Billing Agency vs payment processing company | The concept of "the right person in the right place" to optimize billing operations in BtoB

In Japan's BtoB business、Issuing and sending invoice, reconciling and clearing deposit data, and managing the risk of uncollectedA series of "Inefficient Practices in Billing and Collection Operations and Associated Risks」has long been dismissed as an unavoidable administrative burden. However, as the digitalization of commerce accelerates, this area goes beyond back-office efficiency and is a crucial foundation for supporting sustainable growth for companies. When considering efficiency, many businesses compare "billing agency" and "payment processing company", but they are fundamentally different in the areas and scope of responsibility to be solved.

In this article, we will summarize the functional differences between the two services based on practical knowledge from the payment field. Then, we will explain the criteria for determining which mechanism can be the true solution to the challenges faced by your business model.

Defining "Roles" and "Areas of Responsibility" in Billing and payment processing company

To avoid operational confusion, you must first clearly define the "depth of work" and "risk location" covered by both services. These are not alternative relationships, but nothing more than a strategic choice of which phase of the business to externalize.

Billing: Comprehensive externalization of the entire business process

There are two main forms of billing agency depending on the service design.

Office Agency Type

Externalizing tasks such as issuing and sending invoice and managing payments. In this case, in principle, the risk of uncollected payment in the event of a delay in payment is often borne by the introducing business (seller).

Guarantee type (payment)

In addition to administrative work, it integrates credit check and accounts receivable warranty in case of non-collection. In this form, the agency guarantees accounts receivable, allowing the operator to focus on trading without worrying about uncollected losses. What they have in common is that they mainly focus on outsourcing some or all of their back-office functions to reduce their own operational load.

payment processing company: Building a foundation for infrastructure of payments sophistication and business growth

payment processing company is an infrastructure that integrates and manages various payment methods, including credit cards, Bank transfer, and virtual accounts, on a single platform. The most important feature is that it externalizes the burden of building and maintaining complex infrastructure, such as contract with individual payment institutions and system connections, and provides a foundation for adopters to focus on business growth that they should focus on. It goes beyond simply expanding payment means to provide a secure trading environment by taking on the burden of maintaining high security such as optimizing deposit cycles, automating through system integration, and PCI DSS compliance. This will serve as a "growth foundation" for business expansion based on payment while utilizing the company's own operating flow and credit standards.

Business models in which billing works and their practical value

Billing is not just a substitute for administrative work, but a solution that contributes to eliminating uncertainty in management. Its value is more likely to be demonstrated, especially if you have a practical background such as:

Accelerating sales channel expansion by externalizing uncollected risks

In BtoB transactions, dealing with new customers always carries the risk of bad debts. In-house credit check not only costs a lot of money to build screening criteria and gather information, but it's also common to be overly cautious and lose opportunities. Guaranteed billing agency creates an environment where the agency can focus on aggressive new development without worrying about risk by guaranteeing payment.Especially when targeting an unspecified number of small customers with a small transaction amount per company and uncommensurate credit costs, this "payment collateral" is a strong impetus.

Appropriate allocation of resources by reducing office man-hours

For businesses that conduct small transactions with a large number of transactions, the reconciliation and clearing of transfer data concentrated at the end of the month is a heavy burden on the accounting department.By implementing billing, these routine tasks can be automated, reducing human error and reducing human costs at the same time.This allows limited resources to be redirected towards more strategic financial management, improving overall productivity within the organization.

Improved Infrastructure Capabilities and Customer Satisfaction Offered by payment processing company

The role of payment processing company lies in minimizing payment inconvenience and machine losses by increasing payment options. In modern BtoB trading, convenience can be a powerful competitive advantage.

payment Customer-centric payment strategy to meet the diversification of means

In recent years, the BtoB market has seen an increasing number of companies that want to transact not only with Bank transfer but also with corporate cards. Card payment offers the benefits of point redemption and cash flow flexibility for buyers, while for sellers, it can lead to faster confirmation of payment availability and shorter payout cycles. payment processing company realizes these diverse needs in one point of contact and contributes to improving the closing rate of transactions.

Reducing the collation load of diverse deposit data

When implementing multiple payment method, one of the major practical barriers is the variability in payment timing and notification format. With payment processing company, you can see the status of payment across different methods, such as credit cards and Bank transfer, in a single pane of glass. In addition, system linkage reduces the time and effort required for manual data output and processing, helping to eliminate information disconnection in accounting practices. In addition, if it is a subscription-based model, by utilizing functions such as "account update" that automatically confirms the validity of card information, it is possible to improve operations in line with practical practices, such as preventing the occurrence of uncollected items due to payment failure.

Analyze the current situation and identify bottlenecks to avoid making mistakes.

When deciding which service is best for your company, you should not consider comparing tool features, but identifying the real cause of your flow challenges.

Situations where you should choose"billing agency"

• The complete elimination of "risk and administration" is a top priority: we cannot tolerate the financial damage caused by bad debts, and we want to avoid exhaustion of human resources due to dunning operations.
• The target audience is unspecified and small, and the company's credit costs are not suitable: the hassle of conducting individual screening is putting pressure on profits, and a uniform screening and assurance package is efficient.
• There is a serious shortage of manpower in the back office, and the business cannot run unless the entire process is cut out: accounting resources are occupied by routine tasks such as clearing and issuing invoice, which interferes with the main business.

Situations where to choose"​payment processing company "

• I want to control the "growth speed" and "trading flexibility" in-house: I want to flexibly expand transactions by utilizing my own screening criteria to prevent lost opportunities (screening failures) due to external conservative screening.
• You want to increase revenue with the best combination of payment method: Instead of aligning your operations with a one-size-fits-all package, you want to strategically use credit cards and virtual accounts. For example, I would like to lead the design to maximize customer lifetime value (LTV) starting from payment, such as early recovery of funds through card payment and expiration prevention through the "account update" function in recurring payment.
• Aim for advanced integration with existing systems: Leverage system integration to seamlessly integrate payment functionality as part of your company's core systems and service sites.

Summary: Selecting partners to support sustainable business growth

Billing and payment processing company. The difference lies not only in the presence or absence of functions, but in the degree of freedom of management and the depth of operation, such as how autonomously the payment process is designed according to the company's commercial flow.

GMO Payment Gateway, Inc. offers a wide range of solutions, from payment processing company to billing.

Where are the bottlenecks in the current commercial flow? Identifying the true cause of this and selecting the right person in the right place is a sure step towards the next step towards growth.

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