by 2 or 3 working days' processing time. 

Many banks do introduce more and more new instant payments protocols. This was first rolled out for domestic payments, but then also for payments within Europe. This is useful when you have regular unforeseen charges. You then easily raise the limit on most of these cards in real time. 

When we in Europe talk about a prepaid credit card we actually mean the prepaid debit card where you thus transfer the amount to a segregated account and can only spend that. Once you or your organisation have gone through the due diligence process for the card, it is often easier to get additional cards after that. You can then quickly assign new employees their own prepaid card. Because prepaid cards work with e-money, transactions can be tracked digitally in real time. This makes them ideally suited as a basis for modern business spending systems such as SimpledCard. 

advantages: flexible budget, map easily allocated to staff, real-time visibility
disadvantages: not always accepted online

❯  The secured credit card

With a secured credit card, you pay a deposit to your account at the credit institute in advance. This deposit is the collateral for the card issuer. In case you are in arrears with your payments. 

This credit card is actually mainly used in Anglo-Saxon countries. It helps people with a bad credit score rebuild a positive credit history. Otherwise, they would probably never be able to get a credit card again. 
So the bank does give credit and you always have to pay off monthly expenses neatly. The deposit remains basically unaffected. At the same time, the amount of your credit limit is equal to the deposit. 

benefits: for people with negative credit history
disadvantages: deposit required, limited credit limit

Online business payment services

Nowadays, it is impossible for an organisation to get away with only making purchases in physical shops. In fact, the majority of business transactions take place online. Therefore, it is imperative to have a suitable method of making online payments. 

Although the first thing that comes to mind is the classic credit card, there are an increasing number of specific payment services for online purchases. How do these differ from a credit card payment? And how do you make sure you can use them for business? Read more here.

❯  PayPal

PayPal is a popular payment solution worldwide. In the Netherlands, with 1.7 million users, it is one of the most widely used payment systems. PayPal ranks third, just after iDeal and the (business) credit card. 
PayPal is also widely used on auction sites such as eBay and Marktplaats. Unlike iDEAL, PayPal, like many credit cards, offers purchase protection. If the product is not delivered, PayPal will make sure you get your money back.
This method is also mainly used by consumers. You link several bank accounts or credit cards to it. This is called an e-wallet. One advantage is security. When paying via such an e-wallet, the information about the bank account or payment card used is not disclosed to the seller. 
Paypal does store the data on its servers, but promises to strongly protect it from hackers. So this works differently from the so-called device-based digital wallets, such as Apple pay and Samsung pay. These only store your card data on your phone or computer.

PayPal also has a business solution in many countries. This B2B payment solution ensures that direct debits also run through the system. 
There are basically no fees to use. You can create an account for free and do infinite transactions. Only in case of an exchange rate will it be charged on top of the purchase amount. The webshops you order from do pay a commission to Paypal for its use.

advantages: accepted worldwide, no extra costs for buyer, purchase protection
disadvantages: additional account required, less overview for finance team

❯  Bitcoins

In the news, you regularly see exciting stories about price speculation with bitcoins. The new digital currency is a strong piece of technology. It relies on encrypted calculations performed on several computers in thousands of steps (called the blockchain). 

You can compare bitcoin to an e-mail containing a password. Each bitcoin has its own password that only the owner owns until he transfers money. 

Bitcoin does not belong to 1 central issuer as it does with a regular bank, for example. Users pay via a software. In practice, however, the number of shops that accept bitcoins is still very low. For instance, you cannot pay directly with bitcoins on Amazon.  

Advantages: secure and anonymous, no intermediaries or bank needed
Cons: low take-up, employees no access to network

Buying on accounts (widely used as a business payment method)

As an organisation, it is best to pay large bills in arrears. You then know whether the service has been delivered and still have access to the money during the payment period. Which of course helps cash flow. The only problem is that when you purchase from a new supplier, they usually want to run a credit check first. They want to make sure you can actually pay for the purchase.

In addition, you yourself do not just include any organisation in your supplier tribe. Setting up a new profile takes time and has to be released after verification. This does not improve speed. Which in turn affects the delivery time. 
Legally, a webshop must offer the option to buy on account. Many sellers do not want to run the risk themselves. You therefore see ‘Pay afterwards’ increasingly offered as a payment option by payment services. Think of companies like AfterPay and Klarna. They make it increasingly easy to pay afterwards with just a few clicks. A credit check is no longer even required.
Meanwhile, b2b websites also use these options. Since such payments often involve larger amounts, this is a relevant payment method in the business sector. Vendors are capitalising on this. 

In b2b purchases, there are almost always several people within the organisation involved in the purchase decision. After all, a payment must be approved by the person with decision-making authority. For recurring purchases, but also for one-off invoices, Pay afterwards is a good alternative. 

❯  On invoice

Many organisations still prefer to pay by invoice. And thus a popular business payment method. The payments are all collected first. Once cleared by the person in charge, payments can be prepared. After authorisation, the amounts can be sent and transferred by someone from the finance department. 
This is done by several people within the organisation to make sure it gets into the accounts correctly. And no less importantly, that there is less chance of fraud.
This can be done manually, but significantly increases the risk of errors. With a digital payment request, you solve this problem. That is why this is happening more and more often. A digital payment link is then created and sent with the invoice. This can also be done using a QR code, for instance. 

advantages: trusted by finance teams
disadvantages: risk of errors, manual work

❯  AfterPay

One of the best-known providers in the Dutch market is AfterPay. They bear the risk of payment and take care of invoicing. 
So when you choose this payment solution in a webshop, you can first view the order (in the office) before actually paying for the products. In the end, you only pay for what you keep. This saves the accounting department a lot of hassle because they have to process any refunds back into the accounts.
Purchases at b2b online shops are generally large and expensive orders. AfterPay itself does not charge fees and interest. However, the webshops themselves are free to charge transaction fees for payment via AfterPay.  This offers a solution for business customers.

advantages: secure process, only pay for products you keep
disadvantages: additional account required

Direct debit as a business payment method

A commonly used business payment method is direct debit. This involves a one-off or sometimes periodic paid debit. A ‘contract’ is then entered into in advance whereby you give permission to the seller to debit the amount automatically. This is called a direct debit authorisation. This can be done directly through the business account or through a third party such as Buckaroo. 
In the past, an authorisation always had to be declared in writing. This then had to have the account holder's signature on it. Nowadays, this is no longer necessary. What happens is that an e-mail is sent in which you place the signature digitally within a secure environment. 
advantages: security through payment agreement
Cons: payment sometimes keeps running without you noticing it

How do you integrate the right business payment method into your workflow?

With so many options and providers, it is sometimes difficult to choose which business payment solution best suits your operations and employees. You want to make it as easy as possible for the operational teams within the organisation, but not lose control yourself. In addition, it is of course important that payments are secure.
Ultimately, the actual payment behaviour of your employees will help determine your preference. The choice of business payment method(s) within your organisation also depends on how you conduct your payment and processing strategy. 
A good payment and processing strategy for corporate expenses can give you a lot as an organisation. Although it is often seen as an afterthought, as an organisation it gives you precisely the control you need. Before choosing the right method, you can ask yourself a few questions:
❯  What is the frequency of spending, do expenses recur regularly or are they often one-offs?
❯  How many employees should be able to use the business payment option?
How do I distribute them and can I easily connect new employees?
❯  Do business payment methods match the desired spending pattern (online vs physical purchases, domestic vs foreign, cash withdrawals possible or not)?
❯  What is the best value for money business payment option?
❯  How can I include payments in our workflow for business expenses? How do I ensure a smooth reconciliation with accounting?
❯  What level of control do I want to ensure as a finance manager? Set maximum budgets, quick insight into transactions, instant feedback with proof of purchase, multi-eye principle, etc?
❯  Does the provider provide expert support in case of payment problems? How are potential fraud incidents recognised and dealt with?

Implementing your business payment method

Once you have answered the above questions, you can further set up the business payment process for your organisation. This boils down to the following three steps:

1. Picking and ‘buying’ one of the products;
2. Setup within accounting and workflow;
3. Implementation within the team and organisation.

After a new payment option has been fully rolled out within the organisation, it is important to monitor usage. This will give you a better overview and insight. Where necessary, you can then adjust and optimise the processes. 
Finally, it is always good to keep abreast of new developments within business payments. Listen to employees and gather feedback from operational teams. What new business payment methods are there and how does this fit within our operations? This way, you respond in time to the changing payment needs within your industry. 
Within SimpledCard, we have several experts to advise you on choosing and implementing the right business payment method. Should you have any questions about the best solution for your organisation, please take full non-binding contact on. Together, we look at the needs and help you draw up a plan of action.