For many B2B merchants — especially small and mid-sized ecommerce sellers eyeing potentially lucrative markets outside their home countries — accepting payments and the inability to offer credit options are just some of the many hassles that make international business daunting.

But a new service from U.S.-based Balance Payments Inc. and Europe-based Hokodo Services Ltd. could make international commerce easier for merchants by supporting net term financing, a business equivalent of buy-now, pay-later (BNPL) options that have become popular in business-to-consumer payments in recent years.

“This collaboration establishes a one-stop shop for payment terms, so that global B2B companies can now effortlessly offer flexible payment terms to customers across Europe and North America,” the companies said in a joint statement. “As merchants prioritize growth and attract more customers, offering favorable payment terms is a strategic approach to achieving this goal.”

Replacing paper invoices with a digital system

Sean Last, director of partnerships, Balance

Balance and Hokodo are replacing paper-based invoicing with digital systems that can offer so-called net term financing with various options, such as payments due in 30 or 60 days after the sale. “Eighty percent of payments are on net payments,” Sean Last, Balance’s director of partnerships, tells Digital Commerce 360. But while widely available domestically, net term payments are less common in cross-border transactions.

Founded in 2020, New York City-based Balance set out to streamline B2B payments, including cross-border transactions. The company, which offers a range of payment services, developed application programming interfaces to make invoicing and related tasks easy to carry out digitally, and it lined up financial partners enabling it to extend credit to merchant customers.

Balance went shopping for a partner to help it offer international services, and it found one in London-based Hokodo, which bills itself as a provider of BNPL solutions for B2B payments. “Being able to work with them … felt very natural,” Last says.

The first company to use the joint Balance-Hokodo service is France’s FoodoMarket, a food marketplace for restaurants and caterers that is expanding into the U.S.

A ‘real challenge’ to offer payment terms to foreign buyers

“As we scale internationally, it’s been a real challenge to offer payment terms to buyers in new regions,” FoodoMarket CEO Eric Nivoix said in a statement. “The unique relationship between Hokodo and Balance means that global marketplaces like ours can take our operations across the world without impacting the customer experience.” A FoodoMarket spokesperson could not be reached for further comment.

Hokodo will service the European merchants while Balance will do the same for the U.S. ones, according to Last. In a typical financing transaction, a merchant could select a 60-day payment option, with Balance or Hokodo providing the full amount to the seller immediately and taking over collection responsibilities.

“By de-risking the merchants, they’re able to serve new clients,” Last says. “It allows them to focus on other parts of the business.”

Balance has developed an API-based risk-assessment system that uses in-house and public data to determine how much credit to make available for each buyer, according to Last. “We can usually approve up to $50,000 automatically,” he says.

Credit decisions on larger transactions usually can be made within 24 hours, he adds. Besides term financing, Balance provides revolving credit options. Last didn’t disclose specific costs for sellers and buyers, but says merchants pay “competitive” fees.

Courting a ripe B2B market

A recent survey of 200 merchants and marketplaces in the U.S., United Kingdom, Germany and France for Balance and Hokodo found that 65% of respondents consider offering payment terms vital for influencing business growth. The research also found that only 16% of B2B sellers find it “very easy” to offer payment terms to buyers in new countries.

Thus, Balance and Hokodo may have found a ripe market. “Their core offering of offering net terms to buyers is a valuable one in B2B,” says Scott Reynolds, senior associate at TSG (also known as The Strawhecker Group), an Omaha, Neb.-based payments consulting and research firm. “It has the potential to be one plus one equals three.”

Meng Liu, senior analyst, Forrester Research

Senior analyst Meng Liu at Cambridge, Mass.-based Forrester Research Inc. adds in an email message that “I expect partnerships like Balance and Hokodo to become more common in the future, as the B2B financing market has long been neglected and is in need of innovation…B2B buyers are happier with flexible payment terms and the ability to access credit; B2B sellers are more satisfied when they can get paid at the very beginning of a transaction at a low cost.”

With their partnership just beginning, Last says Balance and Hokodo are concentrating on trans-Atlantic markets for now before any potential expansion to other areas.

Jim Daly is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy.  

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