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5 payment pain points for B2B sellers

The B2B landscape has changed significantly in the past decade. From the shift to omnichannel sales approaches to digitising shopping experiences, B2B sellers have had to jump through hoops to keep up with the market. Today, 83% of B2B buyers have stated they are willing to spend more to purchase products from sellers that have strong web shops.

One key aspect of running a successful web shop is having a robust payment system. How businesses approve payments, transact, and receive payments from customers can have a significant impact on how they perform in the long term.

When companies look to optimize their digital channels, many become stuck on how they can streamline payments and improve customer satisfaction in transactions. In this article, we will examine some common pain points B2B sellers have surrounding payments and transactions. We will also look at how alternative payment solutions can alleviate these pain points.

1.    Late invoice payments

Arguably, the number one pain point for many B2B sellers lies in late invoice payments. If you are a seller finding yourself devoting more and more time to chasing invoices instead of conducting your business, you are not alone.

In the B2B eCommerce space, 6 out of 10 companies say their customers pay late, and up to 90% of businesses were impacted negatively by late payments. Late invoice payments not only stunt a business’s ability to grow, but it is also a pain for sellers in their day-to-day operations.

Additionally, not every business can stand to receive late payments. SMEs, or businesses with tighter cash flows, can face serious disruptions if their buyers constantly miss payment deadlines or require extensions.

For example, 20% of companies said they have had to postpone their own payments to vendors and suppliers because of late payments. Another 20% stated they lost revenue. These delays, therefore, pose a huge problem for business owners, and they can make or break a company.

2.    Expensive transaction fees

Traditional credit cards may charge a percentage of the transaction volume, per transaction. These fees add up and eat into profits. Some B2B sellers mark up their goods and services to account for these additional fees, but the price increase can create dissatisfaction in buyers.

3.    Labour-intensive credit checks

A third pain point that deters business growth for B2B eCommerce companies is the labor-intensive credit checks. As B2B transactions can sometimes be very large, sellers must do their due diligence and conduct credit checks on buyers. This includes ensuring they are financially sound, among other requirements.

These credit checks can take up to days to complete. They can also be difficult for sellers due to a lack of available data online. When it takes days to approve a transaction, buyers can become frustrated and drop the seller in search of a better one. Labor-intensive credit checks also become a burden on sellers as they are not cost-efficient.

4.    Lack of systems in accounting

Often, one of the main pain points in B2B payments is the lack of integration between channels. This is especially true when a company uses multiple sales channels, ranging from in-person to over-the-phone to digital. The inability to combine systems can cause a real headache for B2B finance managers.

The lack of a cohesive accounting system is also a result of the use of paper invoicing. A lot of the time, paper invoices can get lost in the mail. They can also contain mistakes made by employees. Additionally, it can be difficult for teams to know which invoices have been sent out, which ones are pending payment, which ones are paid, and which ones are overdue.

This can lead to errors in accounting and reporting. It can also lead to a waste of employee time and resources when someone needs to rectify others’ mistakes or manually combine accounts.

5.    Bad customer experiences

With the sudden rapid onset of digitization, many businesses have not had the opportunity to optimize their web shops. One of the biggest areas of friction is the slow transaction process.

When buyers check out, they sometimes have to wait days to get their transaction approved. This is due to sellers needing to conduct manual credit checks and get a better understanding of their new buyers’ profiles.

We live in a world where we long for instant gratification, and real-time B2C payments have become the norm. When B2B payments take time to process, it can decrease customer loyalty and retention, which may lead to lower customer satisfaction, loyalty, and retention.

How fintech firms are combating these pain points

The pain points in B2B eCommerce payments have been well-documented, and many fintech firms are providing solutions. The goal is to create a holistic solution that can reduce costs, speed processes up, and improve customer experience.

To achieve this, fintech firms have introduced alternative payment methods from third-party providers. One such method is Buy Now, Pay Later, which eschews the need for paper invoicing and tedious finance administration for the seller, while offering maximum flexibility for buyers.

B2B Buy Now, Pay Later

B2B Buy Now, Pay Later (BNPL) is a type of short-term financing that allows buyers to make transactions immediately and pay for their purchases later, in the B2B space.

How B2B BNPL works

How it works is that the B2B seller opens a web shop, and he works with a BNPL provider. He integrates the BNPL payment method in his shop checkout. When a buyer purchases something and decides to use the BNPL option, the BNPL provider will conduct a quick credit check on the buyer. This is done automatically, and it can take as little as a few seconds with the help of machine learning.

If the BNPL provider approves the buyer, they can select their desired payment terms and conclude the transaction immediately. Payment terms vary from provider to provider. Some may have installment plans, while others may dictate buyers need to pay their invoices all at once in 30, 60 or 90 days.

Regardless of the payment terms the buyer chooses, the buyer receives their goods and services as soon as possible and can continue with their business operations. The seller, on the other hand, also gains peace of mind when they receive the payment from the transaction in full, from the BNPL provider in a set amount of time.

This is important for B2B sellers – that they have a financial guarantee when they partner with BNPL providers. These providers act as middlemen in transactions, ensuring sellers get paid within an agreed time range, even if the buyer has chosen the option to pay in 90 days. The BNPL provider is also then responsible for following up on outstanding payments. When the buyer is ready to pay, they transfer the funds to the provider.

How B2B BNPL benefits sellers and buyers

The benefits of B2B BNPL are obvious when you understand how the payment method works.

For B2B sellers, they receive the payment – guaranteed by the BNPL provider. This reduces their financial burden and the risk they take on when they conduct business. They also no longer need to chase late invoices nor conduct credit checks, because the provider will do that on their behalf. This can free up a lot of time and allow employees to focus on what they do best, which is developing plans to grow their business.

B2B buyers, on the other hand, gain flexibility in when they would like to pay and how they would like to pay. They can ensure their company is in a healthy financial state by choosing payment terms that suit them best. Buyers from smaller companies can also work with a greater number of sellers. This is because automated credit checks with AI can search both existing databases and the wider web to validate their businesses and approve their purchases.

At the end of the day, both parties maintain a healthy cash flow, and the relationship between buyer and seller strengthens.

Final words

If you are a B2B seller who is frequently experiencing problems with payments and transactions, you should consider alternative payment methods. B2B BNPL is suitable for merchants of all sizes and can be a valuable tool for business growth. If you would like to learn more, you can check out B2B BNPL provider Biller.

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