The need for speed in B2B e-commerce

Author: Sharon Goldman | June 4, 2019

B2B e-commerce is growing rapidly, as brands look to increase sales and boost their bottom line. In fact, a 2017 report from Forrester Research estimates business-to-business (B2B) e-commerce transactions will reach $1.2 trillion by 2021.

But as the industry booms, so does the pace of business, so B2B organizations dealing with e-commerce need to figure out how to keep up. After all, competition between industries is getting fiercer, especially in retail sectors with tight margins, while small business success is more challenging than ever. . Customers are also becoming more demanding, accustomed to the seamless buying journey they enjoy on the B2C side (think Uber and Seamless.com). Also, as the younger generation moves into B2B management positions, they expect technology on their terms.

Ultimately, transactions are global and 24/7, so businesses that don’t grow faster are left behind. The faster you can complete a transaction, the quicker you can move on to the next opportunity.

Complex B2B Payments Slowed Due to Paper Chase

The point is, B2B e-commerce is much more complicated than B2C transactions. Unlike clicking “buy” on Amazon, for example, buying or selling B2B goods and services often involves multiple decision-makers, high-value transactions, and a highly targeted customer base.

Historically, complex B2B payment methods have also slowed things down. In B2B transactions, customers often do not pay upfront, but wait until they receive the goods and services. Contracts may include upfront or partial payments for discounts or increased flexibility. Of course, invoices also go through various approval stages. In addition, complex fees and taxes are also part of cross-border payments.

The traditional types of business payments used can also slow things down with delays and out-of-sync transactions, leading to cash flow problems, delayed transactions, and slowed growth . According to AFP, 51% of Business-to-Business (B2B) payments in the US are made by check, with the remaining 49% going through Electronic Funds Transfer (EFT), prepaid debit card, credit Automated Clearing House (ACH) and debit transfers.

For example, after analyzing proprietary data, including an analysis of 16,000 customers from July to December 2018, Fundbox found that the average SME had 24% of its monthly revenue related to accounts receivable, terms or trade credits. .

PYMNTS recently reported on an example of what small and large businesses deal with all the time in the B2B world: Three Babes Bakeshop, a local business in San Francisco, delivered cake orders week for Munchery, an on-demand delivery service. The bakery still owes $20,000, but Munchery’s closed and still owes many suppliers. Receivables are considered an asset only when Three Babes receives cash, but without it, the bakery cannot access the working capital needed to grow. This type of credit risk can be devastating to a small business.

On the other hand, for B2B buyers, extended payment terms from suppliers may be essential to successfully get the inventory they need. Unfortunately, the bottom line in B2B is often that both parties, both buyer and seller, don’t necessarily get what they need when they need it, the way they want it. But the B2B payment model is changing now — a long time.

Change payments to move faster

Freedom, flexibility, faster speed: It’s the key to long-term financial success in B2B e-commerce payments. Giving businesses credit, in context, at the point of sale, is an essential part of this fundamental shift.

If both parties – buyer and seller – can reduce friction in the payment process, then both sides can win and thrive. For small businesses, including those selling in B2B online marketplaces, using the latest in digital technology to give and receive credit at the point of sale, inside the checkout process , is a game changer. It means sellers can get paid instantly, rather than letting months go by. At the same time, buyers can get the products they need to keep up with orders and trends.

Result? Buyers can buy more on the spot, sellers can sell more without waiting for money, and the entire industry has a chance to grow like never before. For small businesses, B2B e-commerce can become a growth opportunity, rather than a hindrance that requires complicated paperwork and insight into complex financial solutions.

B2B e-commerce has long had a need for speed. Now, thanks to the latest digital solutions, both B2B buyers and sellers – especially in the small business space – can move as fast as they need to, to succeed on their own terms.