Brandwise, a provider of B2B ecommerce software for brand suppliers and sales people, is deploying new online payment options to address what it says is a primary cause of lost sales—over-extended credit limits of merchants.

Brandwise is making new financing services available to the more than 300,000 companies, including suppliers, sales agencies and retailers that use its ecommerce and sales processing software. It says it expects adding net payment terms to its ecommerce platform will enable suppliers to boost sales and increase average order size.

Suppliers and sales agencies on Brandwise’s platform can receive payments from retailers the next business day after a merchant places an order. Retailers can get net 60-day terms on purchases up to their credit limit. Brandwise’s clients service more than 250,000 retailers.

Brandwise is deploying financial credit management technology from Fundbox. Prior to adding Fundbox to its platform, Brandwise clients either accepted credit cards for purchases or sought financing from a third-party. One of the issues with credit card acceptance, says Todd Litzman, president and CEO of Brandwise, is that 30% to 40% of the transactions cancel after being placed.

The culprit behind canceled orders

A leading culprit for canceled purchases made with credit cards is buyers exceeding their credit limit. Because suppliers typically do not charge a buyer’s credit card until an order is shipped, which could be days or weeks after an order is placed, they have no way of knowing whether a credit card purchase is valid until they request an authorization from the buyer’s card issuer when the order is ready to ship. While Brandwise’s platform has order management tools, it does not perform credit card authorization.

“This is a hole we were looking to plug for our suppliers and sales agencies,” Litzman says. “Providing financing gives our suppliers and sales agencies more control over receiving payment.”

Applying for financing also came with problems. Terms and qualifying processes can vary by the financier. Fundbox aims to provide consistency in that area, Litzman says.

In addition, suppliers pay a lower rate for financing than accepting a credit card, which can improve their margins, Litzman says. Fundbox, which provides revolving credit lines up to $100,000, charges suppliers about 2% of the order value.

As part of its credit-decision process, Fundbox uses machine learning models. In addition, suppliers must show two months of activity in an accounting application or three months of transactions in a business bank account, and a minimum of $50,000 in annual revenue. The average Fundbox customer earns more than $250,000 in annual revenue and has been in business more than a year, the company says on its website.

Use of risk management tools, such as machine learning, is a way financial technology companies can differentiate themselves in the increasingly competitive B2B financing space, says Rivka Gerwitz Little, research director, Global Payments for IDC.

Dynamic analytics

“Fundbox has dynamic analytics-based models that quickly measure risk, allowing buyers to receive immediate financing and sellers to receive immediate payment, which is good for both parties,” says Gerwitz Little. “There are a lot of newcomers making this market increasingly noisy, and innovation through better technology is a way to stand out.”

Improving underwriting through the use of machine learning algorithms can bring efficiencies to B2B financing that make risk analysis less cumbersome for suppliers and speed sales that would otherwise be delayed while a retailer awaits approval for financing.

“The process of providing or receiving terms in the world of B2B is slow, inefficient, and it inhibits growth and the ability to capture opportunities for businesses on both sides of the transaction,” said Sebastian Rymarz, chief business officer for Fundbox. “There is a multi-trillion-dollar economy locked up in terms, which if unlocked, will propel the B2B sector in ways that we can’t even imagine.”

Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.

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