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How SMBs Can Improve Working Capital Management

Why B2B Payments Should Take a Page from B2C’s Playbook blog image

B2B businesses want to satisfy buyers with innovative purchasing options. But with the B2C sector setting a high bar (80% of B2B buyers agree their personal buying experiences impact their expectations for business purchases), SMBs are struggling to meet buyers’ expectations and increase cash flow. When business growth depends on smart working capital management, it’s dangerous to have cash tied up in inadequate payment processes.

Sellers often view credit cards as the easiest, most obvious payment option for buyers. In fact, 86% of B2B buyers use credit cards to make purchases online on a weekly or monthly basis. However, with high credit card processing fees, the benefits for sellers are quickly outweighed by the cash flow problems these cards create. And with credit cards, fraud is always a possibility: Digital platforms lose on average 2.2% of their revenue to fraud.

On the other hand, 50% of B2B buyers prefer payment methods other than credit cards when purchasing for their companies, a factor that incentivizes B2B sellers to extend credit to buyers. Offering buyers the option to pay on invoice is increasingly popular among B2B sellers, especially since 82% of B2B buyers would choose a vendor over others if that vendor offered invoicing at checkout with 30-, 60- or 90-day terms. 

However, extending credit can be risky and SMBs often assume too much risk. And when businesses extend credit themselves, they tie up working capital due to lengthy DSO, dragging down cash flow and the efficiency of accounts receivable teams who must track transactions and chase down payments. 

What If There Was a Better Way? Welcome To Credit as a Service 

Your payment processes shouldn’t hold back your business. But high credit card transaction fees, limited payment options, and inefficient back-end accounts receivable processes create financial challenges and stall growth. Credit as a Service® (CaaS) is an MSTS payment and credit solution that facilitates transactions and improves relationships between SMBs and their buyers. 

With CaaS, B2B businesses can increase working capital and:

  • Offer risk-free credit. Our innovative solution extends credit to buyers on sellers’ behalf, preserving working capital and offloading the risk to MSTS, while eliminating hefty credit card fees at rates 30% less. In addition to assuming credit risk, we initiate fraud screening for each online credit application. Our automated credit and risk assessment uses a variety of third-party tools, including Fraud.net and LexisNexis as well as our internal fraud watch list. This automated assessment is powered by APIs and completed in a matter of seconds. 
  • Better manage customer credit lines. Once buyers are approved, we continue to manage credit lines. MSTS is proactive when it comes to credit line adjustments, handling the tasks of examining buyers’ payment habits, average days paid and collections issues. Then we compare this information with third-party data sources to alert you to appropriate credit line adjustments — up or down. 
  • Offload time-consuming A/R tasks. Credit as a Service allows your accounts receivable team to spend more time on meaningful projects, while we manage back-office tasks, like matching invoices, chasing payments and handling collections. 
  • Continue to scale. Without the accounts receivable team leaning on sales for support, you can refocus sales efforts with confidence. CaaS provides payment in 2, 7, 14 or 30 days, reducing DSO and allowing your business to accelerate sales without the fear of tying up working capital or stalling future growth. 
  • Meet buyer expectations. Credit as a Service facilitates a fast, frictionless payment experience with easy onboarding, application tracking and omni-channel options. And, our smart APIs allow buyers to integrate CaaS with their legacy business systems, like ERP, CRM and eCommerce platforms for consistency and an easy ramp up.

SMBs Need Credit as a Service in Their Working Capital Management Toolboxes

With B2C purchasing leading the way for buyer expectations, there’s no time like the present to start improving your payments experience. The sooner you innovate, the sooner you can outpace the competition. CaaS is the all-in-one solution that brings antiquated payment processes into the future, supporting sales and accounts receivable teams, managing credit and meeting buyer expectations. 

Interested in what Credit as a Service can offer your business? Partner with our credit experts to start your journey toward increased cash flow and exponential business growth. Contact us today.

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