How Payment Personalization Plays a Role in B2B eCommerce

Introduction to Typical B2B Transactions

B2C consumers are used to a wide range of payment options when shopping on the web. They can pay using a credit card, debit card, in some cases a check, or even credit. Contrast this with B2B, which often uses invoicing on credit.

Unlike B2C, the majority of B2B buyers don’t use credit cards. Instead, they’ll pick up the phone or submit an order through a website. The order is then processed and an invoice sent out to the customer. The payment is done on credit with net terms of 30, 60, 90 or some similar number of days.

For the above transaction to take place, a merchant-customer relationship must already be established. Companies aren’t going to extend credit to just anyone. They’ll first establish a customer’s potential creditworthiness. This can be done in a number of ways including:

  • Checking with a partner company where the customer is already established.
  • Running a background check.
  • Analyzing the customer’s financial statements.
  • Allowing the customer to pay in smaller amounts on a trial basis.

As the customer shows that they always pay on time, the merchant will extend additional credit. This can mean a higher spending limit and longer net terms. As you can see, B2B transactions are all about the relationship.

Payment Options

While B2B may not offer the plethora of payment options that B2C companies have, they do have pay on credit. There are many instances of pay on credit.

Pay on delivery – rather than extending credit or making the customer pay up front, pay on delivery lets the customer pay only when the product is received. This avoids the customer having to finance, as would be the case with an upfront payment, any delays in receiving the product. Delays can happen due to stock-outs, back orders, or production issues.

For the merchant, pay on delivery can also simplify their accounts receivable. For example, if there are production issues and product delivery is delayed by 20 days, the customer’s 60-day net terms invoice must be adjusted. In fact, all affected customer invoices must be adjusted. With pay on delivery, there are no net terms invoices to adjust.

On account (net terms starting when) – Customers who pay by invoice will pay on net terms. These terms might be 30 days. But when exactly do the terms start? Is it the day the order is placed? Or when the invoice is mailed (post-stamped)? What about when the invoice email reaches the customer? There are a number of ways to start the clock. Below are a few of the most common methods.

  • After order – net terms start once the order has been processed.
  • After delivery – net terms start once the product has been confirmed delivered to the customer.
  • After shipment – net terms start once the product has been confirmed shipped from the merchant’s location.

Pay by check – Paper checks have not gone away in B2B payment transactions. In fact, pay by check is still preferred in many industries. There are two methods when paying by check: paper and electronic. Paying by paper check can delay order fulfillment since the check must be mailed and then cleared. This delay can be more than a week.

Electronic checks or eChecks offer far more advantages over their older paper peers. It takes just a few days for an eCheck to clear vs. the roughly 10 days needed for a paper check. This doesn’t factor in time in transit for mailing a paper check.

eChecks can also be integrated into your B2B eCommerce website, allowing customers to pay immediately without ever having to speak to a person. Some B2B customers will still want to talk with a human. For those customers, eChecks offer merchants a software terminal that allows them to process payments over the phone.

Discount Pricing

B2B merchants offer their customers discount pricing based on a number of factors. Going back to the relational-manner of B2B, merchants are able to look at a customer’s past purchasing behavior and reward them for it. These rewards come in the form of discounts.

By Account – Applying a discount to the customer’s account means offering a fixed discount no matter how much the customer purchases. An account level discount doesn’t have to be exclusive of any other discounts. For example, for every purchase, the customer may receive a 2% discount. Based on the volume of product for a transaction, the customer may receive another discount of 1.5%, for a total discount of 3.5%. Account level discounts are usually applied based on customer purchasing history.

By Volume – Volume discounts are sometimes called tiered discounts. Though these two types of discounts are not always the same, a straight volume discount can be applied based on per transaction volume, monthly, quarterly, or annual volume of items purchased. A discount is applied once a certain volume is reached within a predefined time period. For example:

Tiered volume pricing is based on units and provides a discount for each tier of units. For example, every 10 units may include a 1% discount.

By Product – A product discount applies a percentage discount for specific products. These may be slow moving products that the company wants to sell out of or move higher dollar products with high margins.

Buying on Account

Buying on account or credit is a common form of payment for B2B companies. In this method of payment, companies are invoiced for a purchase and have a certain number of days, called net terms, to pay the invoice.

Before any credit is extended, the merchant will look at the customer’s creditworthiness. Customers with low creditworthiness may be declined outright or receive less favorable net terms.

For those customers who are extended favorable net terms, B2B merchant can use those terms as a sales tool (on an account by account basis). For example, if the industry standard terms are net 30 days, the company may use net 45 to differentiate itself from the competition. Loyal customers may receive more favorable terms based on how long they’ve been a customer.

B2B payment experiences are often considered more restrictive and less creative than their B2C counterparts. As we’ve seen in this article, B2B companies have a number of levers to pull when it comes to payment personalization in B2B eCommerce.

About the Author:

Matt Osborn is the Director of Marketing at Apruve, a Fintech company that is revolutionizing how businesses buy from each other. He is a gifted “dad joker” although he has not fathered any children and writes his own small business marketing blog,

About Apruve:

Apruve is a B2B credit network that manages and finances credit programs for suppliers and their business customers. The automated platform integrates directly into online stores or ERPs to manage credit programs for suppliers with and without eCommerce. To learn more about how Apruve can grow your business, visit

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