At the start of 2024, we surveyed 500 business buyers from across the UK and Europe. Their responses were analysed and used as a basis for our groundbreaking research report, The Definitive Guide to B2B E-commerce Buyer Demands in 2024.
Given the nature of Hokodo’s solutions, we of course asked several questions about the online payment and checkout experience and learned that, for many buyers, friction is introduced at one of the very last moments of a transaction. In fact, payment challenges are causing issues for a combined total of 73% of B2B buyers. Around a third agree that payment terms functionalities need to be improved in online (32%) and offline checkouts (30%).
“The survival of my business depends on the availability of payment terms, but as a small, independent store, it can be challenging to access credit at the checkout, both in online and offline purchasing situations.” – Joe Berger, Owner, Chinley Cheese
Payments have emerged as one of the most important aspects of the B2B e-commerce buyer experience. Recognising changing buyer demands, a small number of innovative merchants have elevated payments from a dusty back-office process to a key position in their e-commerce strategies – but most leave much to desire.
Let’s take a closer look at the payment experience your B2B buyers have come to expect.
The credit they deserve: payment terms and settlement methods drive buyer loyalty and conversion rate
Let’s get one thing straight: merchants that are not offering payment terms at the checkout are alienating swathes of potential buyers. In fact, 83% of B2B buyers say they will abandon an e-commerce purchase if payment terms are not available.
However, there are several reasons why a B2B merchant may have not yet found an effective way to offer trade credit online:
- It can be risky. The anonymity and scale of e-commerce means that it can be difficult to know which buyers can be trusted to stick to their payment terms.
- It can be complex. From credit scoring and fraud detection, through to financing, payment processing, insurance and collections, trade credit is made up of several complex components.
- It can put pressure on cash flow. Offering credit off their own balance sheet can have a significant negative impact on the cash flow of a merchant.
In recent years, digital trade credit solutions such as those offered by Hokodo have emerged as a safer, simpler and more sustainable way for merchants to offer payment terms. With Hokodo providing the financing and handling every step of the trade credit management process, buyers get the credit they deserve while sellers get paid upfront and in full, even if a buyer is unable or unwilling to pay. Everyone wins.
Buyers expect swift credit decisions
Gone are the times when B2B buyers would be willing to wait days to find out whether or not they can get access to credit. Now, 83% expect credit decisions to happen in less than a day. This includes 22% that expect a credit decision in less than an hour, and 19% expect instant credit decisions – but these numbers will climb quickly as instant payment terms on first purchases become the norm, rather than the exception, in B2B.
Buyers prefer the payment terms they’re used to
86% of buyers agree that payment terms are an important consideration when choosing a vendor or supplier – but what kind of payment terms do they want?
In B2B, 30-day payment terms come as standard. Advanced digital capabilities and new solution providers have made it possible to offer extended payment terms and instalment plans – but it appears you can’t beat the classics, with almost half indicating 30-day terms as their preference.
Ultimately though, there’s demand for a variety of different types of payment terms. Merchants must listen to the preferences of their customers, learn about competitive practices in their industry and adapt their offering accordingly.
There’s huge demand for trade accounts
One of the types of payment terms that buyers show the most interest in is trade accounts.
Trade accounts (sometimes known as billing accounts) enable buyers to make several purchases through a specified period and then receive one consolidated invoice to be paid on an agreed date. They are an effective way of simplifying trade credit for buyers and sellers, and are traditionally popular in sectors such as food and beverages, construction and automotive.
Buyers interested in trade accounts would cherish the ability to manage their invoices in a buyer portal (69%) and the option to group invoices from multiple sites or companies (46%).
Optimising the settlement method offering
If payment terms are about when B2B buyers pay for their order, settlement methods are the how. Without a selection of carefully considered settlement methods, payment terms are no good to anyone.
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Unsurprisingly, standard settlement methods like bank transfer (76%), credit card (69%) and debit card (56%) are all popular among B2B buyers. 49% also expect to see Direct Debit as an option at the checkout.
However, it is increasingly important for merchants to consider newer and lesser-known settlement methods such as mobile payments and specialist regional options, like iDeal in the Netherlands or SOFORT in Germany. As buyer expectations of B2B e-commerce evolve, we anticipate demand for innovative settlement methods to grow.
The bottom line? Buyers want payment flexibility
B2B buyers say they have abandoned purchases because they weren’t offered the right settlement methods (31%) and payment terms (27%) at the checkout. A further 18% admit to having jumped ship when they weren’t offered payment terms on their first purchase.
The bottom line is this: buyers expect a variety of payment terms and up front payment options at the checkout, and the choice to settle each transaction in the way that is most suitable to their business. They expect fast and effective credit decisions and access to terms on their first purchase. They want payment flexibility and convenience, and they want it now! And if they don’t get it? They’re not afraid to go looking for it elsewhere.
Ready to learn more about what your customers expect from online procurement platforms? Download your copy of The Definitive Guide to B2B E-commerce Buyer Demands now.
