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This post has been contributed by Oro’s technology partner – Apruve.

If we go back 20 years and look at the B2B landscape, we see something that is very different from today. There was no such thing as a B2B eCommerce site that buyers were purchasing from. When companies bought from each other, products were almost always procured over the phone or in person, using a printed catalog or brochure as a product reference.  

The in-person sales call and on-site presentation occasionally happen in today’s sales cycle and buying behavior. There is no doubt that eCommerce has significantly simplified buying behaviors, where the digital age has opened up a new era for buying and selling efficiency. Businesses have turned to their eCommerce websites to meet their customer’s needs, encourage repeat purchases, promote higher average order value (AOV), and to supply their sales people with incredible tools to increase leads and conveniently transfer product knowledge. Forrester research has found that 59% of B2B buyers prefer not to interact with a sales rep and 74% find buying from a website more convenient.

Simplifying the sales cycle has resulted in tremendous industry growth, B2B eCommerce is projected to hit $1.1 trillion in revenues while decreasing many of the travel and admin costs that are prominent with the old sales process.

Where B2B eCommerce gets over simplified

Naturally, simplifying the sales process worked so well through eCommerce that businesses started looking to streamline their payment processes as well. Extending credit to customers has always been a grueling and risky form of payment. It involves long, paper based forms, offline credit worthiness calculations, reminding customers to pay continuously and not being paid immediately for your sold inventory.

Although over 40% of B2B transactions happen through a line of credit, the B2B eCommerce community, for the most part, abandoned extending credit to their customers to increase ease of purchase and speed of payment. Although before making this decision they did not look at all the facts.

What is buying on a line of credit?

Purchasing on credit in its simplest form is, buying something now and paying for it later. These terms typically vary from paying the supplier 30 to 90 days after purchase depending on the size of the order and the creditworthiness of the buyer.

Extending a line of credit to your customer may not seem like a game changer in the buying process, but it is responsible for up to a 35% increase in average order value and can be responsible for two times the order frequency.

Why do customers buy from you more if you extend credit?

  1. Cash Flow Management

Customers that pay on terms have exponentially more control over their business’s cash flow. (Businesses fail due to cash flow issues). By extending credit to your customers, you are allowing them the ability to improve their working capital by paying you when they have the ability.

Due to this convenience, buyers reward suppliers by having fewer worries about larger purchases and buy more from vendors who extend credit than compared to those who only accept credit cards.

  1. Buyers become loyal customers

Almost every online business accepts credit cards. They are an undeniable convenience for any online purchase, but to quote Visa, “It’s everywhere you want to be,” which includes your competitor’s site.

A line of credit is different. It is a set amount of money that you have authorized your customer to spend at your specific store. In many ways it is like a gift card or a loyalty credit card, it offers incentives for any business to continually buy from you instead of looking at other firms that may provide the same service.

  1. Strengthened relationship

Extending credit to your customer is a form of financing your client for their purchases. In doing so, the purchaser understands that you trust them to pay you back. Although we commonly associate trust with our personal relationships, trust also plays a dramatic role in our professional relationships.

Improving trust leads to a long-term relationship which helps increase your customer lifetime value and decrease churn.

Simplify, not eliminate

B2B eCommerce has done a great job at simplifying the buying behaviors of today’s digital world. Sadly, in the attempt to become more streamlined and simplistic, it has overlooked the some of the most crucial things buyers are looking for when buying from their suppliers.

Ignoring the credit process has been responsible for a smaller eCommerce onboarding, a decreased average order value, and a diminishing customer lifetime value.

What B2B eCommerce sites should do is look for a way to improve and streamline the credit process instead of eliminating a prominent payment type. Luckily, Apruve does just that.

About the Author: Matthew Osborn is the Sr. Marketing Manager for Apruve. He uses his ten plus years of experience in marketing to help companies battle credit monsters and be more financially productive.

3 comments
    1. matt4

      Yes. Each customer will have their own credit limit to buy against. In the non-financed product, this limit will be set by eCommerce owners. In our financed offering, this limit is automatically generated from a customer’s credit worthiness. These credit limits still have flexibility, in the situation that it needs to be increased after a limit has been given.