How Technology is Transforming Point-of-Sale B2B Financing

For merchants selling to business customers, offering a robust point-of-sale B2B financing offer leads to improved customer acquisition, customer retention, and business growth. Traditionally, retailers have struggled to provide financing options that meet the needs of small and medium-sized business customers, as most B2B financing providers offer net terms that are only suitable for large companies. However, this is changing.

What’s changing in point-of-sale B2B financing

Point-of-sale B2B financing is undergoing a transformation, driven by technological advancements and the emergence of fintech lenders who are addressing the unique needs of SMBs. Unlike traditional financing providers that offer limited and inflexible terms, these new entrants provide more adaptable and accessible financing solutions. SMBs seek terms that extend to 12 months, and beyond. They want to apply and buy quickly with instant credit decisions that reflect their experience as individual consumers. New players such as Credit Key and Tabit present such an opportunity. When integrated into an embedded lending platform, such as ChargeAfter, they enable merchants to seamlessly offer SMBs access to the capital they need to grow and compete more effectively right at the point of sale.

“B2B transactions have many unique requirements including split shipments, customer-specific pricing, invoicing, in-house lines of credit, and flexible payment terms. Combine that with a complex omni-channel experience and manual approval processes that depend on legacy systems, and you have a recipe for a massive delta in customer experience expectations.  Through our partnership with ChargeAfter, merchants can provide the B2C experience that customers expect for their B2B customers in ALL of their sales channels.” James R Wallen, Vice President of Sales, Credit Key

Key B2B lending challenges to overcome

There are specific challenges in B2B financing that make it difficult to provide, especially to smaller businesses. Understanding these complexities emphasizes how valuable it is when retailers get it right.

• Larger and more complex transactions: B2B transactions often involve bulk purchases, customer-specific pricing, split shipments, unique invoice requirements, and integrations to back office and ERP systems.
• Use of traditional credit and financing options: Many businesses rely on familiar, traditional payment options such as Net Terms which are ubiquitous in B2B, overlooking innovative funding solutions, which dramatically increase revenue and share of wallet to the merchant
• Longer risk and compliance assessment processes: Assessing business creditworthiness is more intricate and time-consuming than evaluating individual credit scores. Data that is available to assess risk for small and medium-sized businesses is limited and fragmented leading to long, cumbersome processes to open a new account.

“Business owners expect a seamless customer journey, mirroring their experiences as customers. This includes access to point-of-sale financing solutions suitable for different types of businesses at the point-of-sale.” Elias Beaino, Executive Vice President of Tabit by Merchant Growth.

Benefits of advanced B2B financing solutions

There are many benefits to meeting the needs of SMB customers, they include:

• Enhanced customer acquisition and retention: By offering flexible financing options, merchants can attract more business customers who might otherwise be unable to afford large purchases upfront. This not only boosts customer acquisition but also fosters loyalty, as customers appreciate the support in managing their cash flow.
  
• Increased sales and revenue: With better financing options, SMBs are more likely to make larger purchases, thereby increasing the average transaction value. This translates to higher sales and revenue for merchants.
  
• Streamlined operations: Modern B2B financing solutions often come with integrated platforms that automate and simplify the financing process. This reduces the administrative burden on merchants and allows them to focus more on their core business activities.
  
• Improved cash flow management: For SMBs, managing cash flow is crucial. By using the lender’s funds to purchase inventory, merchants can preserve their working capital for other essential business operations, such as marketing, hiring staff, or expanding their business, ensuring they can maintain operations without financial strain. 

The platform-first approach

The easiest and most efficient way to offer lending options to your business customers is through an embedded lending platform. With a platform-first approach, retailers easily manage their entire point-of-sale financing offer customized for businesses as well as for their individual customers in a single platform. Benefits of a platform-first approach to point-of-sale B2B financing include:

• Fast access to multiple B2B and B2C financing options.
• Exceptional customer financing journey in seconds.
• Centralized management of lending and post-sales activities.
• Embedded regulatory and compliance requirements.
• Customizable point-of-sale checkout with white labeling.
• Enhanced customer and lender relationships.
• Improved approval rates, sales conversion, and order value.

The transformation within the B2B financing sector is driven by the adoption of new technologies, innovative market players, and customer-centric solutions. These advancements streamline processes and introduce greater flexibility and efficiency. Embracing these changes allows businesses to enhance financial strategies, improve customer relations, and secure a sustainable competitive advantage.

About Kevin Lawrence
VP Global Lender Relations

Kevin has worked in the banking and finance industry for over a decade. He has worked closely with some of North America’s largest banks, financial institutions, and retailers. Kevin is an expert in embedded consumer financing and B2B financing and has a deep understanding of current trends and where the industry is heading.