The B2B buying process has transformed extensively in the last few years.
Gone are those days when a buyer places a purchase order for a product, and the seller processes it and delivers the product along with the invoice. Gone are those days when the sellers had to wait for their payments to be processed on time.
Taking a leaf out of B2C eCommerce, the B2B enterprises have started implementing the eCommerce model for buying and selling products. It has reduced the friction in the transaction process and has made it convenient for enterprises to buy and sell products. Sellers have also been able to reach out to more customers, segment them, and give them segment-specific discounts. This has helped them to generate higher ROI.
Unlike B2C eCommerce, B2B eCommerce deals with transactions that go up to million dollars. So, payment through credit card could attract a high interest rate. Secondly, the purchase decision is not taken by an individual. It has to go through multiple authorizations and approvals before getting a sign-off. There is also a lot of complexity involved in the transaction process making the payment process harder for enterprises.
Apart from this, enterprises are also worried about the risks of failed payments.
Let’s look at the common risks that lead to payment failure and find out how they can be solved.
What Leads to Inaccurate Payments in B2B eCommerce?
Different discount offerings
Sometimes sellers offer special discounts to different buyers. For example, sellers provide an early bird discount to buyers who pay earlier than usual. They could also provide special incentives such as free maintenance or complementary products. Such unique offerings help the sellers to build a long-term relationship with the buyers. However, adding different discounts to different buyers can be a cumbersome process, and if not done right, could lead to inaccurate billing.
Different pricing terms
Unlike B2C, B2B purchasing is not a one-size-fits-all process. Every buyer has a different pricing term with the seller. As they purchase products in bulk, they negotiate the pricing with the seller. Sometimes the prices are negotiated per customer or on a contractual basis. Given that different buyers have different pricing agreements; sellers have a tough time ensuring that the right price is entered during the billing process. This leads to billing complications.
Traditional payment methods
B2B buyers seek payment flexibility. They want to use non-traditional methods such as e-wallets, PayPal, or even cryptocurrencies. However, surveys reveal that 51% of B2B payments are still done using traditional payment methods. They still use traditional methods such as paper checks, wire transfers, and automatic clearing houses (ACH) to pay the sellers. Some buyers also rely on emails to make purchases. The lack of uniformity in payment methods makes it difficult for sellers to keep track of payments and add to the complexity.
What Are the Risks of Failed Payments?
Poor customer experience
According to a 2019 Sana Commerce’s B2B Buying Process report, While 30% of B2B buyers want to purchase most of their products online, only 19% are currently doing so. Poor customer experience was found to be one of the reasons why B2B buyers were reluctant to buy online. The B2B purchasing process is not as straightforward as B2C. For example, the payment terms are not the same for every buyer. So, during the checkout process, the buyer must see the pricing that was negotiated at an early stage. If the billing system fails to customize the pricing or apply the discount, the buyer is likely to lose trust, resulting in a loss for the seller.
Process prone to errors
According to the same report, 44% of B2B buyers stated that they found errors in their online orders every week. While there could be various reasons behind the errors, one of the top reasons cited was incorrect pricing. Discrepancies in the pricing could be due to the different payment terms agreed between the buyers and the sellers. Another reason could be the traditional and manual process of transacting by using paper checks. According to Comdata, the error rate of transacting with paper checks is 18%. Even if the buying process is done online, buyers prefer to use traditional payment methods like paper checks to pay. This not only delays the payment cycle but also leads to errors that occur during traditional billing.
Loss to sellers
Traditional and manual billing is not only error-prone; it is also time-consuming. The seller may dispatch the products. However, they may not receive their payment on time if the buyer does not clear the invoices on time. This could impact their cash flow and eventually lead to losses for the sellers. It could also halt their operations and delay the process of purchasing raw materials and hinder their delivery time.
The failed payments should not be a reason for not adopting eCommerce. eCommerce can enable B2B enterprises to improve their profits, make selling more seamless, and enhance customer experience. What B2B eCommerce needs is an automated mechanism to enhance the payment process. They can automate their billing operations to keep track of their payments, send reminders to the buyers, apply relevant charges and discounts, and manage online payments effectively. The seamless process will help B2B eCommerce enterprises to receive their payments without any hiccups within a short duration and enable them to have a positive cash flow.
At OneBill, we offer a modern Billing and Revenue Management solution to help B2B enterprises automate their billing operations and ensure accuracy in revenue tracking. We offer features such as usage rating engine, taxation, billing, invoice customization, and account receivable reporting to enable B2B eCommerce to address the risks of failed payments efficiently.