Rethinking B2B Finance: The Consumerization of Business Transactions

In the complex world of commerce, the distinction between B2B and B2C has long been a cornerstone of understanding buyer behavior and process by which buying decisions are made and executed. However, a flaw in this categorization has recently come to my attention—one that revolves around the way we discuss business finance. Regardless of whether you're a consumer or a business entity, at the core, we are all consumers. We all seek something we desire or need, and when financially viable, we make a purchase.

All of us do this: consumers, as well as businesses. While the inputs differ, fundamentally the driving force is the same: acquire the stuff that makes us whole. For businesses, wholeness means profitability, and the work of mitigating risk and managing the costs is more robust, but in the end, we all want the same thing: to grow. With the advent of artificial intelligence and machine learning, business decisions are moving faster, making them, in fact, simpler and contextual at the transactional level. So why persist in separating B2B and B2C when delving into the intricacies of finance experiences and payment processes? It's time to explore the concept of the consumerization of business finance.

Having spent 25 years at the forefront of disrupting consumer finance and identity, I've recently turned my attention to the world of B2B finance, specifically how digital experiences can unlock working capital. At my company we've questioned why the radical transformation seen in B2C finance has not yet substantially translated to B2B, leaving it decades behind.

The crux of the matter begins with working capital, the lifeblood of economic endeavors. Unlike individual consumers, businesses grasp the nuances of working capital in a sophisticated manner. In our current economic landscape, where affordable access to capital has dwindled, understanding and efficiently managing liquidity is paramount. As capital flows, prosperity unfurls for businesses, their employees, and the communities they impact.

In our post-pandemic reality, both consumers and businesses face heightened uncertainties. Disrupted supply chains and global unrest—not to mention steep inflation—have prompted micro-decisions based on rolling cash flow analyses for individual consumers, not unlike the fundamental inputs' businesses use to make decisions. But when businesses make these decisions, the economic repercussions are far more significant. Yet, while consumers have swiftly adapted to the challenges, B2B finance services have lagged, entangled in outdated systems that hinder agility and intelligent decision-making. This problem may have existential consequences for both regional and national economies.

The exchange of payments is a quantitative problem entwined with emotion. Whether for individuals or businesses, the payment process can make or break relationships. Consider the last time you had to chase down money owed to you—it likely wasn't an easy conversation.

In a recent study by Wakefield research, it was found that business owners face similar challenges. Eighty-two percent admitted to losing work due to miscommunication in the payment phase and 42% said it has happened multiple times. Imagine: every day, miscommunication in payment is costing businesses. This relational problem calls for a shift in the way we approach business finance.

Consumerized B2B not only addresses legacy issues like reporting challenges, manual processes, and outdated payment terms but also accelerates cash flow. This isn't just a business necessity—it's vital for economic survival, promoting employment, fueling economic growth, and fostering innovation.

Fueled by technologies, the rise of embedded finance has streamlined the ordering and invoicing process, significantly improving collaboration between businesses. Akin to a consumer's digital wallet, a business’ digital wallet embedded in non-financial experiences offers a paperless, secure, and efficient way for businesses to transact anywhere anytime, anyway.

The consumerization of business finance is not just a trend; it's a necessity for the survival and growth of our economy. As we navigate the complexities of modern commerce, let us reimagine and embrace innovative solutions that bridge the gap between B2B and B2C, fostering a more fluid, secure, and efficient financial ecosystem for all.