B2B Ecommerce

Revolutionizing B2B payments: Balance powers FashionGo’s Dynamic Net Terms

July 27, 2023
Table of contents

We all recognize the industry standards of Net 30, Net 45, or Net 60. However, what's often overlooked is the restrictive nature of trade credit. Specifically, small businesses, the backbone of the economy, face unmet credit needs due to stringent requirements and a lack of real-time, comprehensive information about the applying business.

The result is that they are often hampered by cash flow shortages.

Traditional credit offerings weren’t designed with small businesses in mind, relying on data that predominantly supports large enterprises with ample financial records. Consequently, net payment term approvals aren't optimized for the majority of today’s buyers.

To democratize access to cash and reduce exclusivity for its retailers and wholesale customers, FashionGo is introducing the first Dynamic Net Terms solution, powered by Balance, poised to set a new gold standard in B2B payments.

FashionGo is a leading online B2B wholesale marketplace, complete with dropshipping features for Shopify business owners, as well as many other capabilities to enable the fashion industry to connect and discover new opportunities.

Let’s delve into what Dynamic Net Terms is all about and how it's poised to revolutionize the landscape of B2B ecommerce.

What are Dynamic Net Terms?

Dynamic Net Terms, exclusively available on FashionGo in collaboration with Balance, offers buyers flexible wholesale terms tailored to their individual business needs and credit levels. Gone are the days of rigid payment structures; Dynamic Net Terms offers net terms of 60, 45, or even 30 days, dynamically adjusting based on the buyer’s profile.

This dynamic risk assessment maximizes the chances of approval for buyers, empowering them to secure the funds they need to thrive. Depending on the business, purchasing history on FashionGo, and many other data points, the number of days of their payment terms and credit limit amount are adjusted in real-time to that specific user.

Moreover, Dynamic Net Terms automatically increases buyers’ net terms limits as they build their order history and maintain timely payments on the FashionGo platform. Rather than declining a buyer who doesn’t qualify for Net 60, FashionGo can maximize access to cash for growing retailers by offering alternative net term options such as shorter terms. As these businesses repay their invoices, their credit limits can increase, and their terms can extend over time.

This approach deincentivizes late payments or failure to pay on the invoice due date while incentivizing early payments. What's more, it's completely free for buyers, with no hidden fees or costs, providing peace of mind for their next order.

FashionGo isn’t just connecting buyers and brands; it's evolving into a financial partner, optimizing the buying process with customer-centric payment innovations like Dynamic Net Terms. Beyond the accessibility of Dynamic Net Terms lies its payment flexibility.

Buyers can effortlessly use both net terms and credit cards together for a single order, giving them the freedom to pay their way. This innovative approach supports businesses to grow their inventory by enabling them to place more substantial orders and pre-orders by combining different payment methods. This will all be available at the checkout.

Setting a New Standard: Unmatched in the Industry

Dynamic Net Terms isn’t just a new feature; it’s a paradigm shift in B2B payments. With no similar applications available elsewhere, Dynamic Net Terms fills a crucial gap, especially in today's turbulent retail and economic climate, where access to funding is more critical than ever for business success.

Many merchants today overlook the long-tail when offering net terms. Setting minimum order quantities (MOQ) for terms may seem like the right choice when considering the effort and cost of extending credit terms.

However, this approach fails to account for the potential growth of a customer given terms. By reducing the operational cost of extending credit terms, businesses can increase the return on investment per customer. Credit card payments, for example, might seem like the cheaper option, but they don't offer the chance for businesses to grow through credit that can provide the necessary cash flow.

Offering more payment options and delaying upfront payments allows B2B businesses to grow their inventory and purchase new products needed for business expansion, which is the essence of a marketplace.

The Technology Behind Dynamic Net Terms

The technology behind Dynamic Net Terms is powered by Balance's Zero Decline Model. The model is AI-powered and is able to do a combination of three things:

  • In real-time, leverage robust and proprietary data sources to securely and accurately underwrite buyers that traditional credit systems decline due to limited publicly available data
  • Make real-time and dynamic payment suggestions along with credit limits based on the unique financial and business information
  • Automatically suggest when an approved buyer, based on their instant assessment and previous purchasing and payment behavior, can and should get larger credit limits

Together, these capabilities ensure that each business purchasing on FashionGo can receive the right level of terms to operate and grow efficiently.

Expected Impact and Growth

Dynamic Net Terms isn’t just about facilitating transactions; it’s about fostering growth and empowerment within the fashion industry. According to the Federal Reserve, trade credit is the most important form of short-term finance for firms, accounting for approximately 21% of U.S. GDP. Moreover, SMBs represent about 90% of all businesses, yet they are often subjected to outdated practices that make access to funds difficult.

FashionGo boasts 3 million products available across 11 different categories, ranging from women’s apparel to shoes, accessories, jewelry, and men's and children's wear. With Dynamic Net Terms, the platform aims to drive significant growth across various metrics, including the number of buyers, suppliers, gross merchandise sales volume, and revenue.

FashionGo aims to achieve an approval rating 5-6 times above the current industry standard, aligning its growth with the growth of its retail buyers. By increasing buyers’ purchasing power on FashionGo, Dynamic Net Terms is poised to drive substantial growth, fostering diversity and inclusivity within the wholesale ecosystem.

Expanding Access and Impact

By broadening access to critical funds for smaller retailers, Dynamic Net Terms aims to empower businesses of all sizes, fostering growth and diversity within the wholesale ecosystem.

With its customer-centric approach, innovative technology, and commitment to fostering growth and empowerment, FashionGo and Balance are leading the charge towards a more inclusive and dynamic future for businesses worldwide.

Balance combines the power of payment processing and financing to power wholesale business owners and be giving real credit options - ones that work with the timeframe they need to grow, at pricing that doesn’t impact their margins.

To apply for Dynamic Net Terms on FashionGo, visit: https://www.fashiongo.net/DynamicNetTerms/apply

Learn more about Dynamic Net Terms here.

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