Did you know that last year, as the B2B global market valued at $17 trillion, half of those transactions were made offline? Welcome to the untapped potential of B2B payments, and the focus for season 10 of Future Commerce’s Step by Step podcast.
On this season, sponsored by Balance, hosts Philip Jackson and Brian Lange sit down with 3 industry leaders who have their fingers on the pulse of the influences, challenges and trends shaping B2B payments today and into the future: Paul do Forno of Deloitte, Kirsten Green of Forerunner Ventures, and Balance’s very own CEO and cofounder, Bar Geron.
Here are some of our favorite moments from the season.
Episode 1 | B2B Payments: The Final Frontier with Paul do Forno
Which industries stand to gain the most from payment technology, and how?
The value of a digital payment platform leaves no stone unturned. Every business, no matter the vertical, is looking to grow their margins. There are many ways to approach that.
One way, Paul explains, is through digital payment platforms like Balance: “the[se] new tools will help facilitate, reducing the friction to allow your customers to pay you in an easier way. And it doesn't necessarily mean they might pay you sooner, but you make it easier for them to fulfill their contractual obligations.”
Furthermore, adopting a digital payment platform enables businesses to expand their markets, creating “an opportunity for some of your segments where you might have not done business with people because it might not have been easier to set up terms or do credit”, Paul continues.
“A lot of business is based on trust. As the relationship becomes more digitized and more transactional, that trust becomes more inherent. There's an opportunity to broaden your market because you can sell to a set of businesses you couldn't have sold to prior.”
What are the challenges businesses face in the pursuit of digital transformation?
The larger a company, the larger the scale of change management. For payment solutions specifically, Paul describes the challenges a larger enterprise faces: “no central person owns a topic. You [have to involve several teams]: finance, the accounts receivable team, front office revenue department and sales team. You have to move a lot of people [and processes].” Ensuring that each team is aligned and that their actions prioritize this transformation can be a significant obstacle.
SMBs, on the other hand, may not have the manpower to prioritize digital transformation without sacrificing other business priorities. The idea of completely revolutionizing how you receive payments sounds intimidating to a lot of businesses.
To tackle this, Paul points to the power of leveraging plug-ins and add-ons to tools that businesses are already using to make new technologies easier to adopt.
How can companies achieve success in the new B2B landscape?
The most important value you can bring to your customers, Paul says, is that you are easy to do business with.
Buyers will choose to do business with merchants that make it easy to do so, with delightful checkout experiences, buyer portals, troubleshooting without having to pick up the phone and call someone, etc.— and technology solutions will make all of this possible.
In fact, whereas personal relationships dominated the B2B landscape before, a robust online platform will be essential in building trust with the new generation of tech-native business buyers. “[As a buyer,] if I go in and I don't have a portal, I don't have a website to go to, I’m not going to have the trust in this supplier,” Paul explains.
“But, if I have those tools, if I get an automated message after purchasing to confirm my order, if I receive updates, then I feel a lot of trust for this merchant. It’s proactive. This merchant is organized, and ultimately, this merchant and those like it are going to win [in this space].” The B2B space looks like this today: The more robust your technology offering, the easier you are to do business with, the more trust your buyers have in you.
Episode 2 | The Consumerization of B2B with Kirsten Green
Why has B2B lagged behind B2C, and why is it finally having its moment now?
B2B innovation lagged behind that of B2C because there was not technology to support the nature of the B2B commerce: It is a purchasing journey, driven by personal relationships, underpinned by business-related buying behaviors, and characterized by larger transactions. A lot of times there are negotiated volume discounts and there's been less optionality in how a transaction is settled or paid.
Now, with the technology available, these elements of B2B can be done better and more efficiently. “How B2B transactions are executed today mirror more of what people are used to doing in the B2C landscape,” Kirsten explains. “Ultimately, this is more efficient for the B2B business model.”
Episode 3 | Make B2B Sexy Again with Bar Geron
How are current technology offerings powering scalability in B2B like never before?
As B2B moves online, its most well-known business element reaches uncharted territory— where buyers and sellers don’t necessarily have a personal relationship.
Without the security of a personal relationship, sellers can rely on technology to facilitate that trust: buyer portals, confirmation emails, automated payments, etc. Because of the nature of technology, that trust has scaling potential like a personal relationship could never offer.
All that scaling potential is convincing even the most classically offline industries to consider digitization: “The biggest opportunity in online commerce is the ability to reach a much wider audience,” says Bar. “With the technology that exists today, everyone—from steel to lumber to the chemical supply industry—has the opportunity to scale and reach new customer segments.”
Why now is there an urgency to begin digitizing in B2B?
There’s an old business adage: The customer wants what they want, where they want it, when they want it, and how they want it.
Buyers’ expectations are changing—No longer does the tech-native business buyer need to have a personal relationship with their supplier. They want a seller who is easy to do business with and can offer them a good price.
Moreover, the reality is that today, B2B merchants are not only competing with ecommerce channels, but also niche B2B marketplaces, whose focus is on experience and optimizing cost. “This leaves merchants with one of two choices,” Bar explains. “Digitizing one’s business or moving to a platform to digitize the sales channel.”
The sellers who adopt technology will win in the end, being more flexible and better positioned to offer business buyers the experience and conditions that they demand.
A final thought
When it comes to B2B payments, one thing is clear: their digitization is driving enormous change across industries. Here at Balance, we’re making sure merchants and marketplaces have the tools and support to be part of that change from the beginning.
If you enjoyed these moments, check out the full episodes for even more great insights on the untapped potential of B2B payments.