As a fast-growing B2B marketplace, sourcing new revenue streams will be an important priority. You might also be facing the following challenges:

• Deal ‘leakage’: Buyers and sellers use your platform to find each other and complete the initial transaction, but then complete subsequent deals offline once they’ve established a relationship.

• Low margins: Take rates in the B2B world are low (3-5%) and buyers/sellers are unwilling to pay more - unless you can prove value.

• Maintaining or growing your Gross Merchandise Volume (GMV): If your are in a cash-strapped industry, deals might be faltering due to liquidity issues. And when deals slow down, your GMV decreases.

At Tilta, we have experience working with B2B marketplaces such as Automa.net and Packhelp. We understand that marketplaces today need to incentivize customers to complete payment within their platform, deliver additional value to justify higher margins, and address liquidity issues to keep deals moving.

Established payment providers, like Stripe and Adyen, have some great solutions for platforms and marketplaces. But these were designed with B2C in mind and don’t meet the complex and specific needs of B2B commerce - namely its reliance on invoices with payment terms.

To help you understand how traditional invoice payments can be adapted for digital to deliver more value to your customers and more revenue for your platform, this article explains:

• The problem with invoice payments for B2B marketplaces

• How established embedded payment solutions help (up to a point)

• How credit-backed solutions unlock monetization 

• How Tilta will help you reduce leakage, increase margins, and grow your GMV

The problem with invoice payments for B2B marketplaces

Traditionally, the invoice is part of the B2B deal negotiation. For example: 

• A buyer issues an RFQ and a supplier responds.

• The buyer accepts the quote and places an order based on agreed payment terms.

• The supplier issues an invoice, which is paid on shipment, delivery, or performance of a service (depending on the industry and agreed terms).

When this deal takes place within a B2B marketplace platform, it typically has two options:

1. The marketplace facilitates the ‘search and discovery’ part of the deal but the transaction happens offline. It loses the transaction fee and the merchants end up completing the deal across several channels: Searching on the platform, emailing an invoice, maybe even switching to the phone to discuss or track delivery. This is clunky and fragmented, wasting a lot of time and resources.

2. The platform facilitates the invoice exchange. It earns a transaction fee but must also dedicate significant time and money to debtor-management and credit underwriting. Alternatively, the marketplace can demand up-front payment, but many buyers will be unwilling (or unable) to agree to that.

How established embedded payments solutions work and why Tilta is different

Marketplace payments, like Stripe Connect and Adyen for Platforms provide some amazing solutions for platforms and marketplaces. But they were designed for B2C, where transaction values are typically lower. Their business model requires upfront payment which they hold in an escrow until conditions are met (such as a Vinted purchase being shipped). 

They mitigate risk by freezing the capital, which is fine when sales cycles are short and values are low. But doesn’t work in B2B where transactions are easily €20,000 and deal negotiation and shipment can take months. Freezing funds of that size for that period stifles cash flow and drives commerce to a halt.

The missing piece of the puzzle is to embed financing into the transaction, which is what Tilta allows marketplaces to do. So, instead of just facilitating the payment, you can extend payment terms at zero risk to either participant. Sellers get paid immediately and buyers receive their shipment and can even sell it on before they have to pay. Cashflow is uninterrupted and commerce keeps moving.

How credit-backed solutions unlock monetization 

Every industry is different, but there is usually one party dictating the payment terms. For example, a small-scale manufacturer that makes car parts is not in a position to demand up-front payment from a buyer such as BMW. Whereas Coca-Cola will feel entitled to expect up-front payment from a local convenience store.

In these cases, one party is at risk, either having to wait a long time for payment or to pay up long before they can recoup the investment.

This puts the marketplace in a strong position to balance the odds and generate additional revenue at the same time. It can do this by advancing payment to the supplier or paying upfront on behalf of the buyer. This removes the pressure on all sides and safeguards liquidity - delivering significant value for which marketplaces can charge.

An example of a Tilta customer successfully monetizing invoice payments 

Stark Futures sells electric motorcycles to dealers. It already offers 30-day payment terms to its dealers but it wanted to offer longer terms, for a fee.

With Tilta, Stark allows its wholesalers to extend payment terms by up to 90 days and earns a margin proportionate to the extension. This is great for the wholesaler who doesn’t have a shop floor full of e-bikes they’ve paid for but not sold yet. And great for Stark as it’s just introduced a new revenue stream.

How Tilta will help you reduce leakage, increase margins, and grow your GMV

Tilta is a credit-backed payment solution that you can embed into your B2B marketplace. We exist to help you bridge the B2B funding gap by embedding financing where it’s needed most - at the point of payment. So merchants who complete deals on your platform benefit from flexible payment terms with zero-party risk.

We have also designed our solution to help B2B marketplaces reduce churn and leakage, safeguard your margins, and grow your GMV. Here’s how:

Reduce leakage by making your platform the best place to complete the deal.

You want to ensure that every transaction between a buyer and seller happens on your platform (not just the first). To do so, you must deliver value beyond acting as a search engine and make your platform the best place to complete the deal.  

With Tilta, you can incentivize merchants to keep the deal within your platform by offering competitive payment terms. Both parties benefit from flexible financing options, you increase the stickiness of your platform, and we shoulder the counterparty risk.

Increase margins by adding more value to your merchants

Take rates for B2B are typically low, especially when compared with B2C where they can be as much as 20%. As a result, your margins are small and it can be hard to generate significant revenue without high volumes. But, by providing added value to your merchants, you can justify charging more. For example, 3% is a reasonable finders fee or sales commission. But risk-free credit-backed payments and embedded credit facilities are worth much more.

With Tilta, you can configure your own fees. You decide whether to charge the buyer, the seller, or both - and how much. So, you deliver a better service to your merchants and grow your margins at the same time.

Achieve higher GMV by proactively extending credit to fuel more sales

By reducing leakage, you can capture more sales on your platform, and, by adding value, you can increase your margins. The next step is to proactively extend credit to known buyers on your platform to increase their purchase power and enable more deals. 

Tilta’s holistic underwriting solution uses your merchant data to asses their eligibility so you can confidently extend credit. This won’t just increase your revenue, it will enable more sales on your platform, increasing your overall GMV.

Making everyone a winner

Marketplaces play a crucial role in modern B2B commerce and we want to help. That’s why we built our technology, so businesses can access financing, and marketplaces can earn more on every transaction. 

If you’d like to learn more about Tilta and how we can help you monetize your payments, get in touch and we'll arrange a demo.