Accelerate Your B2B Expansion: The Importance of Offering Net Terms to Business Buyers

The B2B product sales market is vast, yet B2B ecommerce remains largely underutilized, offering a significant growth opportunity for B2C retailers looking to expand. By tapping into this market segment, B2C companies can easily leverage their existing brands, ecommerce infrastructure, and expertise to cater to the specific needs of business buyers and unlock new revenue streams. 

Whether you're a B2C retailer that has already expanded into the B2B market or are planning to make that shift, it's crucial to understand the key differences between selling to consumers and businesses. One of the most important aspects to consider is payment options at checkout. In this blog, we’ll dive into how B2B buyers have different payment expectations, and how offering the right payment solutions can impact your success in the B2B space.

How Business Buyers Want to Pay

When it comes to payment options at checkout, B2B and B2C sales differ significantly. In B2C, customers are used to paying immediately through credit cards, digital wallets, or buy-now-pay-later options. These transactions are typically straightforward and involve a single decision-maker, with the focus on speed and convenience.

In contrast, B2B buyers often expect more flexible payment options, such as payment by invoice with net terms, allowing them to pay for goods and services after a set period (e.g. net 30, 45, or 60) and without any interest rate, late fees, or penalties. This flexibility in payment is crucial for managing cash flow, especially for large or recurring purchases. 

Additionally, B2B buyers often look for streamlined invoicing processes, integrations with their internal financial systems, and payment methods such as ACH transfers or wire payments. Offering flexible payment options at checkout, including net terms, not only meets these expectations but can significantly enhance conversion rates and foster long-term partnerships. By accommodating these needs, sellers position themselves as trusted, business-friendly partners.

4 Reasons Why Offering Net Terms is Crucial for Your Business

#1: Meet Industry Expectations

In the B2B world, offering payment by invoice with net terms is not just a nice-to-have, it’s the standard. Business buyers expect the ability to purchase goods or services on credit - 30, 60, or even 90 days after delivery. By simply meeting this expectation, you can capture market share from competitors who don’t. In fact, nearly three out of four B2B buyers say they would switch to another online B2B store if it offered a better purchasing experience.

#2: Increase Sales and Average Order Value

Flexible payment terms can directly impact your bottom line by increasing sales volume. Buyers are more likely to make larger purchases when they have the ability to pay over time. Without the immediate burden of payment, businesses can take on larger orders or more frequent purchases, knowing they have time to pay. Offering net terms often leads to higher conversion rates and larger AOVs, as buyers feel less restricted by their current cash on hand.

#3: Create a Competitive Advantage

In many industries, offering net terms is not just beneficial—it’s necessary to remain competitive. If your competitors are offering flexible payment options and you aren’t, you risk losing out on deals, even if you offer better products or services. When buyers, especially SMBs, are deciding between two suppliers, the one offering net payment terms often becomes the clear winner. Flexible terms are particularly valuable for these businesses, as they need time to market and sell products before settling their payments.

#4: Improve Your Customers’ Cash Flow 

Offering net terms allows your business customers to better manage their working capital. Instead of making immediate payments, buyers can hold onto their cash for longer, using it to maintain operations, fund growth initiatives, or cover other essential expenses. This payment flexibility is especially valuable for SMBs, which often face tighter cash flow constraints and have limited access to traditional credit. Vendor-provided net terms become an appealing alternative, offering these businesses the credit they need without the barriers of bank loans. By extending net terms, you open the door to capturing a significant market segment that can drive growth, particularly as these SMBs scale. 

Common Challenges in Offering Net Terms

Coming from the consumer space, retailers may lack the necessary infrastructure, expertise, and processes to offer and manage net terms. Here are the key challenges that retailers come across.

Accounts Receivable Overhead

Offering net terms comes with hidden costs: from properly evaluating the creditworthiness of your buyers to managing collections and chasing late payments. Managing these processes requires significant resources impacting both operational efficiency and costs. Without proper systems to manage invoicing, credit assessments, and collections, offering net terms can create administrative burdens and increase the risk of non-payment.

Cash Flow Disruptions

Extending net terms means a delay in receiving payments, which can put a strain on your cash flow if not carefully managed. Waiting 30, 60, or 90 days for payment can lead to liquidity challenges, especially if operating expenses or supplier costs must be covered in the interim.

Risk of Bad Debt

Net payment terms are easier to extend in an offline environment when you have the time to investigate a buyer and the opportunity to meet them face-to-face. In the fast-paced online environment, this is much harder to do, and the risk of losses as a result of credit defaults or fraud is high.

According to a recent accounts receivable industry report by Dun & Bradstreet, in the first quarter of 2024, approximately 10% of B2B sales conducted on credit in the U.S. were deemed uncollectible due to defaults or payment issues. This highlights the ongoing challenge businesses face in extending credit, where a significant portion of transactions may lead to lost revenue because of non-payment or delayed collections. Managing credit risk effectively remains critical for merchants to avoid substantial financial losses.

B2B Payments Done Right with Automated Net Terms 

Given the challenges, having the right infrastructure and processes for allowing your business buyers to pay with terms is crucial. How do you do that? By taking a digital and automated approach to net terms, you can establish and scale your offering without the extra overhead, bad debt, or DSO (Days Sales Outstanding)

Balance’s net terms solution addresses these issues head-on, providing a streamlined, end-to-end platform designed to handle everything from buyer onboarding, credit risk assessment, and approvals to collections and cash application. With Balance, you can offer flexible payment terms to your business buyers, including SMBs, while eliminating the risks associated with in-house credit management.

Balance's API-first, white-label solution seamlessly integrates into your checkout process, creating a smooth buying experience without disrupting your operations. By transferring credit risk to Balance, you benefit from a 0 DSO guarantee, meaning you get paid on the due date, even if the buyer hasn’t paid. This stabilizes cash flow, reduces the complexity and cost of managing credit and accounts receivable internally, and frees up resources to focus on growth.

With enterprise-level support and quick implementation, Balance allows you to grow revenue, expand market share, and scale your B2B operations while eliminating the risk and operational overhead. 

Unlock New Opportunities in B2B

In summary, incorporating net terms is essential for B2C retailers expanding into B2B, as it not only meets buyer expectations but also enhances cart conversions by reducing friction during the buying process. Providing flexible payment terms like net 30 or net 60 can significantly enhance your ability to attract and retain customers. 

Although managing credit and payments can be challenging, automating these processes helps minimize overhead, reduce credit risks, and improve cash flow. Ultimately, embracing net terms can unlock significant growth opportunities in the B2B market while building stronger, long-lasting relationships with business buyers.

Balance’s comprehensive solution handles everything—from instant approvals to payments and collections—while ensuring predictable cash flow and zero bad debt. This enables businesses to scale effectively while reducing complexity and risk. 

Ready to take your net terms offering to the next level? Request a free consultation with our experts today.