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Manufacturers cite cash flow woes as #1 concern in offering customer payment terms

27 November 2023

Unveiling critical insights into B2B dynamics, a joint report by Hokodo and Balance reveals that cash flow constraints are the primary hurdle in offering flexible cross-border payment terms to customers.

Pan-European flexible payment terms provider Hokodo and US-based fintech company Balance have released a research report which explores trends and attitudes among B2B sellers about cross-border payment terms. 

The report features data collected from a survey of 200 manufacturers, distributors and B2B marketplaces across the UK, US, France and Germany, in order to discern what businesses are looking for in a global payment terms solution. 

68 percent of respondents in the UK and US cited that they are dedicated to leveraging payment terms as a key driver for the success of their e-commerce business. 

However, respondents raised a number of challenges that they face in offering cross-border payment terms. These include managing compliance, enhancing buyer payment experience and meeting regional buyer preferences. 

The manufacturers surveyed expressed their own unique challenges to offering payment terms. 45 percent of manufacturers cite managing cash flow constraints as their top concern in offering terms to customers, whereas only 24 percent of distributors face the same problem. 

The report states that manufacturers typically make substantial upfront investments in equipment, raw materials, labour, and production processes. This cash-intensive nature can tie up a significant portion of their working capital, leaving them with limited liquidity to provide beneficial credit terms to customers. So, manufacturers may face more significant cash flow issues due to their capital-intensive, inventory-dependent, and longer production cycle operations. 

Distributors, on the other hand, may receive credit terms from manufacturers, allowing them to pay for products after selling them to customers. A strong financing solution could help solve cash flow issues with upfront payments, risk protection and support for large credit lines.

Despite these challenges, 65 percent of B2B sellers surveyed consider that offering payment terms is vital for influencing business growth in their respective markets – suggesting that alleviating cash flow constraints for manufacturers could be a great contributor to growth. 

Hokodo and Balance’s partnership encompasses all the key elements of international payment terms management, from credit scoring, fraud mitigation and payment processing, through to insurance, financing and collections, to empower global merchants to achieve their growth goals. 

“This new research cements what we at Hokodo have known for some time: B2B businesses are making payment terms part of their long-term strategy,” says Louis Carbonnier, Co-founder and President of Hokodo. 

“This is particularly true for smaller businesses, with 79 percent of UK and US respondents within the $80 million-$400 million revenue range indicating global payment terms as a critical lever for business growth.”

Visit Hokodo to download the report.

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