Many B2B manufacturers using a distributor channel have long appreciated being a step removed from conversations and underwriting decisions about payment terms their end customers expected. In B2C online marketplaces or lower-priced, lower volume B2B transactions, accepting credit cards bypassed that concern. But as more companies digitally transform to online selling direct to customers, how do you handle financing for high value orders, say, selling to a single contractor truckloads of plumbing fixtures destined for an office building, or selling a fleet of bucket-trucks to a utility company?
The answer is in-cart customer financing at check-out, a capability powered by my company, Inxeption. We are a cloud-based industrial, or “I-commerce” platform and service provider and our menu of innovations to reduce transaction friction is constantly growing.
To put this in perspective, here’s what happens now: A company wants to order $75,000 worth of warehouse racks online. It’s a simple exercise in dimensions and design, so a digital ordering process works well. But the buyer wants payment terms. So . . . the customer might shop online, determine the products they need, but then they have to call or chat or email the rack supplier, then go through a difficult and lengthy credit approval process complete with long, multi-page applications, paper and fax-based processes, and even wait weeks for a decision decision from the company or a third-party lender. The rack company could be facing its own cash squeeze and risk it might have taken on last quarter suddenly seems out of the question. The advantage to the seller and buyer of ordering online, which accelerates the payment process and provides time value to customers, drops as the calendar pages flip, waiting for the OK on the financing. Friction is expensive.
At Inxeption, our Buy Now Pay Later program is designed to leverage our familiarity with our customers’ products, transactions, seasonality, and projected revenue in addition to near-instant buyer third-party assessments. With our advanced and accelerated term review process, a brand new buyer could be approved in minutes, while an existing customer could literally enjoy instant, in-cart approval for, say, 60-day net terms even for a very high-value order. That stands to benefit a seller in four powerful ways ways:
First, extending payment terms can increase the average order volume by 20%--immediately. Pair this financial service with volume discount targets, and it acts like rocket fuel.
Secondly, experts estimate the new basis for credit approval baked into this kind of process can reduce transaction time by 90%. That’s an incredible number, and it means closing on an order today you might have previously needed to wait a month to finalize. You can use the time-saving to find and drive more sales.
Third, the risk of non-payment or delayed payment is assumed by Inxeption, not sellers. There is no need to manage and track repayment, so sellers can focus on growing their business, not accounts receivable.
Finally, sellers are saving buyers a substantial amount of money they might have paid in fees and interest to another third party, like a credit card company. That savings, plus the time savings for busy buyers, creates stickiness and trust that will bring you long-term benefits.
Inxeption advisor John Thompson, chairman of Microsoft and a Venture Partner at Lightspeed, has said, “Real-time credit and an ability to asses a buyer’s financial strength are critical. One benefit of a local transaction or a distributor-mediated transaction is when you know the buyer well, you might offer credit when others would not. If you’re going to build an effective B2B commerce platform it needs to have the option to extend credit.”
That’s why we have prioritized in-cart financing at Inxeption, where our mission is to help our partners Do Business Better.