Written By Kendra Langlinais / Edited By Mallory Gafas
Most consumer retailers recognize that online shoppers won’t bother with anything less than a frictionless experience—because they don’t need to. Business-to-consumer (B2C) companies are continually improving and streamlining how customers can pick out and pay for what they want. That efficient and empowered purchasing process hasn’t always been the story for business-to-business (B2B) buying, but increased digitization is revealing a white space ripe for change.
The U.S. Department of Commerce projects the global B2B e-commerce market will expand at a compound annual growth rate of 14.5% through 2026. Yet, the vast majority of B2B revenue is not generated online. As industry experts explain, a historically complex B2B buying process could be to blame.
“B2B is generally a larger and more complicated sale [than B2C],” says Kelley Marko, vice president of marketing at Capital One Trade Credit. “That creates some unique pricing opportunities, different payment term considerations, and the need for greater billing detail in terms of enabling cost allocation and management among multiple purchasers, locations or even business units. It just creates a lot more complexity in the purchase-to-payment process, and that experience for the buyer.”
As B2B buyers increasingly demand a B2C-like customer experience (CX), Marko points out that simplifying and streamlining payments and accounts receivable (AR) is now fundamental to achieving organizational goals. Recent research finds that modernizing those processes also poses a significant opportunity for growth.
“Improved Accounts Receivable Efficiency Drives Key Business and Financial Goals,” a commissioned study conducted by Forrester Consulting on behalf of Capital One Trade Credit, surveyed B2B enterprise leaders in finance and AR across the U.S. Their collective responses point to a clear market need for holistic B2B payment and financing solutions—and suggest AR innovation could drive B2B transformation.
Below, explore four key findings from the study, and what they reveal about the future of B2B e-commerce.
1. 92% of finance and AR leaders believe improving the B2B digital buying experience is important to achieving organizational goals like revenue growth.
B2B leaders appear to recognize that revenue growth and the customer experience (CX) are inextricably linked. So, too, is CX to AR. A streamlined AR process not only affects cashflow and liquidity, it has a direct effect on CX—and, subsequently, revenue growth.
Capital One Trade Credit is innovating the B2B digital buying experience by transforming AR and financial processes to improve operational efficiency and enhance CX—both of which research shows is critical to organizational success.
“[B2B] buyers don’t want to wait—they want to make a purchase, and move on with their day,” Marko says. “Needing that near-instant access to making a purchase … was driven largely by the sudden shift that the pandemic created, where folks moved from a much more high-touch process to one that became very automated.”
Those changes in B2B transactions have had lasting impact on how customers increasingly demand to do business. By simplifying credit, billing and payment processes, businesses can make transactions more frictionless for their customers, which in turn makes them more likely to come back.
“B2B buyers want that same access to credit whether they’re buying through a sales rep or online,” says Marko. “If they don’t have it, that friction can erode loyalty.”
Preempting pain points in the buying process is an area of recognized importance amongst B2B leaders, 61% of whom identified improving customer retention and loyalty as a key goal for the year ahead, according to the Forrester study.
2. 63% of executives using external partners to unify AR processes on a single platform are experiencing or anticipating increased cashflow and market share.
Despite its crucial importance to an organization’s financial health and other metrics of business success, many B2B companies still try to manage AR in-house—often resulting in a disorganized and inefficient process that’s spread across several departmental silos all using different IT systems and separate workflows.
“The complexity of managing AR across different departments—credit, billing, collections—can strain resources and increase the potential for errors,” Marko explains.
The reasons AR processes in B2B tend to be more fragmented than in B2C can be partly explained by the way B2B payments are made. While most B2B buyers finance purchases, few actually pay with a credit card like B2C buyers. Instead, about 80% of B2B payments are still executed via check, cash or ACH through “trade credit” financing—in which the supplier acts as the buyer’s creditor.
As a result, many B2B companies may have historically viewed trade credit operations as a necessary evil to doing business. But, as Marko explains, that approach could lead to untold costs.
“If a company can streamline how it delivers billing and invoicing to the right party within an organization, it helps reduce that disconnect that often causes delays or missed payments,” she says.
Partnering with Capital One Trade Credit to centralize AR processes can improve cash flow, enhance visibility and augment control over AR processes to innovate the B2B digital buying experience and increase market share.
“A unified AR system is really about creating operational efficiency that ultimately benefits both the buyer and the seller,” says Marko. “Our trade credit solution enables you to actually lift and shift that entire AR end-to-end process to a third party to have them manage it for you.”
By leveraging experts to manage the tangled AR process, B2B finance employees can do their jobs more effectively and increase focus on delivering more value to customers—which helps explain why 83% of B2B leaders surveyed in Forrester’s study agree that leveraging an external partner to manage points of friction is important to organizational success.
“You remove that complexity from the business,” Marko says. “Your team can then focus on more strategic areas like selling, how you want to serve your customers and managing the overall customer journey.”
Capital One Trade Credit’s Forrester study also reveals that nearly half of B2B businesses face shortages in AR personnel or skills. This skills gap can slow down processes like credit approvals or collections and overburden existing talent, creating workflow inefficiencies and potentially increasing the risk of fraud. This is where using external partnerships becomes a critical solution.
“AR is a specialized field, and sourcing talent for these roles has become increasingly difficult,” says Marko. “Leveraging 3rd party solutions allows companies to tap into experts who specialize in AR, which not only improves efficiency but also reduces risk by closing any gaps that internal teams might overlook.”
3. More than 80% agree leveraging AI, automating credit decisioning and streamlining payment processes are important to improving organizational efficiency.
To evolve to a smarter B2B digital sales platform, harnessing AI and automation for intelligent and secure payment and financing processes has the potential to offer a multitude of benefits.
B2B suppliers who are early adopters of frictionless digital communication channels with easily reachable representatives and holistic, streamlined AR interfaces and tools could create a value proposition for buyers and edge out competition. As Marko explains, that’s because automating payment processes simplifies how sellers receive payments, especially for large purchases that involve complex billing and multiple stakeholders.
“You’re getting payments brought in from multiple channels, some are checks, some are coming in digitally, they’re coming in through transfers. How do you connect those payments back to the right open invoices and resolve and reconcile those? That’s where AI can really help make a difference,” she says. “Using AI-enabled cash application processes can help identify what the intent is behind the payment to reconcile the correct open items, and get that off your AR books and resolved.”
When suppliers have to wait 30 to 60 days, or longer, to receive payment for five- and six-figure, or larger, B2B purchases, they may need to borrow working capital at high interest rates for business costs like replacing inventory. That directly affects their bottom lines, their profitability and their growth.
In addition to payment processes, automation advancements in credit decisioning generate significant B2B benefits as well. Nearly nine-in-ten (87%) respondents in the Forrester study say automating crediting decisioning processes is important to improving organizational efficiency. Unsurprisingly, it can also significantly enhance CX.
In a B2B setting, purchases are often large, repeated and reliant on credit. Manual credit checks can delay transactions and frustrate buyers. The ability to automate credit approvals helps B2B suppliers move at the speed of their customers.
“At Capital One Trade Credit, we can reduce credit decision times, with the potential to bring the average decision time down to under 30 seconds,” says Marko. “That ability to access credit to make a near-instant purchase is crucial for today’s B2B buyers.”
By automating credit decisions, B2B businesses not only meet customer expectations, Marko points out they can also close more sales, faster.
“If a company’s credit decisioning process is slow or cumbersome, it could be the reason a buyer looks elsewhere,” she says.
4. 86% emphasize that thorough policies to contend with fraud risk are integral to organizational success.
As tech advancements create new opportunities to innovate CX, enhance efficiency and grow profits—so too come new potential risks. The complexity of B2B transactions and the large sums financed between buyers and sellers makes fraud an especially relevant concern for AR as B2B becomes more globalized and digitized.
“B2B fraud can occur at various points, from credit application to unauthorized transactions on an existing account,” says Marko. “You need to have mechanisms in place to identify all these points of risk, look for tendencies of fraud, and then manage them.”
Marko points out that threat detection which leverages AI and machine learning can help to more robustly protect accounts throughout their lifecycle, from credit application to payments.
“These tools can help identify signals of fraud occurring, and help shut them down before they become large losses on someone’s balance sheet,” she says.
Full-service AR solutions like those offered by Capital One Trade Credit can provide fraud protection that most B2B businesses can’t provide for themselves. By securely managing everything from credit decisioning to underwriting and billing to collections, a trusted external AR partner can proactively manage security threats and ensure that potential fraud is detected and addressed before it affects financial health.
“Working with a bank like us will give [B2B businesses] that built-in expertise,” Marko says. “We are built around detecting that type of risk, managing it and mitigating it.”
