Every CEO wants their company’s revenue to grow; after all, it’s one of their primary metrics for success. A sizable increase in sales is not usually easy to come by and executives must employ creative tactics to continue to drive growth. In today’s competitive multi-front business landscape, companies who don’t think outside the box for creative solutions to move the needle will find their days numbered. One simple change every business can make to increase B2B eCommerce sales through every channel is easy to use flexible payment terms. Wholesale payment terms are a little-talked-about secret that breathes life into sales organizations — and the reality is many buyers will expect you to provide them with a terms solution. Giving customers time to pay for products is a time honored tradition that can increase your sales.
Things to consider when offering net terms
Net 30 terms — the practice of giving customers 30 days to pay the full amount of their invoice — is a staple in the North American B2B business model. Terms may be extended at the buyers expense but they are granted 30 days from the day a product is shipped to pay their invoice. This system presents risk to the vendor in the form of late payments and lost revenue. Late payments create huge headaches for accounts receivable departments (AR). Collecting these outstanding payments is challenging and organizations often hire dedicated staff (or in some cases are forced to use their sales people) to call late buyers to collect delinquent AR.
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Solutions exist to mitigate the risks associated with extending B2B terms. One common practice is factoring. Factoring banks will buy your delinquent invoices at a significant discount. They purchase your debt so you no longer have to worry about collecting it yourself. The downside is that they often don’t cover delinquent payments– and if they do, they can be very expensive.
There is a better option to factoring banks that guarantees payment on your sales and eliminates the risk of non-payment, Rumbleship. Rumbleship modernizes the entire process of offering terms, forgoing late checks in the mail and calls to delinquent accounts by providing an automated and scheduled electronic payments (ACH) solution. Rumbleship is an easy to use gateway that solves the accounts receivable problem created by late payments.
Rumbleship allows your sales organization to benefit from extending wholesale payment terms to your customers and eliminates the risk of delinquent or non-payments.
User adoption and cart conversions
Making net payment terms available at checkout increases adoption by your buyers – your customers who couldn’t consider them previously can organically convert during checkout. Seeing them offered during checkout from your eCommerce store encourages them to become better buyers.
A 2017 Baymard Study of eCommerce shopping cart abandonment found that approximately 8% of order abandonments occurred due to lack of accepted methods. Offering terms reduces this risk by offering an additional payment method directly in your checkout. If cart abandonment is a growing problem for your business, implementing a terms solution directly in your checkout flow will improve conversions. Having time to pay for product is attractive to buyers and seeing the option will help them plan their future orders.
3 reasons why flexible wholesale payment terms boost B2B sales.
1. Try before you buy
For brands new and old, breaking into a new market is challenging. Whether you’re selling new products to existing customers or you’re trying to enter a new vertical, retailers and distributors are hesitant to commit to buying unproven products. One strategy that will reduce their risk and improve their cash flow is to give them time to pay for product. A 30- or 45-day B2B term will supercharge your sales team by giving them an additional closing tactic. Terms lower the barrier to entry for new markets and instill an additional layer of trust with your customers. Giving your customers time to sell product they purchase from you before paying for it will make buyers feel more comfortable trying new products and taking on brands for the first time.
This isn’t just a tool for new markets and products but an important seasonal sales strategy as well. Many industries have a natural ebb and flow and allowing your terms to be flexible based on your buyers’ needs will help you both. Longer terms on preseason orders will enable your customers to purchase more product in preparation for the busy season ahead and give you deep insight into your revenue forecasts down the road.
2. Incentivize your customers
Not sure your customers will be thrilled at the premise of having time to pay for product? What if you gave them a discount for paying early? Everyone likes cash back, especially your customers! Incentivizing them to pay early on their terms with cash back on their invoice is a great way to get them excited about your brand and in a good pattern of behavior.
Changing consumer behavior is challenging. With a little nudge customers who are seemingly stuck in their ways will be willing to try something new to improve their bottom line. Beyond rewarding your customers for good behavior, when they really need time to pay for product they have it. It’s a win-win for everyone.
3. Double your B2B sales
Combining an eCommerce store with flexible wholesale payment terms can grow a brand’s b2b sales by as much as 2x in as little as two months. Just ask Elephant Brands CFO and Founder Jack Brooks:
“Today, we help 80-90% of our buyers create their orders through the wholesale channel. The terms are determined on a buyer-by-buyer basis. As a result, wholesale has doubled for us over the last two months on a per-week basis.”-Elephant Brands CFO and Founder Jack Brooks.
Combining flexible net terms with a dedicated b2b eCommerce channel will quickly grow your sales volume and average order size.
Use a term solution that doesn’t hinder your sales process. Assigning credit to all of your retailers is hard work. It’s really hard. The ability to extend credit to your buyers is imperative to your growth. You’re in the business of sales and you need tools that let your focus on selling. Find the easiest to use solution that gives your buyers the time they want, and doesn’t impact the cashflow you need. Using a solution that confidently approves your buyers is key to implementing a lasting strategy that your sales executives will be able to use as their ace in the hole.