As the B2B landscape embraces digitization, traditional buyer-supplier dynamics are undergoing a sea of change.
With news Monday (July 8) that business identity platform Niva brought to market its business verification solution, firms know that no matter the shifting nature of today’s contemporary B2B transaction cycles, one thing remains immutable: Buyers need to know who they are buying from, and suppliers need to know who they are selling to.
In the complex and high-stakes world of B2B transactions, discerning buyers understand that thorough knowledge of suppliers is not just advantageous but essential.
It empowers them to make informed decisions that enhance operational efficiency, foster strategic growth and mitigate risks. Investing time and resources in supplier research and relationship management is a component of a successful B2B procurement strategy.
B2B transactions often involve financial investments, long-term commitments and complex integration processes. Knowing a commercial partner’s track record, financial stability and reputation helps buyers minimize the risk of supply chain disruptions, loss and even project failures.
This knowledge forms the bedrock of strategic procurement, driving efficiencies, fostering innovation and securing competitive advantages. However, the equation is reciprocal; it is equally crucial for suppliers to understand their buyers to cultivate successful and lasting business relationships.
Read also: Will 2024 Be the Year of Win-Win Buyer-Supplier Dynamics?
The more knowledgeable a B2B buyer is, the better they can negotiate terms and conditions, including pricing, delivery schedules and payment terms. Familiarity with a supplier’s cost structure and market positioning enables buyers to use their purchasing power effectively and secure favorable deals.
At the same time, compliance with regulatory standards is becoming increasingly non-negotiable in many industries and jurisdictions. Buyers must ensure their suppliers adhere to relevant laws and industry standards to avoid legal liabilities and penalties. Knowledge of a supplier’s compliance history and certifications is crucial in maintaining regulatory adherence.
Understanding the business on the other side of the transaction at a comprehensive level is important, and business identity is becoming a key pillar of the B2B marketplace.
“No one has brought together in a single pre-populated directory, a comprehensive view of every business globally and a two-sided platform that allows the parties to securely connect with each other and create real-time, mutually consented monitoring,” Markaaz CEO Hany Fam told PYMNTS, noting that piecing together data about businesses is a “40-year problem” with many datasets out of date, inaccurate or incomplete, with updates sometimes only every 220 days.
As a result, Fam added, businesses can spend up to a third of their time responding to requests from banks and other third parties when asked for data to support their identity, viability and creditworthiness. Not only does that take time, but it also often results in a negative outcome for the business since banks often lack the right information to verify and subsequently underwrite the business for a loan or even validate that it is a business in good standing to open an account.
Additionally, PYMNTS Intelligence revealed that competitive positioning also continues to concern 25% of chief financial officers, with pricing a factor. It marks the third consecutive month in which competitive position has weighed heavily on CFOs’ sense of certainty and underscores the fact that in today’s volatile environment, B2B buyers are more likely to purchase from suppliers they know they can trust while B2B suppliers are more likely to do businesses with buyers they know and trust.
See also: Legacy Firms Prep for Digital Buyers Who Don’t Want to Talk to Procurement
Understanding how commercial partners prefer to be paid — and the timeline for doing so — is also crucial to building sustainable, profitable and long-term relationships.
“Many folks don’t want to buy from 30 or 40 different vendors,” Dave Haase, president at ChemDirect, told PYMNTS in a conversation in November. “They want to be able to consolidate that with a few vendors, as few as possible.”
The PYMNTS Intelligence report “Getting Paid: Digital Payments for Improving Cash Flow and Customer Experience” found that 79% of B2B suppliers want to receive digital payments, including wire, ACH and virtual cards. Faster payment processing is not the only impetus either, as 76% of firms said buyers are likelier to pay on time when they pay electronically.
“The suppliers that are not as flexible and willing to embrace these new forms of payments are going to lose business, while the buyers who are not using them are losing revenue, which results in them not being as competitive in their space,” ConnexPay founder and CEO Bob Kaufman told PYMNTS in March.
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