In the dynamic landscape of digital commerce, where profit optimization and revenue growth are top of mind, payments emerge as a pivotal yet often overlooked aspect. This article delves into how payments, when strategically managed, can serve as a successful growth strategy for distributors selling online. By exploring various facets, we will unravel how these strategies can create a win-win environment for distributors and their customers. 

Unlocking Revenue Growth with Net Terms

Efficiently managing net terms and boosting approval rates is not just a choice; it’s a necessity in the optimization of online sales. The ability to attract and retain a diverse customer base hinges on the strategic management of modern payment solutions. These solutions should include, among things, a digital application process and Small to Medium Business (SMB) underwriting capabilities, in order to extend more favorable terms to a broader array of buyers. This not only meets the evolving expectations of modern buyers but also ensures a customer acquisition strategy that doesn’t come at the cost of increased overhead or additional underwriting resources. Advanced data analytics and intelligent algorithms can also help distributors provide competitive credit limits for buyers that might be declined by traditional systems.

Fostering Loyalty and Repeat Purchases

Simply being competitive on pricing and products is no longer sufficient; delivering an outstanding customer experience is increasingly crucial. Payment processes are integral to shaping this experience. Customers should have a straightforward checkout process, access to their credit limits online, and convenient online invoice payment options. However, many online distributors currently limit payment options to credit cards at checkout or rely on offline methods for paying on terms. To enhance the customer experience, it’s essential to expand online payment options and introduce features that facilitate post-payment follow-ups through invoice reminders or online payment links.

Strategic payment management not only helps distributors retain their existing customer base but also fosters an environment that nurtures long-term relationships. Embracing innovative payment solutions ensures a smooth and seamless customer experience, ultimately boosting loyalty and encouraging repeat business.

Increasing Average Order Value (AOV)

Digital commerce is not merely about closing sales; it’s about maximizing the value of each transaction. Elevating Average Order Value (AOV) becomes a direct pathway to higher revenue, and net terms play a pivotal role in achieving this objective. Buyers, armed with favorable terms, can maximize their purchasing power, thereby making the most of their online shopping experience. 

Balance’s data reveals a compelling insight – customers have the potential to double their AOV with a net terms offering. This showcases the significant impact that strategic payment choices can have on the overall financial health of distributors. By optimizing the terms offered, distributors position themselves to not only boost sales but also enhance the overall value derived from each customer interaction.

Addressing Processing Costs

The challenge of processing costs, especially with credit cards, can be effectively mitigated with a strategic shift in payment processing models. An Interchange Plus model, for instance, can help capitalize on the benefits of B2B transactions. Lowering interchange rates through this model can substantially reduce processing costs, especially when dealing with significant transaction volumes.

In an era where cost efficiency is crucial for remaining competitive, strategic payment choices can be the key to staying ahead. By strategically managing processing costs, distributors can ensure that their profit margins remain robust while simultaneously offering competitive pricing to their customers.

Smart Management of Collection Costs

As digital commerce continues to reshape the business landscape, the management of collection costs becomes even more crucial. Late payments can pose challenges to cash flow and profitability. The use of Accounts Payable (AP) tools and enhanced visibility tools can significantly reduce instances of overdue payments. Automation, including dunning processes, efficiently handles the remaining late payments, reducing the need for manual intervention and expensive Accounts Receivable (AR) software.

Conclusion

The examples provided shed light on the intricate impact of payments on the financial health and sustainability of online distributors. Instead of viewing payments as static transaction points that can’t drive business growth, it’s crucial to recognize them as an evolving, end-to-end process with various aspects and inefficiencies that can be refined. A robust digital solution, from streamlining the payment process for buyers to expediting payment collections, can deliver sustained growth, reduce processing costs, and minimize collection expenses.

Moreover, embracing a digital solution that outsources the management of term payments enables distributors to shift their focus towards growth opportunities. With a strong e-commerce channel, distributors stand to gain expansion into new markets, attract new customers, enjoy higher margins, and more. It’s worthwhile to seek a payment solution that not only contributes to these advantages but also fosters an environment where the management of how buyers pay and when doesn’t add unnecessary overhead.

Given the complex challenges in the online B2B transactions landscape, finding a partner capable of addressing unique payment issues for distributors is essential. This ensures that the online channel doesn’t merely add to costs but yields returns. Learn more about how Balance can help optimize online sales, introduce efficiency, and drive growth for distributors.