By Brandon Spear
Patience is an increasingly important virtue for B2B businesses. According to a study of 27,000 companies around the world, the average days sales outstanding (DSO) is 64 days. Meanwhile, one out of every four businesses wait at least 88 days before being paid.
Take back control of your cash flow with strategies that deliver payments sooner rather than later. From implementing Credit as a Service® (CaaS) to providing additional payment options, identifying ways to minimize DSO can eliminate many of the challenges that contribute to restricted cash flow.
Offer Credit as a Service
With CaaS, B2B organizations no longer need to play the waiting game. Sellers can extend terms and risk-free lines of credit to customers and still be paid in as little as two days. The result? More reliable cash flow, not to mention increased share of wallet and loyalty.
Instead of cutting back on the size of their purchases or looking for greater flexibility from the competition, buyers gain the luxury of accessing a line of credit when cash is tight. This boost in purchasing power can motivate buyers to purchase more than they originally planned and even pave the way for repeat business.
Give buyers a reason to settle invoices early by offering discounts to those who make payments within a few weeks. Whether it’s knocking down the price of their current purchase or taking 10% off the next one, rewarding buyers who are on top of invoices can help earn their appreciation and incentivize others to make their payments earlier.
Expand your payment options
In addition to giving buyers a reason to make payments sooner, eliminate some of the roadblocks that may keep payments from coming in. If buyers don’t see their preferred payment option, it may take longer to receive payment. Cater to buyer preferences by implementing the payment options that work best for their businesses.
Although buyers used them to complete 81% of B2B payments in 2004, checks are quickly falling out of favor. In fact, the paper check payment method accounted for just 51% of B2B payments in 2016. To satisfy the needs of today’s buyers, consider introducing automated clearing house payments (ACH) and other emerging options into your payment process.
Read how to take advantage of the technology in the full article on Mobile Marketing and Technology.
In the Press
In B2B, suppliers and getting them paid is a friction-filled process.
The friction is especially acute in manufacturing. The relationships between manufacturers and their suppliers often cross borders, and payments can involve several different currencies.
The “clash of the titans” is a metaphor that is used to describe situations in which two powerful forces refuse to yield to the wishes or conditions of the other.
By Martha Salinas
MSTS is out with a new report on B2B sellers and buyer payment preferences. There are valuable insights and solutions to some of the challenges faced by B2B sellers, but one statistic shocked me.