How Integrated Finance Delivers a Seamless B2B Payments Experience
For many businesses and their customers, integrated finance means paying for an online purchase with PayPal, Google Wallet, or Apple Pay. Buy Now and Pay Later (BNPL) options are also gaining popularity. Beyond e-commerce, consumers are increasingly able to make payments through a variety of experiences. Paying for parking through Google Maps or buying groceries through a delivery app are two notable examples.
However, a global perspective shows that integrated finance is not limited to the transfer of money: the applications are much wider. At its core, integrated finance allows brands to integrate financial services into their digital experience via APIs. Take insurance for example: when you buy a Tesla online, you can add a custom policy directly in the workflow. And when you make a claim, built-in funding can accurately calculate a payment and pay it instantly based on coverage and policies.
Now, integrated finance of all kinds is coming to B2B landscapes; one type to note is payments and purchases. Much like consumer applications, B2B integrated finance in the context of money transfer must provide a seamless experience for everyone involved in a transaction. This is especially important as more and more B2B buyers and suppliers expect to be able to buy and get paid online.
The rise of integrated B2B finance
B2B payments currently represent an annual expenditure of more than 120 trillion dollars, a figure that is expected to grow exponentially. Integrated B2B finance is increasingly becoming a requirement for companies currently operating online or those in transition, especially to B2B markets, as well as for applications and ecosystems where invoices are generated and paid digitally. The future of landscape sales continues to accelerate: Earlier this year, Digital Commerce 360 estimated that collective sales in B2B marketplaces increased 130% year-over-year in 2021 to reach $56 billion, growing 7.3 times faster than total B2B e-commerce sales. It’s easy to see why their popularity is skyrocketing and why they’re suitable for integrated finance candidates.
B2B marketplaces are essentially self-service platforms that allow businesses to easily buy and sell their goods and services online. Transactions are transparent and the search for quality suppliers is efficient. B2B marketplaces provide choice, security, agility and value for buyers and sellers. These solutions ease the burden of marketing, logistics, and sales while speeding up transactions and payments, but integrated B2B finance adds even more value to B2B marketplaces, as well as apps and portals.
Previously, these types of platforms helped buyers and suppliers find each other, but let the actual transaction happen outside of the experience. Typically, this included emailed invoices, ACH payments, or even mail and checks. Now, those operating these platforms are recognizing how including payments in their experiences provides benefits they cannot afford to ignore, such as increased “stickiness” and transactions, new opportunities for revenue, reduced risk and more actionable data. Marketplaces, applications and B2B ecosystems should no longer wonder if they should integrate payment options into their platforms; rather, they should ask when. And the answer is now.
Several factors have fueled the demand for digital buying and selling experiences:
- The COVID-19 pandemic. Virtually overnight, online and remote options to keep businesses running have become a necessity.
- Supply chain disruptions. Shoppers need quick and easy ways to find the stock or services they need, and online options make searching more efficient. Additionally, the ability to get paid instantly allows businesses to pre-order goods, or even skip the queue of vendors sending out orders based on which customers pay first.
- Millennial preference. Many of today’s B2B decision makers are millennials who prefer to complete a complete transaction online, whether they’re paying an invoice or receiving payment. Manual processes slow down both.
- Data request. The checkout process is also another way for marketplaces, portals, and apps to collect data to improve their experience, products, and marketing to drive more uptake, transactions, and growth.
Different Needs in B2B Integrated Finance Transaction
An integrated financial transaction has three parts: buyers, suppliers and the platforms themselves. They each have their own unique needs. For example, buyers should buy now and pay later. Large buyers in particular are accustomed to buying on a net basis to maintain their own cash flow, and they need this option to remain available to them. They also cannot change processes or workflows to accommodate new systems.
On the other hand, suppliers need to sell now and collect now. Getting them paid as soon as possible is a powerful incentive to keep them coming back to an online platform rather than falling back on their usual sales processes. Suppliers must also maintain cash flow, not only for day-to-day expenses, but also for growth capital, which can be enhanced with prompt payment options.
As for the platforms, they need less risk and more liquidity. To meet the needs of buyers and suppliers – and increase rigidity and transactions – many platforms extend credit to buyers while paying suppliers quickly. The result is more risk in extending credit, more expense of administrative resources to do their own underwriting, less cash available to reinvest in their own businesses, and a balance sheet that is less attractive to investors than it could be. ‘be.
Pay bills within days
The needs of these stakeholders are at odds with payment expectations, and reconciling them is difficult. But built-in financing options — such as AI-powered invoice factoring that pays invoices in days rather than months — satisfy all three aspects of the B2B online transaction: buyers keep terms net, providers maintain cash flow and platforms reduce their risk by eliminating the need. to extend buyer credit. Additionally, built-in financing options such as invoice factoring generate useful transaction data, increase stickiness, and increase the number of transactions on a platform.
Ultimately, the right integrated finance solution elegantly meets the needs of each stakeholder, creating frictionless B2B payments – a win-win-win.
Amanda Parker is Director of Growth at FundThrough, a revenue-based financing platform that got its start helping small businesses bridge cash flow gaps. Prior to leading partnerships and new product development at FundThrough, she was a serial entrepreneur and sold two venture capital-backed technology companies where she worked and partnered with brands including Microsoft, 20th Century Fox, Pepsi and Molson. Connect with her on [email protected] and on Twitter.