Tips to optimise your business’ cash flow

Priscilla Jokhoo, Business Services Director at the Fédération Française du Prêt à Porter Féminin, who has organised the Paris Traffic fashion trade fair for the last three years, began by saying, "Fashion seasonality leads to very long cycles: between the time you create a garment and the time it brings you your first euro - about 18 months - you will spend your time writing cheques!"

Priscilla Jokhoo assists around a hundred brands a year on a daily basis, at each stage of their economic development. Her verdict is clear: "Most failures are not due to a bad product or bad positioning, but occur for two reasons: lack of structuring, and/or too rapid growth. Remember that this is impossible: you can only self-fund".

Anticipate your working capital requirements

Cash flow structure varies according to the stages of a brand's development. This principle shows, for example, that accounts payable are relatively more important for a young company.

"When you start your business, you will have leverage on accounts receivable, but little leverage on accounts payable. Then, when the company is over three years old and can prove its financial health, it can negotiate with its suppliers, which will reduce its liabilities. But your B2B customers will ask you for payment terms", explained Aline Abeya, France & Benelux Sales Manager at Webhelp Payment Services.

As a result, cash flow levels vary greatly from one stage to another and may decrease sharply, putting the company in difficulty. Anticipation is therefore essential!

Watch your credit ratings

"Your credit ratings are crucial over the entire life of your business. They are issued by the main credit insurers and rating agencies that analyse corporate balance sheets and are connected to national sources of banking incidents and failures. All suppliers throughout the world can access at least one of these sources that gives you a credit rating. You must also make your business social security and VAT payments without delay because they affect your credit ratings", Aline Abeya recommended.

Another recommendation: send your first balance sheet to the three main credit insurers: Euler Hermes, Atradius and Coface.

"You must communicate with them at every stage of your business life. If you have had to cope with a difficult situation, you must explain the reaons and the solutions adopted," explained Aline Abeya.

What is the advantage of a good credit rating? It gives you leverage to negotiate with your national and international suppliers. For example, you can try to find a contract-based solution over several seasons: your supplier may then be able to grant you discounts.

Leverage best practices with your customers

Several recommendations involving customers will avoid unpaid or late payments:

  • use a specialist lawyer to draw up solid General Terms and Conditions of Sale (GTCS)
  • insist on signed Purchase Orders, without exception!
  • ensure that invoices are properly drawn up in accordance with the standards and practices of the countries concerned
  • issue an invoice upon delivery
  • request payments before delivery if you are a young company
  • carry out quality control prior to delivery.

And Priscilla Jokhoo added: "In many situations, I have found that certain customers have exploited loopholes in poorly drafted GTCS! You should also pay close attention to your customers' General Conditions of Purchase (GCP), for example, with respect to returning unsold items".

Use leverage to improve cash flow

Positive leverage effects on your cash flow: in the case of a first order, you should not hesitate to require a deposit payment, usually 30%.

"Your customer can very well understand that you expect him to make a real commitment to your brand, and not just an order "to see how it goes", Aline Abeya pointed out.

Also note the possibility of granting a 0.5 to 3% cash payment discount.

Webhelp Payment Services manages the accounts receivable as soon as the order is placed. In practice, once you have made a delivery, it is potentially too late, as the payment method or time may not have been appropriate to your customer's situation.

"Webhelp Payment Services gives you prior recommendations about orders with respect to the country where your customer is located: this is very important because it reduces the risks of non-payment at the order stage. Webhelp Payment Services' assistance extends to the collection of multi-country and multi-currency funds", said Aline ABEYA.

On the strength of its experience in the textile market, Webhelp Payment Services has entered into partnerships with financial institutions that rely on its wholesale management services to help brands source and finance their sales.

> To receive the pdf of the "Cash is king" presentation at the 2018 Traffic fashion trade fair, do not hesitate to ask Aline Abeya.

 

 


Key features of a B2B marketplace

Creating a B2B MarketPlace may seem a complex task and it is difficult to get it right when there are so many things you need to remember. Here is a list of 6 key points to keep in mind before launching your MarketPlace!

The business model

Commission is based on business volume.
A MarketPlace business model is not the same as that of an e-commerce site. The latter is based on the volume of business and the number of vendors. A MarketPlace generally charges its vendors a monthly subscription to cover all or part of its fixed costs and a commission on the volume of business generated.
Just a simple example: if the marketplace takes a net commission of 10% on €100,000 of business volume and bills its vendors for a subscription of €100 each month, it will earn €20,000.
This principle of remuneration requires a dedicated marketplace trading account, as well as good organisation, particularly with respect to management control.
Please note: commission and subscription rates vary much more than on B2C marketplaces. (Commission rates range from 3 to 50% and subscription rates from 0 to 1,000 euros a month.)

The operator's customers are its vendors

Unlike a classic e-commerce site, the end customers of the platform are not its customers, but the vendors. It is to the vendors that you sell a commercial intermediation contract and the vendors are those who pay your commissions through their sales.
They must therefore be the focus of your attention and you must specify the services offered (logistics, invoicing, export assistance, etc.) that justify your remuneration and will earn their loyalty and encourage them to make maximum sales on the platform.

Customer experience depends on vendors

On an e-commerce site, the operator has full control over the customer experience.
This is not the case on a marketplace site.
Vendors play a key role in this customer experience; they are responsible for the product or service, its shipment and for all after-sales service. The operator must, for its part, manage its brand, the brand promise, litigation and ultimately, the customer experience. The operator must therefore impose rules on its vendors (standard presentation, editorial constraints, rules of conduct for customer relations, etc.) to ensure a positive and consistent customer experience.

For the end customer, the operator is a trusted third party

On a marketplace site, the operator has no control over certain key elements (customer complaints, reimbursement rates, process quality, etc.), which makes it a third party in the buyer-vendor transaction.
It must therefore act as a trusted third party and intermediary for the buyer. To assume this role, the operator must have a clear view of the quality of the relationship between its vendors and the end customers.
To avoid having to mediate in disputes that could have been avoided, the operator must support its vendors as they increase in competence with respect to customer relations and if necessary, encourage them to outsource customer relations to an experienced partner.
The operator becomes a trusted third party, and no longer just an intermediary in customer-vendor disputes.

Promotional offer management is complex

There are two ways of making a promotional offer on a marketplace site:
– The operator creates promotions on its offer or its own funds (10% discount on the first order).
– The operator creates promotional offers and invites its vendors to participate. These offers will then be showcased on the platform. In this case, it is the vendors who bear the cost of the promotion.
Promotional operations on a marketplace site are complex, because they do not only apply to its own products.
They can become even more complex, depending on the business model:
– One vendor per product item (no competition).
– Several vendors per product item (competition that tends to lower prices).

Managing payment methods and financial flows is complex and regulated

On a marketplace site, when a payment is collected, only the commission goes to the operator. The remainder must be paid to the vendor. This distribution leads to accounting, financial and regulatory complexity. Basically, the operator offers a service: collection on behalf of third parties.
This payment service is regulated in Europe and supervised in France by the French Prudential Supervision and Resolution Authority (ACPR) and the Banque de France.
To use this service, you must work with an approved partner such as Webhelp Payment Services.
Your payment partner will take full charge of managing payment flows (deducting commission, cash in, cash out). In a B2B context, it is important to choose a specialist payment company that allows you to offer your end customers B2B-specific payment methods and terms.

Do you now feel ready to start creating your Marketplace? Please do not hesitate to contact us to find out about the opportunities and choices available for setting up a Marketplace and a fluid, appropriate and upgradeable payment management system.

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How to Manage Your Time When You Work From Home

Working from home can be a real win-win for people and companies alike and seems to be more popular than ever. A lot of people just don’t find the commute to a shared office space to be ideal, and that is a growing trend. A recent survey found that when given the choice of a 10% raise or the opportunity to work remotely, 53% of respondents said they would choose to work remotely. Maybe it’s the added comfort level, privacy and freedom from a lengthy commute that make remote work so popular.

But there are benefits for companies as well: Besides saving on office space, by adopting this flexible workforce model companies profit from a new talent pool that can be reached in a much larger geographical range which also allows for a wider coverage of time zones.

While working remotely is clearly very appealing to most people, it might not be the right choice for everybody. Working remotely can lead to distractions, being unproductive and not working in the desired way. While there are countless benefits to the remote life, there are a few ways that you can learn to manage your time and plan your workday in a more efficient and productive way.

Schedule breaks

Distractions can be seemingly endless when you work from home, for example sounds and noises and tasks on your mind with things that you need to get done. Purposely scheduling breaks can be one of the most helpful ways to keep your brain fresh, active, and creative. Don’t feel guilty about it, and plan a few minutes to give yourself a rest! Depending on your work and your schedule, try to take at least a few minutes every hour to stand up and move around, away from your screens or stretch. Consider using a time tracking app, like Toggl, to help you manage and monitor your time. This particular app has lots of tools to help you manage your time and kickstart your productivity.

Reward yourself

Use classic positive reinforcement to help yourself stay motivated. Set little goals throughout your day, and reward yourself for meeting them. Whatever it is that helps to motivate yourself, whether it be a snack or a cup of coffee, use it to help you stay concentrated and feel positive about your workday.

Stick to a routine

While the flexibility of remote work is surely one of its appeals, most people do better with some sort of routine. Little practices like getting up at the same time every day, establishing some sort of morning and lunch routine can really make you function like a well-oiled machine. Stick to your schedule, but also keep some space to adjust your time as needed for unforeseen events!

Optimize your environment

Think about an environment that best suits your personality, needs, and work goals. Maybe you work best in a bare, clean room; or maybe a more creative office space feels best and most right for you. Reflect on how you work most productively and efficiently; and try to make your remote work environment fit with your needs.

The biggest takeaways here are to remove distractions and plan ahead. If you schedule in breaks and plan your time properly, you can surely be a successful and productive remote worker. It can be helpful to keep a log or a journal about how you use your time and any unexpected distractions that may come up. You may have to experiment a bit, but with enough preparation and planning you’re sure to be successful in working from home!

43% of all companies in Germany expect remote work to rise within the next few years. Many large corporations in various industries, from entertainment to lifestyle electronics, have implemented flexible work solutions.

We believe that offering remote solutions has become a key for growth, success and expansion, and will be a major workforce trend for the future.

What are your thoughts on this growing trend of flexible employment? Let us know in the comments!


B2B Payments: How they are different from B2C

B2C and B2B payments are different. But what are these differences in terms of e-commerce, and how can we be sure that B2B payment becomes a positive component of customer experience and loyalty? The 4 major differences to be taken into account if this is to be achieved are explained below.

Average basket

One of the main differences between B2C and B2B payment is the value of the average basket. In fact, in B2C transactions, the average basket value is quite low. It can range from a few euros to a few hundred euros, but practically never reaches a substantial sum.

On the other hand, in B2B transactions, the value of this average basket can be far higher, ranging from several hundreds of euros to several thousands or even several tens of thousands of euros! And this sum can even be much higher in some cases.

This difference in average basket value leads to other particularities. Paying a few hundred euros instantly is simple, but when we are talking in tens of thousands of euros, the operation is immediately more complex. This leads to other differences, such as differences in methods and terms of payment.

Payment Methods

In B2C e-commerce, payment methods are mainly "electronic" (bank card, paypal) and synchronous (in real time).

A digital purchase path with card payment consists of a real-time authorisation request, which ensures that the money is available on the buyer's account. It is quickly debited. The money is therefore transferred almost immediately from the buyer's to the vendor's account, which is why it is called a synchronous payment method.

However, in B2B transactions, purchases are larger and the buyer cannot always afford to pay instantly. That is why asynchronous payment methods are widely used. They include, for example, bank transfers, direct debits or even cheques that do not involve a real-time authorisation request, which therefore means that processes must be adapted.

As such payments are widely used in offline B2B transactions, they must be transposed online and made available on sales platforms to offer a consistent experience, which is a necessary condition for the successful development of online sales.

Fragmentation of the customer base and recurrence of purchases

In B2B, the customer base is far less fragmented than in B2C. However, one of the purposes of e-commerce is to reach customers who were previously inaccessible and to expand one's catchment area. This, of course, fragments the customer base a little more than with offline transactions.

On the other hand, unlike B2C, since customers are buying to keep their company running, professional buyers make far more frequent purchases than individuals, up to several times a week as opposed to two to three times a year for many B2C players. Consequently, although B2B may talk of customers in process, the logic is not only transaction monitoring, but also broader customer account management.

Payment Terms

Offline, in B2B, very often payment terms such as 30 days from the end of the month are proposed. Players are therefore used to this system and are not prepared to pay for all their orders in advance.

Consequently, a B2B e-commerce site based solely on prepayment is not viable. Prepayment can be important and used in certain situations, such as in the case of low-value baskets or for a first purchase, when the buyer is not yet known. However, if a company wants to turn its site into a high-performance sales development tool and a transactional tool and not just an online showroom, it must be able to offer its customers the same experience online as offline by offering them appropriate payment terms.

Lastly, the same payment differences between B2B and B2C are found both online and offline. Digital channels will therefore also have to offer these differences if they are to provide a consistent customer experience. This is especially important for marketplaces. When vendors are recruited, they often ask how the operator intends to charge customers. If the operator does not offer payment methods and terms appropriate to B2B, vendors will remain doubtful about the success of the marketplace and it will therefore be more complicated to recruit them.

An appropriate B2B payment platform is therefore an important tool for ensuring customer and vendor experience and loyalty on marketplace sites.

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