Ways to Manage Net Terms Invoices and Payments

Net Terms, also known as Buy Now Pay Later, is a helpful part of a B2B Commerce business’ payment toolkit. It’s a buy now, pay later format that lets a business effectively extend credit to their customers.

There’s a few ways this process can be managed. Each have their pros and cons, and in this article we’ll go through the core options, how they can benefit you and what challenges each approach offers.

Who Extends the Terms

One core area where you can make a decision is who actually extends the terms offering, and is on the hook for offering the credit. There’s two ways this can be handled.

You Extend the Terms

Many businesses will internally simply manage Net Terms by giving their customers a set window of time to pay their invoice. In essence, they’re extending the courtesy of receiving a shipment before they have to pay for it.

Pros: You more fully own the relationship with your buyers. You know your buyers well, and can use your history with them to determine who is the best choices to extend terms.

Cons: If they are late or fail to make a payment, you and your business are left on the hook and therefore take on the risk yourself. From a cash flow perspective, you’re spending money and delivering merchandise before getting paid for it.

There are now some companies that will pre-pay you for invoices you have on hand, for a fee, so you can gain some cash flexibility upfront. Of course, this does come at a cost.

Someone Else Extends the Terms

There are third-party companies that will offer Net Terms on behalf of you to your customers. For instance, on Zoey, services like Apruve are available as a payment option that can extend terms to your customers.

Pros: They’ll pay you much more quickly (in as little as a day), so you don’t have to wait until a buyer pays their invoice to collect, improving cash flow. They take on the risk for the terms, so if a buyer is late or does not pay, they will absorb that. They handle all bill collection for the purchases they approve.

Cons: You pay them a percentage of each transaction they finance, just like you’d pay for credit card or other purchases of that nature. Low margin businesses, in particular, may not be able to float such a spread. They decide who is approved, so some of your buyers may not be accepted for terms.

For some businesses, paying a percentage to not have to chase down late payments or take on the risk may be money well spent; for others, it may not be an expense they wish to take on. Fortunately, both options exist for businesses to leverage, and they can even be mixed or matched depending on the scenario.

Options for Managing Your Own Terms

If you decide to go it alone, there are also multiple ways for managing your own terms, sending invoices and collecting payments. There are benefits and drawbacks to each of these options, but having multiple ways forward gives your business the opportunity of selecting which is more helpful.

Send Invoices Through Accounting Software

B2B Commerce platforms like Zoey can send order data to solutions like QuickBooks Online to manage invoicing and due dates, and in turn can receive the confirmation when payments are received.

Pros: If you use accounting software for other invoicing, it congregates it in one place. Allows the finance team to manage everything in a single location.

Cons: The web team may not have access to the accounting system for details on invoices. They will only see the final outcome within a system like Zoey when a payment is received.

Generate Invoices Inside the B2B Commerce Solution

Billing systems built into platforms like Zoey can generate invoices, which can allow for an online team to effectively be able to self-manage their customers. Invoices can be taken for partial or full payments depending on the scenario, and the dashboard shows which customers are up to date or paste due.

Pros: The Web team can manage the entire journey from Sales Quote to order to Net Terms payment. Invoices can be collected and managed in the same system as other customer and order data.

Cons: The Finance team may have an incomplete picture if invoices are managed outside their normal accounting software. Invoicing tools are generally more limited than a full accounting software package.

Regardless of Need, Zoey Can Help!

True flexibility for various business requirements is a rarity to find, but Zoey is the solution that ensures however you run your business, you can find the right approach for the job. See how flexible Zoey is by requesting a personalized demo based on your needs – click the button below to start a conversation with our Customer Success team!

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