“In general, B2C is about experience. B2C brands are putting the focus on things that B2B, traditionally, are not within the focus on, which is look and feel, experience, removing friction.”

Intro:
Welcome to the Agile Digital Transformation Podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, content and community manager at Agiledrop.

Tim Butara: Hello everyone, thanks for tuning in. I’m joined today by Bar Geron, CEO and co-founder of Balance; they’re the creators of a leading e-commerce B2B payment solution. Today Bar and I will be talking about why payments are the missing piece of the puzzle for B2B digital transformation. And we’ll also focus a lot on how to accommodate the unique trustworthiness of the in-person B2B sales experience to a digital experience.
Bar, welcome to the podcast, it’s great to have you with us. Do you want to add anything here?

Bar Geron: No, appreciate you inviting me and I’m happy to be here.

Tim Butara: Awesome. Then, let’s get right down to business and let’s start with the basics. Why are payments so important for B2B digital transformation?

Bar Geron: I think the heart of every problem that we have in the business world can be divided into two. One is the cost associated with doing business, and our ability to grow. Those are the two things we’re dealing with. Digital transformation as a broad topic is about the ability to reduce costs by digitizing sales processes, mainly – I’m talking about the ecommerce side of the world. And two, is to get to new audiences we couldn’t get before we had the online to acquire new buyers.

I think what was great about the recent five to ten years is that we made significant advancements in the ability to discover new products online. And that’s true for industries that, ten years ago, you would never believe can be sold online. I’m talking about steel and chemicals and lumber and textile, really different type of industries that are so archaic in our common intuition as consumers.

But today, a lot of marketplaces and big brands are moving their B2B business online. Now the discovery experience is great, because now, you can market your website and find new buyers. And those buyers can find new supply. And with supply chain problems, there’s now more accessible alternatives.

Payments is the second step. Usually, payments, when you’re coming and you want to buy a specific type of steel, you can see it, you can find it, you can get the pricing and that’s great. But now, when you want to do the payments, you need to go back to the all finds base and the emails, going back and forth with quotas, doing the buyer onboarding, requesting terms… 

And this entire operations of just doing a payment is so cumbersome that that friction point can be the thing that will kill the growth element of the strategy. Because at the end, buyers are moving from one vendor to the next due to a better experience, but also, they need the new vendor to support their exact way of doing business. Which is for example with net 30, and to pay with wires and not credit cards online. That’s not a trivial thing when it’s self-served. And when it’s not self-served, it’s just with a lot of friction, and sometimes that friction can kill the deal.

So Balance is really an attempt, which until now was more successful than we even hope, is to create an online B2B payment experience. It makes it self served, completely, very similar to a consumer transaction, as you just come in and put your credit card. So, our experience will provide the same seamlessness that we know from the credit card space on the receiving side, where the buyer will get the flexibility he needs and knows as a business. So, at the end, why it’s important, it’s important because this is how the full cycle is happening online, and really manifest the vision of a true B2B commerce experience.

Tim Butara: And what about– yeah, we mentioned the trustworthiness of in-person B2B interactions, and that there’s a need to transfer or translate this same level of trust, this in-person handshake I believe we called it when we were syncing up for the podcast. How do you translate that, what are the best practices for translating this in-person trustworthiness and customer experience into an online transaction?

Bar Geron: One of the challenges in business purchasing or B2B trade in general is that payment terms is essential, it’s not a nice to have like in B2C. And to provide buyers with the ability to get terms, you need to audit them, you need to onboard them, you need to see that if you will provide the service, they will eventually pay you. And that level of trust is something that is built, usually for years. And it’s a big friction point to really open up the market, to make it more efficient and connect buyers and suppliers all over the world.

And, with Balance, what we do is we try to create a technology that will enable buyers and vendors to transact without knowing each other. So, what Balance creates is a full risk assessment technology that enables us to evaluate the risk for payment terms automatically on the spot. 

And in some cases we will advance the payment to the merchant without him needing to be involved, in other cases we just provide our technology to make it easier for merchants to approve new buyers. So essentially we are taking something that the old world needed time to establish, which is the trust, and just use technology to enable it in a much faster way.

Tim Butara: So, it’s mostly about optimizing the whole process, about removing potential bottlenecks and points of friction, basically, right. I think friction is the key word that you mentioned immediately after I asked why this is so important.

Bar Geron: Yes.

Tim Butara: And, besides establishing trust, what other key considerations, especially in terms of user experience and customer experience, should there be for efficient, successful B2B payments?

Bar Geron: The main thing that is needed is the flexibility to support the way business buyers are paying today. What we have today in the online space, as you know quite well as a consumer, is credit card space, we have credit cards, that’s very simple; we have Apple Pay, Google Pay, Samsung Pay, PayPal, or just normal credit cards processing.

And those are working great for the B2C space, but in B2B credit cards are just not enough. You don’t use credit cards to buy supply, you use it to buy small things. And then when you offer a credit card online, your buyers are getting stuck because they don’t get what they need, so they need to call you and they need to manage the process offline. And that’s not an amazing experience, as you can imagine.

Also, most buyers today are millennials. I think the last statistic I saw is like 85%. They expect the same level of service they know as consumers. So, really, the first thing for efficiency is the flexibility of payment methods. They need to know how to pay with wires and cheques and on an invoice that is being generated in the checkout, and credit cards, and the right debit, everything that they need. And that’s because you don’t know who will come or what their needs are as a business. It’s not as flexible as a consumer will be.

The second is the terms. You need to provide them with the payment terms that they are expecting because this is how they run their business. If they pay on the 16th of each month because this is how they pay all their vendors, they can’t just pay you upfront. It’s just not how they do business, so they would need to go to someone else. So I think this is in the core of it.

Tim Butara: You mentioned that it’s important that, because millennials make up so much of the buying force and are the ones making these payments, they expect to have a very similar experience as consumers. And I think that this is something that we’re seeing almost across the board, right, this reduction of differences between B2B and B2C brands, B2C business strategies. And I’m wondering if there are any other important lessons that the B2B payments space can learn or should learn from the B2C side of things?

Bar Geron: That’s a great question. I think in general, B2C is about experience. B2C brands are putting the focus on things that B2B, traditionally, are not within the focus on, which is look and feel, experience, removing friction. And I think more and more as we grow up in the digital transformation of our economy, we will need to be more consumer oriented, leveraging technology to do it. So I think more and more focus on experience will drive to a more efficient economy and more efficient world, where someone feels comfortable just going online and buying supply.

Tim Butara: And it makes a lot of sense, right? Because mostly everybody in the B2B world is also a consumer themselves, right, it’s not just millennials. And it’s these acronyms that trick us into making this distinction that, oh yeah, the entity buying in a B2B context is different than an entity buying in a B2C context. But in many cases, it’ll not just be the same kind of entity, but the same person, right; a person purchasing new clothes for their kid, and purchasing steel for their construction company or something like that.

Bar Geron: You’re 100% right. Completely agree.

Tim Butara: And we talked about risk before as the core reason as to why trust should be established on such a high level. And let’s talk about risk and security challenges and measures here for a little bit. So, what’s the situation here? Is this getting more important, less important, what are the best practices here?

Bar Geron: I think risk has a few sides. One is, when we talk about risk, we always talk about risk in the lens of the specific MO, the specific type of risk. So, one risk that you want to mitigate is the risk of fraud. That someone that’s coming to your website and saying, hey, I’m a big supplier that wants to buy a hundred pieces of steel, is not really that type of person. And then you’re sending them steel and then you’re not getting paid. The second is payment terms. Payment terms is the risk of not getting paid. It’s to answer the question, would the buyer have enough cash flow to support this transaction?

Balance is dealing with those two in order to make it safe to transact online as a merchant. It’s very similar to what PayPal did in the early days. It was very scary in the early 2000s to pay online. Because giving someone your credit cards that you don’t know is not a trivial thing; he can use it and charge you whenever he wants.

And then PayPal come along and say, you give me the credit card and I will pay him. You can trust me. And if you have a problem, you can talk to me. A very simple, straightforward value proposition that really resonates with consumers. I think Balance in some ways are trying to do the same for B2B.

Tim Butara: I guess the problems and the risks here are not that different between industries. I think fraud is one of the cybersecurity threats that we’ve seen hugely on the rise recently. And it’s becoming very elaborate. Like, recently, I got a spam email which was something like, oh, privacy notice, somebody tried to access your private info – click on this link to make sure this doesn’t happen. 

And I was like, oh, man, that is super sneaky, I’ve never encountered one that was as sneaky as this. And I’m guessing that, because of this, one important security measure is very much focusing on the people working with you, on your team, letting them know, educating them of all of these potential new issues, new strategies of trying to get these things going for the fraud part. What are your thoughts here?

Bar Geron: Yeah, I think some is technology, and some is just education and culture. Because one of the best ways for fraudsters to manipulate systems is by tackling the weakest link, which is the human being in the end. There’s a term, social engineering, where you’re creating a situation that makes the other person feel comfortable that you is who you say you are. But the only way to mitigate it is by education. So, at the end, you’re only as good your weakest link, and usually those will be your people.

Tim Butara: That was really well said, yeah. Well, I only have one question for you today, Bar. And it’s one that’s looking more towards the future. And I’m wondering, how do you see the future of what we’re discussing today, so, B2B payments and its place in the broader digital ecosystem in, let’s say, the next five years?

Bar Geron: I think that digital transformation is really in the heart of it the ability to transact online and have the economy move online and provide goods and services and paying for them online. And at the end, if you create that efficiency as we know from the B2C space, you can reduce the cost of living for everyone and just create a real efficiency of the real economy, which is B2B trade.

The future will look very different from what it looks today. The entire supply chain, the entire economy will live off the online world. And we will pay and buy things as businesses at the best cost, best value, best availability, and that’s because we have an existing relationship with someone. And that will change everything, I think.

Tim Butara: That’s definitely a strong prediction. And we might need to arrange another conversation in a few years to see how that’s turning out, Bar. But before we wrap up this one, if people listening right now would like to reach out to you or learn more about Balance, how can they do that?

Bar Geron: So, first of all, the website is getbalance.com. And my email is bar@getbalance. Feel free to reach out and happy to answer any questions you may have. I enjoyed our time together, thank you so much.

Tim Butara: Thanks so much to you, Bar, I also enjoyed our conversation. And to our listeners, that’s all for this episode. Have a great day, everyone, and stay safe.

Outro:
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