Trade Credit

How Digital Trade Credit drives additional revenue


Over the past couple of weeks we’ve published a series of blog posts that dissect the need for a new approach to trade credit management and the direct cost savings of a Digital Trade Credit solution. With the launch of our white paper demonstrating the business case for Digital Trade Credit just around the corner, here’s a final taster of what to expect.

In addition to the direct cost savings that a Digital Trade Credit solution generates, the other primary benefit of such a solution is the additional revenue that it can drive. Merchants that have implemented Digital Trade Credit report average revenue increases of 40%. Indeed, all else being equal, offering better payment terms is a good way for merchants to win more business than the competition. This is particularly true during economically turbulent times, when access to financing is normally constrained.

The ways that Digital Trade Credit drives additional revenue can be split into three broad categories:

  1. Winning new clients
  2. Increasing share of wallet
  3. Providing a better brand experience

Let’s take a look at a brief overview of each category.

Winning new clients

Digital Trade Credit helps B2B suppliers win new clients in two ways:

  1. By strengthening the value proposition for new customers
  2. By offering a more streamlined sales process

A stronger value proposition for new clients

B2B suppliers typically only offer payment terms to their largest customers. Satisfaction levels tend to be highest among these customers, which is reflected in more repeat orders and a higher average order volume and value. However, there is a long tail of  customers (and prospects) who are unable to access credit and therefore not fulfilling their potential. 

Digital Trade Credit empowers suppliers to offer instant credit decisions to a much larger pool of customers. This helps suppliers to win high potential client relationships and apply caution on high risk clients. Generally, it is possible to offer trade credit in 80% of cases with Digital Trade Credit, whereas with traditional approaches this is only the case for 10-20% of new customers. 

A more streamlined sales process

Accelerating the sales cycle also provides a number of efficiencies. Simply put, coming back to clients faster helps to win deals. Digital Trade Credit shortens or removes discussions between sales and finance teams which can sometimes take weeks. It provides instant decisioning and enables customers to transact from day one. 

Suppliers are also able to conduct more effective targeting of prospects with Digital Trade Credit. Rather than take a blanket approach to all given buyers in a target segment, suppliers can automate pre-checks of prospects, so that only those in good financial health are developed. This saves the time of targeting weak prospects, who may not still be in business in another year! The pre-checked prospects that meet the merchant’s criteria are much more likely to become customers because of the availability of trade credit.

Increasing share of wallet

Digital Trade Credit also drives additional revenue from existing clients. When it comes to such clients, it is important to regularly review credit limits to avoid missing out on business opportunities. 

Offering better payment terms to high potential clients drives loyalty and helps a supplier to become the default choice. Indeed, buyers that use multiple suppliers tend to shift most of their business to those that have the best payment terms and buyer experience. Suppliers that use Digital Trade Credit report increased purchase frequency of 20% and an average contract value (ACV) uplift of 25%.

Providing a better brand experience

Digital trade credit helps B2B suppliers offer a better brand experience in two ways:

  1. By helping to deliver a modern user experience (UX) 
  2. By improving customer centricity

Helping to deliver a modern UX

The pressure is on for B2B merchants to provide a strong digital customer experience across the whole customer lifecycle; starting from when buyers research products through to completing a transaction. Implementing a Digital Trade Credit solution can play a significant role in achieving a better UX, from making it easier to transact in the first instance, to offering trade credit terms and preferred payment options. Digital Trade Credit solutions can readily integrate into existing checkouts so that the workflow is not disrupted and the return on investment is realised sooner. 

Improving customer centricity

Customer centricity is also a key trend in B2B commerce. It is widely recognised that the customer centricity of B2B sellers lags behind that of B2C companies, yet as B2B International finds, improving customer experience from average to exceptional can lead to increases in key performance indicators such as likelihood to renew or buy another product.

One of the best drivers of customer loyalty is to make it easy for customers to transact by removing any points of friction. Digital Trade Credit solutions are an ideal way to remove barriers for end customers, making it easier to trade and providing a range of payment options.

We’re about to launch a new white paper demonstrating the business case for Digital Trade Credit. If you would like to be one of the first to receive a copy, please register below for early access.