Fintech & Payments in B2B Distribution
Interview with Bar Geron, Co-Founder & CEO at Balance
Greetings!
This week we take a deep dive into the competitive advantages of B2B marketplaces and specifically, the two key value added services we see B2B customers demanding as part of the digital purchasing experience: Logistics Offerings and Financing Solutions.
We’ve interviewed two top B2B founders with expertise in these areas and today’s newsletter focused on financing & payments.
🛑 We have a wealth of content this week and have split our coverage into two posts! Stay tuned for a bonus post covering Logistics Offerings with ChemDirect Founder Tyler Ellison. 🛑
Now, onto our coverage of Financing & Payments Solutions!
The Linchpin of B2B eCommerce: Financing & Payments
In January of 2022, we reported that over 50% of the largest B2B marketplaces
had already implemented or were planning to adopt a B2B financing solution imminently. Since then, we interviewed the CEO of Joor, our #2 B2B marketplace in our Top Marketplaces Ranking. Kristin Savilia, Joor CEO, highlighted their recent rollout of their payments and financing solution. In general, there are two key offerings from B2B fintech solutions:
Net Terms Financing that can be offered instantly to B2B customers. In Balance’s case, they offer financing deals up to $50,000 with instant credit decisions.
Seamless payment capabilities. Think of how easy Apple Pay is to use (if you’re reading this on your iPhone, you can become a premium subscriber via ApplePay! 💳). These providers aim to bring an Apple Pay level of convenience while accounting for the complexity needed for a successful B2B transaction to take place.
While the vast majority of B2C eCommerce happens via credit card, B2B payments have more variance. B2B Financing solution providers can close a digital transaction via a variety of payment methods like credit cards, ACH, Wires, and Checks.
With a plethora of key benefits to both the buyer and seller, the rapid adoption of digital B2B payment capabilities is no surprise. We spoke with Bar Geron, the Co-Founder and CEO at Balance, about how the B2B payments landscape has evolved and on what he thinks puts Balance a notch above the other solutions in this space - besides having raised over $80M in equity funding and $350M in debt.
BONUS: How can traditional B2B distributors roll out a better fintech financing experience? See Applico’s Distributor Financing White Paper
Are B2B buyers looking for longer payment terms in 2023? 📉
We asked if Bar has seen an increase in the length of net terms requested by buyers. He told us Balance is seeing a trend in B2B buyers looking for longer payment terms in the wake of credit becoming harder to get. With cash becoming increasingly important, Balance's solution enables small businesses to have more capital in place at a competitive rate. The company sees this trend as a tailwind for their business, as having cash in the bank is more important than ever.
Factoring Providers Can Only Look Backwards 🔙
B2B factoring companies have been around for decades, offering businesses a way to manage their cash flow by selling their outstanding invoices to a third-party company at a discount in exchange for immediate payment. While this service can be valuable for businesses, it has its limitations, as factoring companies can only evaluate existing buyers and can't offer real-time evaluations at the point of sale. However, with the advent of tech-enabled solutions, companies like Balance are breaking down the limitations of traditional factoring companies. By leveraging their position as a payment company and a lending company, Balance can use real-time data to evaluate new buyers multiple steps ahead of traditional factoring companies.
“The problem with the factoring companies is that they can't evaluate new buyers. They can only evaluate existing [buyers] because they don't live in real time, they don't live in the point of sale.”
“[Factoring companies] can’t help you grow, they can only be a capital provider. That's not amazing.”
Why is Balance's All-In-One Fintech Solution Superior? 🥇
We asked Bar what the advantage of Balance's all-in-one solution is compared to other fintech providers who outsource their underwriting decisions.