3 ways a B2B-first payments stack makes ecommerce work smarter
A glimpse of ecommerce payments today
We’re living in the age of ecommerce: merchants today have access to all kinds of technology providers to simplify and optimize every step of the ecommerce experience, from robust ecommerce platforms, ERPs, customer service portals, and, of course, we have fintech to thank for the diverse offering of payment solutions. These tools have enabled ecommerce merchants to grow and scale their online sales in a way that they never could offline.
The payments piece is especially important because it serves as both a customer experience touchpoint and determines the amount of manual involvement on behalf of the finance team. So choosing a payment partner that provides a good experience to customers and increases automation for the front-office (revenue, AR, invoicing and commerce) is essential to both drive revenue and improve back-end operations.
But it’s never one-size-fits-all: depending on who is transacting, the requirements for what makes a great payments platform vary greatly. For instance, in B2C, the highest priority is offering multiple payment methods, with credit cards, paypal, and buy now pay later (BNPL) absolute necessities.
In B2B ecommerce on the other hand, the standards become more complex. Providing the payment options like credit cards is still essential, but in addition, B2B merchants must equip their checkouts to include other industry-specific traditional payment methods like automated clearing house (ACH) and wire transfers, and for some industries, paper checks, bank transfers and electronic funds transfers.
On top of those payment types, business-to-business transactions are often global and so payments solutions must support multiple currencies. With all of those requirements, we haven’t even mentioned perhaps the most essential offering of a B2B payment service: net terms. And even if you have all of those B2B payment methods, it’s still not enough: The nuances and complexities of the B2B payments journey are many, and so it’s important to find a digital payments provider who really understands and can cater to those challenges.
At Balance, we’ve purpose-built our payments rails with the functionality to address those challenges and optimize every step of the B2B payments journey. We’ve considered it all, from checkout to payment to collections, and worked to streamline those processes and workflows to make the online checkout experience and B2B purchasing journey on par with the “Amazon-like” experiences we know as consumers.
Here are 3 highlights of how our payment rail makes the B2B ecommerce payments experience better for all stakeholders:
B2B-first payment processing without the cost
B2B buyers want more payment options than ever. New payment trends, including the rise in the use of business credit cards, mean that merchants must offer new payment methods in an increasingly competitive ecosystem. But for merchants, high card processing fees often negate the gain made on the sale itself, making them a less-than cost-effective option. That’s why we built a surcharge solution, giving merchants the ability to “pass on” the processing fee to their buyers, instead of having to eat those costs themselves.
In the B2C world, consumers may be hesitant about surcharging. However, in B2B transactions, customers often prioritize the ability to float credit over the cost of credit card processing fees. And with nearly two-thirds of merchants expressing the need for this surcharge flexibility, we’ve made it possible for merchants to handle greater credit card volume without incurring associated costs. It not only facilitates widespread adoption of this payment method in the B2B landscape but also helps businesses sustain healthy growth by minimizing the risk of losing customers who prefer credit card payments.
Flexible auth and capture for credit card payments
In the consumer ecommerce world, where credit cards reign, average authorization periods last 5-7 days. This is perfectly acceptable as payment comes upfront with purchasing goods at checkout, fulfillment and shipping are much faster, and merchants have more than enough time to use their payment processor to capture funds. But the same can’t be said for B2B—where for some industries like construction, milestone payments are commonplace.
Making milestone payments work online
With milestone payments, the merchant needs to be able to capture payment at multiple stages of the transaction journey. Perhaps a merchant takes 20% of the payment at purchase, then another 50% once the goods have been shipped, and the remaining 30% at the point of delivery. If the buyer is paying with credit card, that process becomes tricky.
At Balance, we understand the dynamism of B2B purchases: purchase order requests, pricing changes, order fulfillment delays, and the wait period from time of purchase to the point where the buyer receives their shipment of goods. That’s why we’ve built a flexible authorization and capture mechanism to empower merchants who want to offer credit cards, the preferred payment method for many buyers.
The way it works is simple: At the time a purchase is made, a small hold will be placed on the buyer’s card. At that point, the merchant can fulfill the order, ship it, and capture the remaining balance. If the original authorization period ends and the merchant hasn’t had the opportunity to capture the remaining funds, they can easily renew the authorization period right in the dashboard.
The capability to renew credit card authorizations provides merchants with much more operational flexibility and enables them to offer their buyers their preferred payment methods, even when they buy on terms, making credit cards actually align with the B2B payments process.
Auth per vendor for marketplaces
In addition to our flexible auth and capture, we’re making the marketplace payment experience even better with the ability to auth per vendor. For an optimized customer experience, buyers should be able to add multiple items from multiple vendors to their cart, and pay for it in one transaction.
However, on the marketplace operator’s side, each vendor should be able to ship at different times and handle returns/exchanges separate from one another. To do that, you need to be able to authorize each vendor as a separate transaction. Balance makes this possible, all the while giving the buyer a smooth payment experience with one “transaction” and one checkout on the front-end.
Visibility and convenience for merchants and buyers alike
Late payments are a commonly cited issue for merchants, creating a negative impact on business operations and cost while the manual and time-consuming process of collecting those delayed payments leads to increased days sales outstanding (DSO) and cash flow issues. Even receiving occasional payments a number of days late has a negative outcome on the business side of the payments process.
On the other hand, receiving an invoice via mail, fax, or even solely by email isn’t the most convenient for buyers— they can become lost or forgotten about easily. To make the B2B ecommerce experience better and to truly prevent late payments, B2B companies must make it as easy as possible to pay on time.
That’s why Balance built the buyer portal: Buyers have a “control base” with complete visibility into outstanding and paid dues. Through the buyer portal, buyers can conveniently make online payments in real-time and even schedule future payments.
For merchants, the portal offers a comprehensive view of invoice and customer payment details, including due dates, amounts, payment terms, payment history, and statuses. This visibility enables AR teams to stay in control, see all outstanding, paid and future dues, and make informed decisions based on that information.
The buyer portal has been a complete game changer already for reducing late payments. In its first month of release, we’ve seen that B2B customers are scheduling 60% of all invoices in advance of their due dates.
From the customer experience and relationships side, reduced late payments means less uncomfortable phone calls, and strengthened customer relationships and loyalty. From the revenue and financial side, getting paid on time will improve cash flow. And with that increased working capital, merchants are well-positioned to support their own B2B ecommerce growth in a sustainable way.
Learn more about our digital payment solutions for B2B ecommerce
At Balance, we’re solving for the inefficiencies in the B2B purchasing journey, tackling the O2C process from checkout to collections. We’re equipping merchants with the tools to thrive in B2B ecommerce. Want to learn more? Speak to one of our experts today.