No B2B transaction occurs in a vacuum. Buyers and suppliers must consider the history of their relationship, negotiated rates and payment terms, and the reputations of the companies working together. Every interaction — from negotiating contracts to making payment to extending credit — is connected, but the complexity of B2B commerce creates many opportunities for disjointed, friction-filled experiences on both sides.
Brandon Spear, president of global B2B payment and credit solutions provider MSTS, said these negative experiences can be frequent, potentially jeopardizing the buyer-supplier relationship at a time when it's becoming a more strategic component of B2B commerce than ever. A simple change in commerce channel is just one example of how a B2B transaction can quickly go awry if buyers and suppliers are not interconnecting their processes.
Spear told PYMNTS, "If you purchase from a retailer who has a B2B channel from their eCommerce platform, then walk into a physical store, or maybe you phone them to place an order — how does that seller still maintain their omnichannel solution for you so they know who you are, and interact with you the same way, whether you're online or on the phone or in a physical store? That's a challenge."
Businesses that are unable to view their corporate buyers in context introduce friction into the relationship in other ways, too, particularly when it comes to pricing, contract negotiation, payment terms and extending credit.
"B2B customers have an expectation when they log in to get some kind of unique price, whether through a volume discount or a rebate off the retail price," Spear explained. "How do you manage that effectively, keep that contract in place and in an omnichannel way?”
He continued, "When it comes to payment, almost every B2B customer expects to get an invoice that implies some type of credit terms. This creates challenges in underwriting, and in how much credit to give a prospective customer."
The expectations for buyers and suppliers grow even higher as businesses embrace technology and automation. According to Spear, every transaction between business partners must be integrated into each side's back-office systems, and companies expect that suppliers will push out data that can be automatically collected and reconciled in accounting, ERP and other systems. At the same time, suppliers expect to be able to automate payment collection and other accounts receivable functions.
Rising demand for seamless, interconnected B2B processes — including customer history, contract negotiations, pricing, payment terms, payments, credit and reconciliation — pressed MSTS to develop its Credit-as-a-Service (CaaS) solution. Announced earlier this month, the tool is first targeting the manufacturing, transportation, retail and eCommerce sectors – and, more broadly, B2B eCommerce. Spear noted that it has solutions designed for SMB to enterprise businesses, to address the specific pain points of disjointed and friction-filled processes.
At the broader level, CaaS is an omnichannel suite of applications enabling B2B sellers to manage every aspect of their customer relationships, with a focus on enhancing the customer experience. According to Spear, business-to-consumer (B2C) commerce has become a driving force in today's B2B customer expectations.
"All of us have our favorite eCommerce site we go to, and we all know how easy and transparent and simple it is," he said. "Think about how easy and frictionless that is, and then contrast that to the B2B world."
That includes their internal approvals, the process of getting a line of credit, added documentations like purchase orders, pricing negotiations and more. Buyers need to easily consume data from their vendors and integrate that into their accounts payable systems. Suppliers are expected to manage and maintain contracted rates and credit agreements. Customers need these interactions to be the same no matter what channel they use to buy.
Managing the credit aspect is itself a potential headache for suppliers. Spear emphasized the importance of gathering the right customer data to underwrite that credit, with MSTS assessing companies' backgrounds by blending traditional sources of credit with alternative data sources, like Crunchbase.
"We ask questions like how long a company has been in business. If the answer is less than two years, then it is very likely that a data source like Dun & Bradstreet is probably not going to have the financial history on the company you need," Spear said. He added that MSTS' service asks questions based on answers to previous questions, turning away from a one-size-fits-all approach to credit underwriting.
A single B2B transaction is unquestionably intricate, and at each stage, there is a chance for the buyer-supplier relationship to go south.
"All of these components are potential reasons why a customer says, 'This is too hard, I'll go somewhere else,'" Spear said.
He added, "B2B relationships are more complex. That's a big part of what we're trying to do today, is focus on where the big friction points are — how you make acquiring a customer and underwriting an easy process, how you make sure that the contract price is right, and how you provide them with the data they need to reconcile transactions to the right place so it's easy to pay you."
The name of the game, he said, is loyalty.
"If you can get all of this right, and if you can lower the overall friction of the interaction with your customer, then our hypothesis is: The more frictionless the process, the more money they'll spend with you," said Spear. "All of that, in a simple word, is loyalty. The easier it is, the more aligned processes are, the more loyal your customers are likely to be."