From sales calls to partnership proposals, the term ‘win-win’ is thrown around the B2B world as the pinnacle of business dealings: that ideal state where it’s all upside and no downside. But does the concept of a B2B ‘win-win’ actually exist?
What defines a B2B ‘win-win?’
At a base level, B2B ‘win-wins’ occur when two businesses work together for mutual gains and both experience a positive outcome.
Through this lens, it could be argued that ‘win-wins’ underpin the $275 billion SaaS industry. For example, Salesforce delivers CRM software (as a service) that helps improve a scale-up’s customer retention. Salesforce receives payment (win) and the scale-up’s revenue retention outweighs the cost of the software (win).
The same goes with B2B partnerships, such as Red Bull and GoPro. Red Bull uses GoPro’s technology to capture its extreme stunts and reinforce its ‘beyond limits’ branding (win) and GoPro gets unique access to Red Bull’s events and huge worldwide consumer base (win).
However, in both scenarios, one party invariably ‘wins’ more than the other - be it in terms of effort or financial gains. So is there a B2B scenario where both merchant and buyer ‘win’ ‘equally’?
Digital trade credit: a ‘win-win’ for both merchant and buyer?
Ever since there’s been commerce, there’s been trade credit - from a herder borrowing funds to buy and raise livestock for sale, to a carpenter purchasing wood before building a commision. Although both merchant and buyer can eventually benefit from trade credit, there’s usually one side of the transaction that fares better.
Yet, with digital trade credit innovations, such as instant buyer authentication, invoice finance and multichannel buy now, pay later, the mutual benefits to merchants and buyers are too close to call.
Digital trade credit: benefits for merchants
Imagine you’re a building merchant who predominantly sells materials to trade distributors and construction companies. With digital trade credit, you can:
- Reach new customers. Instead of only selling to distributors and companies that you know, you sell directly to smaller suppliers and trade professionals directly via an e-commerce checkout. Embedded with digital trade credit technology, the checkout instantly verifies each new company and sets a spending limit, allowing the buyer to choose their own payment terms. (i.e. a £10,000 order paid in 30 days). This cuts out the middle man to reach new customers, entices competitors’ clients with better credit terms, and helps the sales team close more deals (i.e. sales and marketing teams use pre-approved credit limits to target and entice prospect buyers).
- Enter new markets hassle-free. Selling abroad is daunting if you don’t have a pre-existing relationship with the customer, let alone the market. Then there’s international currencies and banking regulations to consider. But with digital trade credit tools, you get instant decisions on whether you should work with a foreign buyer and what credit terms to give, alongside the infrastructure to handle foreign payments and minimise FX fees. It’s international expansion, made easy.
- Increase orders from current customers. Digital trade credit solutions are not just about new customers, but ringfencing current customers too. By offering the best credit terms on the market and multiple ways to pay, you make it far easier for current customers to buy from you compared to competitors. This locks down their custom for undifferentiated goods (i.e. bricks or cabling), boosts loyalty and incentivises higher value orders - ensuring you get a greater share of a customer’s wallet.
- Get paid up front for your orders. The traditional way of offering credit to your buyers essentially means funding interest-free loans from your balance sheet. This ties up your working capital and your finance department’s time. A better alternative is working with a digital trade credit provider like Kriya, who supply the credit and handle the risk. Whether you offer PayLater or leverage invoice financing, you get paid upfront. This is especially helpful if you sell to larger corporations that will only pay 60 days after receipt of goods.
- Free up your internal team’s focus. In traditional B2B sales, the finance and operations teams waste time manually authenticating new buyers, approving credit terms, handling orders and collecting payments. With a digital trade credit tool automatically authenticating buyers, offering bespoke credit terms and giving you the flexibility to finance your invoices, your finance and ops teams can focus on their core competence.
Digital trade credit: benefits for buyers
Ok, now imagine a construction contractor that needs to buy materials from a large building merchant. When the merchant offers digital trade credit, the buyer can:
- Get quicker approval. Contractors want to take on and complete as many jobs as possible. But waiting for credit approval slows down their business and adds uncertainty to job requests. When a merchant offers digital trade credit, there’s no delay. The buyer receives instant (and usually better) credit terms from the merchant with no need to pay upfront, so they can get the materials they need and complete jobs quicker.
- Access larger order volumes. Traditionally, contractors need to pay upfront a few times before they receive incremental trade credit allowances (i.e. £10,000 for the first order, £20,000 for the second order etc). This naturally impacts the size of job contractors can take on. But with instant credit checks, the merchant can give new customers their maximum spending limits from the off. As such, they can increase the volume of orders, take on larger jobs and bring in more revenue.
- Avoid stressful credit negotiations. Contractors are experts at planning and executing projects, not necessarily credit negotiations. With digital trade credit, they no longer need to jump through hoops, supplying a merchant with reams of documents and evidence that they are creditworthy (with no guarantee of good terms or success). Nor do they need to seek external financing (i.e. banks or other lenders). Instead, instant verification and credit setting enables the contractor to focus on what they do best.
- Have more time to pay. Upfront purchases and short payment windows are a drag on a contractor’s business. Often business buyers get stuck in negative working capital cycles, where they have to outlay for supplies before being paid themselves. But by working with a supplier that offers flexible credit terms and multiple ways to pay, the contractor can pay when they want, how they want. With less pressure on their working capital, buyers can spend more and reduce their need for external financing (i.e. a loan to cover a loan).
- Get all supplies in one place. Just as supermarkets made grocery shopping more efficient for buyers, digital trade credit enables buyers to use one merchant for all their needs. Let’s say they need £60,000 worth of supplies for a job. Traditionally, the contractor might spend time negotiating £15,000 credit limits at four merchants (and time working out which supplies to buy from each merchant). But if one merchant offers the full £60,000 on credit, they can fulfil the whole order in a few clicks.
A real B2B ‘win-win’
Digital trade credit and B2B payments are a one-stop-shop solution for both merchants and buyers, minimising effort and driving mutual growth. Now that’s a real B2B ‘win-win’ in our book.