How B2B Companies Can Weather the Supply Chain Storm Using Payments Technology

In the short term, businesses can alleviate some of the supply chain pressures re-evaluating their B2B payments strategies to meet customers where they are, better manage cash flow and protect themselves against fraud.

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There is no quick fix for the supply chain issues that continue to plague companies worldwide. In the short term, businesses can alleviate some of the supply chain pressures re-evaluating their B2B payments strategies to meet customers where they are, better manage cash flow and protect themselves against fraud. Here’s how.

1. Build “experience loyalty.” The pandemic has changed the way consumers shop overnight with convenience being more important than ever.

Consumers expect a seamless online checkout experience, so it’s no surprise that today’s B2B customers also want fast, frictionless online payments. A Forrester study found that 93% of companies experience payment systems challenges that can negatively affect customer experiences and sales. In fact, it’s reported that lengthy billing processes with multiple steps are the top challenge with current payment systems.

To turn new customers into repeat customers, it’s critical to offer multiple ways to pay, all with the ease of one-click purchasing. A new TreviPay study found that B2B merchants now offer 4.7 payment methods, on average. Of these companies, over 50% currently offer traditional wire transfer, digital wallet payments, traditional credit cards and real-time payments.

But, keep in mind that business customers often prefer to purchase on terms. In the shift to digital-first interactions, instant decisioning is critical to grab the sale and keep the customer. Plus, these buyers will spend more, and more frequently, when they have a dedicated financial relationship and credit line with a business. The advantage over the competition is significant when customers know they can easily purchase once they’re ready for more stock.

2. Provide short-term finance solutions. Today’s global supply chain disruptions are leaving lots of B2B merchants scrambling to find new routes and suppliers, leading to a “trade gap” of outstanding receivables. And, this gap is huge: estimated at more than $3.1 trillion per day, PYMNTS research shows.

Many traditional sources of funding have dried up with banks being more reluctant to take risks during the economic downturn. And, many of these vendors still don’t have much leverage when it comes to getting buyers to make timely payments, let alone have the power to set favorable terms. This financial environment resulted in disproportionate working capital and supply chain finance access, with larger suppliers generally doing better than smaller ones.

Credit cards are a familiar solution, but expensive fees and insufficient credit limits can be costly to doing business. Many B2B purchases are sold on Net 30 terms. In fact, 82% of B2B buyers would choose a vendor over others if that vendor offered invoicing at checkout with 30-, 60- or 90-day terms. But, this is unfamiliar territory for companies that are new to taking all aspects of their business online. Not to mention that the complications of underwriting and the risks of debt can be a limitation for many companies.

A good payments solution partner can smoothly manage these interactions by allowing companies to offer credit to their buyers while still maintaining working capital and eliminating unnecessary risk. This means that companies receive the benefits of extending credit terms without the burdens of debt collection. These solutions can do everything from underwriting and approving buyers for credit in under a minute as well as allowing for online invoicing at checkout.

3. Lower risk by preventing fraud. It’s important to note that, as online sales grow, fraud has increased. It’s the nature of e-commerce these days. As more customers are acquired online and globalization accelerates, there is a growing risk of business identity theft and other forms of digital fraud. According to the Association for Financial Professionals, more than 80% of organizations say they were the target of an attempted or actual payments fraud attack in 2019. These days, sophisticated fraud detection processes are absolutely necessary to prevent companies from experiencing devastating losses to revenue.

It is critical to find a payments partner that can verify customer identity when offering credit. Underwriting should include sufficient KYC and AML fraud detection processes. There must also be sustainable systems in place for accounts payable departments that can be scaled. According to PYMNTS, business email compromises (BEC) are among the most common forms of B2B payments fraud. This is when someone alters bank information on an invoice to redirect payments into the wrong account. Accounts payable departments must be equipped with education and training on preventing BEC so that fraud is detected quickly and efficiently.

Determining what payment methods your company will accept is also pertinent. It is common knowledge that check payments may open your company up to fraud, but AFP reports that wire transfers, corporate/commercial credit cards, ACH debits and ACH credits are reported most susceptible to fraud attempts/attacks. Of course, it’s a delicate balance between preventing fraud and offering vendors the payments options they need.

While much of the increased fraud in recent years can be attributed to the Coronavirus disease (COVID-19) pandemic, one thing is for certain, companies will need to stay on their toes and continue adapting to the rapidly changing landscape around them one step at a time.