Recently, we talked about why consolidated invoicing is ideal for B2B sellers and B2B buyers. But it’s also important for B2B marketplaces. First, let’s talk about what consolidated invoicing is.
What is Consolidated Invoicing?
A standard invoicing system will send one bill or invoice per transaction, but a consolidated invoicing system sends one bill or invoice of ALL transactions during a specific time period. To buyers completing repeat purchases, that’s death by a thousand paper cuts to receive an invoice for every purchase no matter when the transaction occurred. Not only is that painful to manage, sending one invoice for every purchase will also lengthen the time it takes to get paid, and open the door for errors and confusion when multiple purchases on the same account happen in a short amount of time.
Today, according to research from McKinsey, procurement departments are turning to marketplaces for more of indirect spend but “concerns about scale, quality, and reliability have made leaders hesitant to change their longstanding reliance on dealing directly with suppliers.” The tides are changing though and buyers today have grown up purchasing online and sellers need to find a solution that supports the complex needs of businesses.
A university is a perfect example of a business account that has multiple buyers purchasing from multiple sellers on marketplaces. In a standard invoicing system, the university would receive an invoice on every purchase from each buyer. It’s very difficult for AP/AR departments to manage invoices over a month on multiple buyers and sellers. Providing a consolidated invoice or bill will make life a lot easier on the university and help instill loyalty to the marketplace.
B2B Marketplaces need to Differentiate themselves
If you’re a B2B marketplace looking to differentiate yourself amongst the growing list of platforms, evaluate the purchasing experience of both buyers and sellers on your platform. Back-office processes may not be top of mind, but they should be. In a recent survey, billing errors and painful manual processes were listed in the Top 5 Pain Points of A/R team in today’s finance departments.
Let me paint a stronger picture for you. Amazon, the US’ mecca of marketplaces, is consolidating invoices. What’s more, they analyzed purchases for their sellers by telling them how much they could save by consolidating with their technology. Amazon realized they needed to reinvent their back-office processes, and in turn established a best practice as a natural aggregator for other marketplaces if they want to compete.
Amazon was also a top contender, and one of three winners, for a contract with General Services Administration (GSA).Marketplace vendors that could establish a modern buying experience for their government employees with a centralized view of spend would see as much as $6 billion per year. With consolidated invoices and purchase controls, the government’s employees can now make purchases on the three platforms up to $10,000 without approval.
Find a B2B Marketplace Partner to Outsource AR
A/R department processes might not be a top consideration for you as a marketplace but merchants evaluating your platform will prioritize it and it will differentiate you from the growing list of B2B marketplaces. Offer consolidated invoicing to create loyalty by providing an experience to keep buyers coming back and, in turn, your sellers happy. A solution like Credit as a Service® (CaaS) from MSTS can help. CaaS will collect all purchases made by a buyer in a set period of time, 30 days for example, and automatically send one invoice for all purchases made in that 30-day window. Imagine that experience for your sellers. They will have multiple buyers making multiple purchases and only have to collect on one invoice.
Interested in learning more about building better payment processes on B2B Marketplaces? Download our latest whitepaper “Navigating the B2B Marketplace Payment Ecosystem.”