Competition is the frenemy of every business – it’s a sign your offering is valuable to the market but it creates pressure to keep the customers you already have and find new ones quickly before the competition does. With digital on the rise, there is an opportunity for companies to get ahead-of-the-curve and champion digital transformation as a competitive advantage.
How big is this opportunity? A Frost & Sullivan report projects that U.S. B2B e-commerce sales will reach $1.9 trillion by 2020, as global B2B online sales will reach $6.7 trillion. This is a lot of business to leave on the table for your competitors if you put off your company’s digital transformation.
An undeniable way to make customers stickier is to allow them to conduct business with you, the way they want to. What does this mean in B2B? Adapting to their purchase behavior which is trending online and offering flexible payment types. This is where a digital transformation of your accounts receivable process including adopting an electronic invoice payment and presentment (EIPP) platform comes into play.
Even though paper checks continue to reign over the supplier payment space, according to a 2016 Payments Fraud Survey, 71% of companies have cited that they have experienced actual or attempted check fraud. This has motivated B2B companies to accept electronic payments to combat the threat of fraud.
Research featured on BusinessWire.com highlights an average payment portfolio, representing ~3000 US businesses in 2016. Electronic payments account for 35 percent, closely following the tail of paper checks at 37 percent. This is a pivotal time – electronic payments are replacing paper checks.
So what types of electronic payments are B2B customers looking for? Processing credit cards online is one. Corporate credit cards are forecasted to grow by 85% by 2018. But, currently less than 15% of B2B organizations accept credit card payments which is surprisingly low, but this number is misleading. In 2011 credit cards accounted for barely 3 percent of B2B transactions but in today almost represent 16% of an average payments portfolio – a fivefold increase.
Why the rapid growth? Electronic payments and credit cards meet the appetite of today’s digital economy where buyers want to purchase in real-time. This combined with a credit card’s ability to extend payment terms and offer perks like points and rewards helps make B2B customers stickier.
You may be thinking, but what about the B2B transaction costs (interchange and processing fees)? Yes, those were valid reasons to curb credit card acceptance in the past, but it’s a whole new digitized, consumerized, real-time world today. Simply: if you do not accept credit card and electronic payments, your customers may switch to a supplier that does. The cost of losing customer stickiness and holding off on your digital transformation will be, in the next couple of years, detrimental to the health of your business. If you want a competitive advantage, the time for your digital transformation is now.
Want to learn more about electronic payments and how you can leverage B2B credit cards in your organization? Check out this new eBook, “5 Reasons to Accept B2B Credit Card Payments” to determine if the value outweighs the cost and begin exploring why digital transformation is necessary for the future of your business.