Credit terms are standard in B2B, but the process behind them is still stuck in paper
This episode previewed an upcoming discovery stage session at the B2B Exchange at Shoptalk Fall in Nashville, titled Leveraging New Payment Types to Capture Incremental B2B Sales. Brian opened with the numbers that frame the problem. Seventy two percent of B2B buyers prefer to purchase using credit terms rather than paying in cash or up front, and 60 percent of B2B sellers offer credit terms of at least 60 days, a financing arrangement that has long been standard practice for manufacturers and distributors. Despite how common this is, the process behind it remains largely manual. According to a recent study from Ardent Partners, more than 48 percent of B2B invoices are still submitted manually rather than electronically.
John Jakobe: modernizing an old process, not inventing a new one
Joining the conversation was John Jakobe, VP of Commercial Strategy at TreviPay, where he leads sales operations and partnerships. TreviPay partners with large commercial sellers to operate a fully managed order to cash process, combining software with financing and services to extend net terms and trade credit to commercial buyers, and to invoice them in the currency and format they need.
Jakobe was clear that net terms and trade credit are not new to B2B. What TreviPay has built is a modernized, streamlined version of a process that traditionally takes weeks. Getting a commercial buyer onboarded, underwritten, and through fraud and anti-money-laundering checks can take two to three weeks with a traditional in-house credit department, leaving that buyer waiting to transact. TreviPay compresses that into same-day credit extension, letting a buyer transact immediately while TreviPay manages the invoicing and settlement complexity behind the scenes.
Who actually carries the risk
Andy raised the risk transfer at the center of the model. When a company manages credit in-house, its own credit department underwrites the buyer and the company itself carries the receivables risk. TreviPay can take on that role directly.
When we own our buyers through our programs today, we are underwriting that buyer and TreviPay is the one extending them credit in most scenarios. TreviPay also owns the receivables risk against that business, and we take all of the responsibility of collecting from that buyer on day thirty, day sixty, day ninety, whatever those negotiated terms are.
John Jakobe, TreviPay
Jakobe explained TreviPay is not limited to one structure. It can act as a direct lender, serve as the software platform for a company managing financing off its own balance sheet, or provide the APIs a third-party bank uses to supply the capital. He noted many enterprise sellers currently stitch together anywhere from three to eight separate software, financing, and service providers to manage order to cash in-house, and in that setup they are still carrying the collections risk themselves, what he called the day sales outstanding struggle. TreviPay’s model offers a guaranteed DSO instead, letting the seller choose when it gets paid for a transaction, which factors into the transaction fee.
Does adding a payment option grow the pie, or just shift volume around?
Brian, drawing on years running consumer ecommerce, asked whether adding TreviPay as a payment method is typically incremental, the way alternative payment options like PayPal or buy-now-pay-later grew conversion on the consumer side, or whether it mostly substitutes for existing in-house credit. Jakobe said the honest answer is it depends on the seller’s maturity in B2B. Some sellers come to TreviPay having historically treated commercial customers like consumers and want to hand over their entire commercial portfolio. Others keep a meaningful share in-house, sometimes around 25 percent, while transitioning the rest to TreviPay over time, retaining certain customer relationships they specifically want to own.
Where TreviPay does replace or supplement existing terms, Jakobe said sellers typically see buyers spend more and more often, since a dedicated line of credit tied to one seller creates a similar incremental effect to what alternative payment methods produced in consumer ecommerce.
Where this shows up across manufacturers and distributors
Andy asked whether the use case differs by business type or industry. Jakobe said adoption spans the board, but one clear pattern has been manufacturers building direct-to-buyer ecommerce channels for the first time, a shift accelerated by COVID as manufacturers that historically sold only through distributors began selling direct. Distributors themselves are also building out direct sales channels for the products they carry. In both cases, the underlying requirement is the same: net terms need to work consistently whether a buyer places an order by phone, through a website, or through any other sales channel, so the account and terms a buyer uses stay the same everywhere they choose to transact.