Boost Glossary
A
Accounts payable (AP) is the amount of money a buyer owes a supplier for products or services that have not yet been paid for by the buyer. The accounts payable department refers to the team typically responsible for approving and paying invoices, reconciliation, reporting, expense tracking, and fraud prevention.
Accounts receivable (AR) is the amount of money a supplier is owed for products or services delivered that have not yet been paid for by the buyer. The accounts receivable department refers to the team responsible for incoming cash flow. AR teams typically manage invoicing, reconciliation, cash application, reporting, collections, and credit risk.
ACH payments are electronic payments made between two banks through the Automated Clearing House (ACH) Network. The ACH Network is a secure system for transferring funds between U.S financial institutions. ACH payments are typically processed in 1-3 business days and are commonly used for enterprise level B2B payments.
While ACH remains a popular choice, today’s payment landscape offers more efficient solutions. Boost Payment Solutions enables straight-through processing, providing same-day funding for B2B payments along with streamlined reconciliation.
A B2B payments acquirer is a financial institution that facilitates the exchange of funds between a business accepting a payment and the card-issuing bank. The acquirer’s responsibilities include authorizing transactions, settling funds to the business receiving the payment, and managing fraud disputes.
B
B2B Payments refer to financial transactions conducted directly between two businesses. These transactions usually involve larger amounts and added complexity due to varied payment terms, payment methods such as check or commercial card, and compliance requirements. Boost Payment Solutions specializes in B2B payments for large, enterprise-level transactions. Boost provides payment solutions for issuers, buyers (accounts payables), suppliers (accounts receivable), and strategic partners.
In a B2B relationship, a buyer refers to the business purchasing goods or a service from suppliers to support its own operations or commercial activities. A buyer in Accounts Payable (AP) refers to the individual or team at a given company responsible for managing purchases. Key buyer (AP) responsibilities in a B2B include ensuring the associated financial transactions are executed accurately and on time. Boost Payment Solutions helps buyers grow revenue, reduce payment fraud, and extend days payable outstanding (DPO) by maximizing their commercial card programs.
A B2B gateway is a platform that ensures secure, efficient exchanges of data and payments between businesses. It allows companies to streamline and optimize B2B payment transactions and automate business workflows with suppliers, buyers, and partners by connecting different systems. B2B gateways are commonly used in industries like finance, legal, healthcare, and manufacturing where secure, automated, and compliant B2B data exchange is critical for handling high transaction volumes across multiple business partners.
B2B interchange fees refer to the costs that a business pays to process or accept payments made with commercial cards in B2B transactions. These fees are set by the card networks (such as Visa, Mastercard, or American Express) and are most commonly a percentage of the transaction amount plus a fixed fee. The fee pays the card-issuing bank or acquirer and the card network for handling the transaction and managing risks associated with credit and security.
C
Cash application is the process of applying incoming payments to the correct customer account and invoice. Cash application serves as a vital part of the accounts receivable process and ensures accurate reconciliation and reporting, and efficiency of cash flow.
The process of cash application can be very complex and cumbersome with many manual steps for AR departments to handle. With a traditional B2B cash application process, accounts receivable is responsible for the following steps:
- Receiving payments by ACH, wire transfer, electronic funds transfer, or virtual card
- Reconciling payments with the appropriate invoice to ensure accuracy
- Allocating funds to the correct customer account
- Recording payment internally and updating the outstanding invoice
Boost Intercept can automate the cash application process by providing straight-through processing (STP) for B2B.
Check fraud is any misleading or illegal action involving checks such as intentionally writing a bad check, stealing or changing somebody else’s check, or forging a check signature. Business-to-business check fraud occurs due to the manual process of sending and receiving B2B check payments.
The most effective way to combat check fraud is by automating payment processes to reduce human error and switching to a more secure B2B payment method such as virtual card or straight-through-processing.
Check payments are still a traditional method for B2B payments, but they are riddled with disadvantages such as hidden costs, fraud risk, error-prone manual labor, and reconciliation challenges. Many businesses are moving towards alternatives like virtual card for B2B payments. Virtual card offers end-end payment automation while being the most secure payment transaction method for B2B.
commercial card is a type of payment card issued to businesses by a financial institution or bank. Commercial cards are available to businesses of any size across many industries and offer a way to manage their purchasing and expense management processes. The key types of commercial cards are:
- Corporate Credit Cards
- Purchasing Cards (P-Cards)
- Travel Cards
- Fleet Cards
- Virtual Cards
Commercial cards provide many benefits to businesses such as cost savings and rebates, better insight into spending, streamlined payment processes, and enhanced expense reporting.
D
Days Sales Outstanding (DSO) is the financial measure used by businesses to calculate the average number of days that it takes a supplier to collect payment for a sale. Reducing DSO is especially important to accounts receivable (AR) teams to keep cash flow running as efficiently as possible.
Suppliers who are looking to decrease their Day Sales Outstanding (DSO) should consider using tools to automate their accounts receivable processes, such as straight-through-processing (STP).
Days Payable Outstanding (DPO) is the financial measure used by businesses to calculate the average number of days that it takes a buyer to pay its suppliers after it receives goods or services from them. Although increasing Days Payable Outstanding (DPO) may have some benefits for buyers such as improving working capital, taking a long time to pay for services or products can negatively impact their relationship with their suppliers.
Buyers who are looking to increase Days Payable Outstanding without penalties from their suppliers should consider straight-through-processing STP as a solution.E
An ERP system is a software application that automates business processes and provides a central database that organizes information across various departments. ERP systems can play an important role in improving B2B payment processes by automating manual work and allowing employees to dedicate more time to strategic initiatives that promote revenue growth.
I
A commercial card issuer is a financial institution or bank that provides commercial credit cards to businesses. These cards are for managing business expenses including travel, office suppliers, and other operational costs. Boost Payment Solutions offers a suite of services to help grow commercial card programs including flexible pricing, cross border payments, and customized supplier enablement programs that foster card acceptance and increase interchange through incremental commercial card spend.
O
The order-to-cash process is a business workflow that includes all the steps involved in processing an order. Typically, the order-to-cash process is handled by the accounts receivable department in the following order:
- Order entry & processing
- Credit approval of the buyer
- Invoicing once goods are delivered
- Cash application once funds are received
Friction in the order-to-cash process is common when accounts receivable departments encounter late payments and human error, which can happen at any step in the process if employees are not careful. The best way to ensure a smooth order-to-cash process is by automating with solutions that minimize manual processes, such as Boost Intercept.
P
A payment facilitator (PayFac) streamlines and simplifies the process of accepting electronic payments. Along with the technology itself and infrastructure maintenance, payment facilitators are responsible for merchant onboarding, transaction processing, fraud management, compliance management, fund settlement, fee management, and maintaining the relationship with the acquiring banks and card networks. Traditionally, payment facilitators have focused on small to medium sized businesses. Boost Payment Solutions offers enterprise-level B2B payment services and is equipped to handle the demands of high-volume, high-value transactions.
A payment gateway is a technology solution that enables suppliers to accept secure, electronic payments from buyers virtually. Payment gateways work as the bridge between the business making a payment, and the acquirer who authorizes and processes that payment.
Payments-as-a-Services (Paas) is a business model where providers offer businesses a platform to facilitate and manage payment processing without needing to build their own infrastructure. Utilizing a payments partner to provide PaaS is cost effective and allows businesses to bring services to market and scale them with ease.
Procure-to-Pay (also known as P2P) is an end-to-end business process that covers all activities involved in procuring goods or services from suppliers and managing payments. This process starts with identifying a need and selecting suppliers and continues through purchasing, receiving, and finally paying for the goods or services. The goal of the procure-to-pay process is to ensure efficient procurement, maintain good supplier relationships, and optimize cash flow.
R
Remittance is the process of a buyer sending payment information attached to the funds they owe a supplier. The buyer is responsible for including details such as the invoice number, payment amount, payment date, customer account number, and transaction reference. The more comprehensive the remittance information is, the more streamlined the process is for suppliers to reconcile the data with limited errors.
Creating and reconciling remittance data is cumbersome for both buyers and suppliers, but using a solution such as Boost Intercept can automate detailed remittance and reduce unnecessary manual effort.
S
Straight-through processing (STP) describes a fully automated B2B payment process designed to expedite the remittance and settlement process for payments. STP increases AR efficiency, reduces the need for error-prone data entry, and increases security by eliminating exposure to card data. Medium and large, enterprise-sized businesses utilize straight-through processing to streamline their entire accounts receivable department, save money on traditional processing, allocate their staff to more strategic initiatives, and strengthen customer relationships.
When looking for a B2B payments company that can provide straight-through processing, it’s important to consider the technology they use. With Boost Intercept, buyers and suppliers can experience a completely hands-free solution. There is no new software or equipment to set up, no internal training necessary, and remittance data in any ERP format is emailed at the time of payment.
In a B2B relationship, a supplier refers to the business providing goods or a service to another business, referred to as the buyer or customer. A supplier in Accounts Receivable (AR) refers to the individual or team at a given company responsible for managing incoming payments. Boost Payment Solutions offers cutting-edge payment technology that delivers end-to-end automation, minimizes processing costs, mitigates fraud risk, and accelerates payment timelines for suppliers.
V
A virtual card is a digital payment method that can be used for B2B payments. Traditionally, virtual cards utilize a one-time use credit card number that is generated by buyers and sent to suppliers electronically at the time payment is due. Virtual card is the most secure form of making B2B payments compared to ACH, check, and wire transfers.
Virtual Card acceptance with Boost Payment Solutions eliminates the need for manually entering credit card numbers, offering a safer, more efficient way to receive payments than traditional virtual cards.
A virtual lockbox is a digital B2B payments system that streamlines the process of receiving, processing, and managing payments. Traditionally, a lockbox referred to a physical mailbox at a bank where buyers would send their payments. Bank personnel would retrieve the money from the lockbox, process the payment, and deposit the funds into the supplier’s bank account either through an ACH transfer or electronic funds transfer (EFT).
Today, virtual lockboxes use digital technology to eliminate manual processing. Payments are automatically processed, and suppliers are provided with electronic notifications and reports detailing the payments received. Virtual lockboxes have many benefits including faster processing times, increased security, and increased efficiency for AP and AR departments.
W
Working capital is the money a business has available to run its daily operations. It’s the difference between what a company owns that can quickly be turned into cash (such as cash itself, money owed to the company, and inventory) and what it owes in the short term (such as bills or loans). Using a commercial card for B2B payments is an effective way to extend working capital.