Factoring companies: time to go online!

The next generation’s factoring companies go online. How to manage the transition effortlessly and without taking unnecessary risks?
  • October 7, 2020

Consumerization of B2B business is the reality: purchase decisions in the work-life are more and more strongly affected by our experience as private consumers. 

When we sign up for a Netflix subscription or order a book from Amazon, the process is extremely quick and intuitive. Buying is easy and fun! Hence, when signing the office up for a new task manager app or updating office furniture, our expectations are high. In reality, however, many B2B online businesses offer more limited payment options, and the whole process tends to take more time and offer plenty of opportunities for the potential customer to give up.

The future of factoring companies is online

While this is understandable from the business owner’s perspective – offering an invoicing option, for example, comes with great risks – this threatens to slow down the growth of the whole B2B online marketplace.

For visionary factoring companies, however, the challenge offers a unique chance to seize an emerging market and lead their companies and clients to a bright future of online business, says Jarkko Anttiroiko, CEO of Enterpay. 

Enterpay is a risk management service provider of the next generation, offering an automated and simplified e-commerce payment solution for B2B businesses.

“Many traditional factoring companies are lacking a clear strategy on how to move over to the online world. But those who can manage the transition successfully, have a growing market waiting for them.”

Online business requires a transition team

How can traditional factoring companies enter this new online marketplace, then? It seems very different from their current environment.

It will require setting up new systems and processes and gaining new know-how, Anttiroiko admits. He recommends creating a team responsible for the transition.

“It can be only one person! What is important is that someone supervises and manages the process”, he reminds.

How to manage risks in online financing?

The right partners are also crucial because the whole business model changes when taken to the online world. 

Traditionally factoring companies enter into the picture when the purchase has already been made, and they also typically finance recurring services. 

This allows them to manage risks on the merchant level and handpick and verify each customer.

The online marketplace is very different from this perspective, because the purchases are often small. Verification needs to be instant and automated.

“A partner, like Enterpay, can bring this expertise and system to the table”, says Anttiroiko.

Automated processes improve profitability in online business

In addition to setting up a team and choosing the right people to manage the transition, the companies need to make sure their own processes are 100 percent automated from invoicing to controlling and collecting the receivables. 

The online market is based on high volumes and even one manual step in the process becomes a bottleneck that decreases – even kills –  profitability.

Go online, your clients are already there

Any last words of wisdom from the industry expert?

“Set up a realistic timeline”, Enterpay CEO Anttiroiko advises.

While the technical set-up only takes a few months, setting up internal processes and bringing clients up to speed will probably take from nine months to a year.

In the long run, hard work will pay off, because the online market keeps growing, and so will customers’ expectations. Pioneers and thought leaders who get on board now have a chance to win over a loyal customer base by answering their future needs and wishes today.