How Merchants Can Embrace B2B Digital Transformation in Payments Strategies

By Brandon Spear, CEO, TreviPay

As we approach 2023, it is exciting to see the amount of energy going into solving the challenges in B2B payments. While digital transformation has been accelerated by the pandemic, most company resources and attention initially went to improving the online customer buying journey for the B2C buyer. But attention is now rightly focusing on how money flows in the B2B ecosystem.

B2B expectations and demand for seamless online experiences have become critical. Although B2B innovation typically follows years after B2C processes are established, merchants are finally evaluating business models to determine how to best digitize processes for the business buyer. Why? Because B2B buyers have a different set of expectations and involve more complex processes than B2C payments. For instance, B2C payments tend to be performed by a single stakeholder (a consumer) using a single payment method (a credit card), but any given B2B transaction may involve multiple stakeholders (the purchaser, the budget owner, the procurement group and the A/P team) and numerous payment options (trade credit, purchasing cards and credit cards).

The accelerated digital transformation is also changing merchant requirements to keep pace. Inefficient administrative processes consume valuable department time and resources, but with the right fintech ecosystem support and back-office innovation, teams can be fully equipped for the future of payments.

As B2B businesses consider how to continue digital transformation in 2023 and beyond, here are four ways to future-proof your payments strategy:

1. Improve the B2B buyer journey with modernized payments options. Data from the Why More Payment Options Mean More Purchases report shared that 50% of B2B buyers prefer to pay with methods other than credit cards when given the option. This means that merchants who only accept credit card purchases stand to lose to competitors that offer more desirable payment alternatives, such as trade credit. Trade credit is an essential component of B2B trade and has been around for decades. Today, some call it “BNPL for Business.” It enables suppliers to increase sales and grow loyalty while buyers can purchase without impact to their cash flow. Offering trade credit is so important that the same report found 82% of respondents would pick one vendor over others if they could choose from invoicing with 30-, 60- or 90-day terms.
2. Mitigate against fraud and digital identify theft. As a result of the pandemic and shift to eCommerce preferences, more customers are being acquired online than ever before. This causes a growing risk of B2B business identity theft and fraud. To help proactively combat this risk, businesses must recognize the importance of verifying a business is who/what it says it is before agreeing to sell to them. Before the creation of a Certificate Authority on the internet, buyers were looking for ways to authenticate the validity of a website operator (the seller). Today, these roles have flipped as sellers must authenticate their buyers before selling to them – particularly B2B buyers that tend to make high-dollar purchases. For companies who can do this, the speed by which you can accelerate eCommerce is enormous.
3. Transform finance departments with automation. Another area of modernization stemming from digital transformation is the back office, and the handling of financial data for accounts receivable/accounts payable functions. For example, think back to the start of the pandemic when there was no longer someone sitting in the office to open the mail to pay invoices and take checks to the bank, the payment cycle risked slowing down. All the back office financial data processes had to immediately modernize and digitize, like onboarding, billing, reconciliation, dispute management and collections. When invoices had to go completely digital, they had to become significantly more thorough by including all necessary data, like PO numbers, so they could be better processed by automated systems. Accounts receivable automation can help finance departments by enabling teams to focus on high-level service and processes, instead of administrative tasks or manual processes. Automation also improves the customer service experience, leading to a larger share of wallet, more loyal clients and the reduction of non-payment risk.
4. Embrace collaboration across the fintech industry. As B2B transactions are inherently more complex and may encounter cross-border nuances, merchants must remember to put their business buyers’ needs at the center and understand who they can collaborate with to solve the problem together. This could mean partnering with multiple vendors, including a purpose-built B2B invoicing and payments provider, and being forward-thinking to build a platform in an API-centric way to offer the best inter-connected solution.

As we enter 2023, B2B merchants will continue to face immense competition to win increasingly digital buyers, amplifying the need to offer payment solutions that will drive revenue and support customer loyalty. To improve the B2B buyer journey and embrace digital transformation, retailers must leverage a customer-centric payments strategy and embrace ecosystem partnerships, recognizing that companies do not have to solve all problems themselves.

Gleaning insights from B2C customer interactions and preferences, buyers want to transact on their terms seamlessly and safely, using their preferred payment methods. So much so that retailers should consider payments as the fifth P of marketing, alongside price, product, promotion and place that was coined in the 1960s. Now is the time for B2B businesses to modernize their payments strategies and put fraud mitigation measures in place. After all, B2B buyers and sellers are traditional consumers at their core and have increased expectations when it comes to transacting with the brands they prefer and trust.