Business-to-Business (B2B) purchases are more complex as compared to Business-to-Customer (B2C) transactions. Payment methods need to be simpler and more flexible for such purchases. A majority of B2B firms have halted traditional payment methods which cause hindrance towards long term growth.
These firms offer payment mechanism that include purchase orders, trade credit, cash on delivery, ACH and paper checks. Some firms also have the ability for credit card payments, which are more appropriate for small orders. Although few e-commerce businesses have adopted contemporary payment methods such as mobile wallets and third-party financing, B2B buyers expect modernized payment processes to save time and avoid friction in the upcoming years.
B2B e-commerce is a concept where one business entity makes a commercial transaction with another business entity. The procurement process takes place partially or entirely on a digital platform between the two parties.
Why Should B2B Firms Adopt Digital Payment System?
E-Commerce businesses face numerous challenges with traditional payment methods preventing them from scaling. One of the biggest challenges is high transaction cost. The solution that E-commerce provides is that the product is selected according to the buyer’s budget. The seller ships the product with an invoice and waits for the payment. Delayed payment results in the creation of a significant gap in the seller’s cash flow. It gradually impacts the purchases of raw materials, ultimately slowing the delivery times and sellers cannot make their capital investments.
Addressing challenges in B2B purchasing process with simplicity and convenience
B2B purchasing processes can be simplified with a B2B payment technology solution like credit key, thereby reducing cost, time and risks. Credit key enables e-commerce buyers to pay for purchases in monthly installments, at better rates compared to business credit cards and other such alternatives. Payment systems can be embedded into the checkout process with the use of enhanced technology and algorithms to deliver faster purchase experience. It resolves the process of downloading and completing a form like various trade credit application demands. Instead, just a few critical questions help to understand and identify a buyer’s creditworthiness. Furthermore, the system automatically decides the credit; the buyer is deemed eligible and is instantly provided credit approval.
This system reduces the friction in internal B2B purchases, with increased number of buyers completing the entire purchase process. Instant credit is an affordable payment method if the cost is the concern for buyers as well as sellers. Buyers can take advantage of lower interest rates, sellers can save costs due to automated processes and eradicate manual mechanisms of processing credit applications, sending invoices, and chasing buyers for payments.
High-quality data elevating revenues
The completion of any B2B purchase generally requires sign offs and complex configurations. However, the payment process can be simplified considerably with flexible payment technologies. Traditional trade credit or credit cards don’t offer quality data, but sellers can gain higher quality data from new-age digital payment solutions. This data can be beneficial to sellers in positioning and remarketing their product and services, to existing as well as potential customers.
For instance, sellers can create segment-specific campaigns that initially segment the customer base, based on the amount of credit the customer can access. The probability of merchants offering special lower-cost items for a customer who has a smaller credit line is higher. Line of credit may not only be advantageous in product purchase, but also persuade the buyers to spend more with complimentary offerings.