February 1, 2022Uncategorized
Being a business-to-business supplier is an inherently risky position. While great risk usually does equal great rewards, you still need to take the right risks to avoid financial disaster. Mitigating risks also goes a long way toward ensuring losses are minimal and earnings are high. So, what can you do to reduce or eliminate the unique B2B supplier risks you face?
1. Determine Your B2B Supplier Criteria
Take a look at your current sales and payment data. What would you like to change? Are you getting your payments in full and on time? How long does it take to convert your inventory or an invoice into cash? Does your accounts receivable team need to call or email clients frequently to get bills paid? Once you’ve identified what does or doesn’t work for you, you’re in a much better position to chart the way forward and define your ideal customer relationship.
2. Seek Your Ideal B2B Customer
Thanks to good marketing and brand recognition, you likely attract a lot of customers. Are they the ideal customer you have in mind? If there is a specific company you know that has an excellent track record and you would love to serve them, why wait for them to come to you? Pitch them an offer that could prompt them to break ties with their current B2B supplier.
3. Reward Good Payment Behavior
In a perfect world, businesses make their payments in full and on time because it’s the right thing to do. In the real world, even well-meaning businesses can sometimes struggle to pay bills on time. Many businesses punish customers for late payments with threats and late fees. Offering an incentive is often a much better approach. Here are some offers to consider:
- Offer to prioritize orders to customers with great payment records.
- Offer special perks and terms to customers with great payment records.
- Provide a small discount for upfront payments or early payments.
- Provide better credit terms to customers with great payment records.
4. Follow the Data
As a B2B supplier, your business likely generates a lot of data. Go where the data leads you when it comes to making important decisions. Sometimes, this could mean not renewing a contract or choosing to no longer offer a specific product for sale. Using data analysis to make key decisions is crucial to the process of making positive changes that reduce risk and increase your return on investment.
5. Rely on B2B Supplier Technology
Human error and human biases can be costly when it comes to finances. Make the process more objective by relying on technology that considers only the core data, analyzes it and arrives at a final decision as to the creditworthiness of an entity. You can then make an informed decision on how to proceed. Using technology also has the added benefits:
- A fast and easy decision-making process for credit
- A fast and easy onboarding process
- Peace of mind regarding the creditworthiness of customers
- No need for time-consuming application processes
- Secure and convenient contract management
- Integration with accounting software
At Pencil One, we provide software that accomplishes these tasks and so much more. Find out how our PencilPay tool can eliminate risks as a B2B supplier and generate business growth.