When was the last time you paid cash for a takeaway or gave your card details over the phone? As consumers, we've become used to fiddly manual processes being replaced with efficient and convenient online methods. 

Tapping 16 digits into a keypad or hunting under the sofa for change have made way for one-click, in-app purchases. 

Now, in the still largely offline world of B2B, technology is catching up and all aspects of payments are digitising too. 

Where B2C leads, B2B follows (slowly)

From a carpenter buying lathes directly from a toolmaker to a mason purchasing stone in-person from a quarry, businesses have sold to each other for millenia. But as businesses have grown in size and reach, B2B transactions have become increasingly complex in comparison to consumer transactions. 

Picture the buying process. In B2C, individual consumers make one individual purchase choice. In B2B, there’s multiple decision-makers, stringent procurement rules and endless back-and-forth, not to mention larger transactions and more regulations. A one-click B2C sale could be a one-year B2B sales cycle. It’s like turning a kayak versus shifting a cruise ship.

Yet big ships eventually turn too. For instance, B2C e-commerce has been on the rise since the late 1990s, but it took a worldwide pandemic for B2B to jump on the e-commerce bandwagon. In just a few years, the B2B e-commerce market grew to more than double the size of the B2C e-commerce market and 83% of B2B buyers now prefer digital purchases. 

There’s more to digitisation than eCommerce

B2B businesses will not be selling completely online any time soon. Less than 10% of B2B payments are currently done online and invoicing remains the most popular way to purchase. For buyers accustomed to placing orders over the phone or email, entrenched habits won’t change overnight. But they don’t need to. 

With the increasing digitisation of the last mile of offline sales, buyers can still place orders as they wish and merchants can benefit from faster online payments and more flexible digital credit options. Instead of filling out a paper purchase application at a tool store (which is then sent to head office for verification and takes two weeks to process), trade customers can download an app or scan a QR code in store to complete a purchase via their phone. Restaurant buyers can use click and collect to pick up the day’s produce from the likes of London’s Spitalfield and Billingsgate markets. Tradespeople can send pay links and digital invoices via Whatsapp. The last mile in B2B is now digital. 

The next frontier: digitising trade credit

Digitising the last mile of B2B commerce is creating new opportunities all the way up the supply chain. Manufacturers can sell directly to the end-consumer instead of through distributors. Wholesalers can offer multiple ways to pay to stand out from the competition. But, the most exciting untapped opportunity is digital trade credit. 

Rather than carrying out cumbersome due diligence on each new buyer, authenticating credit limits and extending credit off their balance sheet, B2B merchants can instantly verify buyers, offer market-beating spending limits and provide flexible payment terms while getting paid up front - all thanks to digital transformation. Combined with last mile payment digitisation, digital trade credit removes B2B buying friction, incentivises larger orders and optimises the buying experience for both merchants and buyers. It’s a win-win for all involved. 

Offline B2B benefits from online B2B payments

Even if 90% of your business is conducted offline, digitising the last mile of payments and trade credit opens up new growth opportunities. Take Meatex for example. A traditional meat and fish wholesaler, most of Meatex’s sales were offline and their team spent hours manually assessing credit for buyers, sending invoices and chasing payments. Despite butchery being one of the most traditional sectors out there (Meatex told me how their suppliers would take down orders on the back of their hands), when Meatex started offering instant credit and flexible terms, buyers that had never even sent emails before signed up to place orders online. 

In more recent news, we're working with Halfords, the UK’s leading provider of motoring and cycling products to modernise their checkout process across online and offline. As part of this we'll digitise their Trade Card so it transitions from a piece of plastic to a QR code in an app powered by our embedded finance.

When traditional B2B retailers and FTSE-listed companies are digitising their payments and processes, the ship has well-and-truly set sail. Those that don’t take advantage are leaving money on the table.