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Kriya Payments

Don’t leave money on the table - leverage digital trade credit

January 8, 2024
min read
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By offering digital trade credit, B2B merchants can stand out from the competition, enhance revenue and free-up working capital.

Not all business transactions feel like wins. Be it undervaluing your product or giving away too much for free, we’ve all had the feeling of missed opportunity when making a sale. 

While price is the obvious starting point for maximising sale value, if you’re not offering digital trade credit for each transaction, you’re leaving money on the table no matter the sale price. 

From increasing the number and size of orders to reducing the friction and costs of doing business, leveraging digital trade credit will boost your revenue and let you outpace the competition. Here’s why. 

Credit as a competitive advantage

Instead of manually performing KYC checks on buyers, assessing their ability to pay and offering standard trade credit terms funded off your balance sheet, you could use a slicker credit process and better credit terms to increase your share of a buyer’s wallet. 

Imagine a buyer needs £20,000 of wholesale goods on 30 day payment terms. If you can't offer this, you'll either get a smaller order (as they split their purchase across multiple suppliers) or miss out entirely. But if you can offer this on credit, you’ll get the full share of their wallet and the buyer’s full loyalty (as they’ll come to you next time instead of shopping around). 

What’s more, offering higher credit limits upfront works as a lead generation and sales tool. Your marketing team can differentiate your offer from competitors by offering a personalised, pre-approved spending limit to buyers you want to win. Your sales team can also close more deals by giving on-the-spot credit limits without worrying about time-consuming financial checks. 

In short: if you’re not using credit as a growth tool, you’re leaving money on the table. 

Credit as revenue expansion

Most large B2B merchants only offer credit to large distributors and buyers they know well, but digital trade credit widens the addressable market. Traditionally, merchants sell through wholesalers in different markets or new customer segments as they rely on the wholesaler to carry out the ‘last mile’ credit check on local customers (and take a mark-up for doing so). But with instant credit risk and fraud checks telling you whether you should trade with a new buyer and what credit terms to give, you can extend credit terms to first-time buyers and international companies, cutting out the middleman and capturing more of the margin. 

In addition, you’re not only selling to more buyers with digital trade credit, you’re able to sell them more. By providing the upfront credit to fund larger order sizes with better unit economics, buyers will purchase larger volumes. By offering market-beating credit terms and various payment methods, you’re simplifying the buying process and encouraging more frequent orders. 

In short: without digital trade credit, you’re fishing in a smaller pool and leaving money on the table. 

Credit as working capital

Banks make money from money - borrowing funds from depositors and making interest on loans. But as a B2B merchant, every time you offer standard trade credit terms, you’re funding interest-free loans from your balance sheet and tying up your working capital. You’re like a bank that’s lending for free to your buyers, which has two obvious downsides. First, you could be spending the money to grow your business by funding sales, marketing, hiring or product development. Second, you’re putting your own capital at risk and spending time assessing credit worthiness and fraud exposure for each buyer. 

But if you outsource this to a digital trade credit service, you offload the risk, monitoring and liquidity for funding credit and free up the finance team’s time for more valuable tasks. You can also unlock additional revenue with invoice finance. Buyers will make larger orders if they have longer payment terms (i.e. 60 days+), but instead of waiting two months for payment, you can get paid in advance and source stock to fulfil their orders.

In short: if you’re managing trade credit internally, you’re leaving money on the table. 

Get ahead of the competitors

The concept of digital trade credit is simple: the easier you make the buying process, the more businesses will buy from you. By offering instant, flexible credit terms, higher spending limits and more ways to pay, you’ll capture greater market share. 

The concept of embedded digital trade credit is also relatively new: early adopters will not only stand out from the crowd, but get a running head start too. By offering digital trade credit before your rivals, you’ll maximise your revenue potential and see the biggest gains in market share. 

In short: with digital trade credit, you’re taking all the money from a larger table. 

B2B Payments to boost your growth

To learn more about our payments and digital trade credit solutions book a call with us today.
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