The Trusted Market Assurance Pay by Invoice, also known as invoice purchasing. it’s common in both B2B and B2C transactions. In both cases, the merchant creates an invoice for the buyer (private customer/company) and agrees with him on net-payment terms. Nevertheless, the theoretically easy process gets complicated when offering the payment method to business customers. it’s a widely used payment method across all of Europe. It allows buyers to obtain goods or services immediately and pay at a later date, as determined by the invoice purchase provider. No risk of paying for bad quality, Payment is only made once the goods are received and meet the buyer’s expectations. If there is a problem, the goods can be sent back without payment.
B2C invoice payments
Offering Pay by Invoice in the B2C sector is relatively simple and straightforward. Customers receive the goods or services immediately and pay for them at a later time, usually within a few weeks.
Payment approval and settlement times are minimal, taking only a few days. Furthermore, the average shopping basket is mostly in the three digits.
B2B invoice payments
B2B is moving online at a rapid pace. In B2B transactions, invoice purchases are particularly desirable, with 90% of B2B buyers indicating their preference for this payment method when shopping online.
This series will discuss a critical component of any B2B commercial relationship: offering net 15/30/60/90 day payment terms to your business buyers.
Whether you are selling offline or online, business buyers expect to receive an invoice for their purchases with a net payment term of 15, 30, 60 days, or more. And they want to pay their invoices in a way that they are used to, which is usually a form of bank transfer or account-to-account payment.
This practice is often referred to as “net payment terms” – referring to the option to pay for the invoice 7 – 90 days (or more) after the issue date.
In essence, the supplier extends a form of short-term credit to their buyer’s account, lowering the cash flow burden for the buyer and giving them time to add value to the goods and sell them on to the next layer in the value chain.
Extending credit and net payment terms to your business buyers means that you will be shipping products or providing services to your buyer before receiving payment for that purchase. This is a risky business, and it needs to be managed well.
Net payment terms are much easier to extend in an offline environment when you have the time to investigate a buyer and the opportunity to meet them face-to-face. In the fast-paced online environment, this is much harder to do, and the risk of losses as a result of credit defaults or fraud is high.
The B2B merchants, platforms and marketplaces that get this experience right will have a real advantage over competitors. Buyers will return to merchants where they can get net payment terms and where the purchasing experience is convenient and fast. For you, the merchant, this means growth through higher-order values, higher order conversion and repeat purchase rates.
