When consumers receive delivery from Amazon, they have prepaid online with a credit card.
Commercial consignment works differently. When companies deliver a large quantity of commercial products, whether consumer packaged goods (CPGs) or office furniture, they often enter into a cash on delivery agreement with the customer.
“Normally they don’t want to pay merchant fees,” Laurence Dunne, director of product management at CheckAlt, told PYMNTS. “Even if the seller was okay with paying the credit card merchant fees, there would be associated challenges.”
Since the risk management profiles of wholesale delivery drivers require that they not carry cash, this means that these payments are often made with paper checks.
Handling paper checks in bulk deliveries
Some drivers then drive around all day with paper checks before taking them to the office. Others use commercial banking solutions to scan checks, but since these are not specifically designed for this use case, drivers often have to enter some of the data themselves. This results in a higher risk profile and, if not integrated with the accounts receivable enterprise resource planning (ERP) system, additional back-office work.
Read more: B2B payments: 40% are made with paper checks
CheckAlt attempts to streamline this with a specially designed mobile app that allows drivers to scan a check like one would with a credit card.
Adapt to a new environment
Another challenge is that with the number of cut checks decreasing by 5% each year, some companies that process them are going out of business, leaving fewer options available for vendors who receive checks.
Additionally, smaller wholesalers have been impacted by the shift of shoppers to larger e-commerce companies. Shoppers moved online out of necessity at the start of the pandemic and are now accustomed to sourcing that way.
While smaller wholesalers can compete on personalized service, they must also meet new customer expectations, which don’t include paying the price for the more expensive structures of companies that still process checks manually.
To help solve this problem, CheckAlt’s solution integrates directly with an ERP system so that when a driver scans a check, it is associated with the invoice in the ERP system.
“So you don’t need this huge back office of people doing all this manual labor behind the scenes,” Dunne said.
Provide supply chain visibility
Shoppers also expect the kind of supply chain visibility they’ve experienced with Amazon and FedEx. For smaller wholesalers, there are now small business ERPs that can provide this level of support by answering the question “Where is my order?” »
“We’re integrating a lot of these ERP vendors so the little guy can provide the visibility,” Dunne said.
Wholesale distributors also have to deal with partial payments and overpayments. For example, if the goods are damaged during delivery, partial payment may be required. If a customer wants to pay for a future delivery and the current one, there may be an overpayment.
“We can accept both partial payments and overpayments,” Dunne said. “If there is a perfect match, then everything passes. If there is an imperfect match, you have the possibility to manage it in the back-office by spreading it over several invoices, modifying the invoice amount, etc.
Together, these capabilities provide an opportunity for small wholesalers to better compete in today’s environment.
“The more they can do to provide personal service – provide the kinds of services that the Amazons cannot provide – but at the same time be as efficient as the Amazons, or at least come close to it, the more they can thrive,” Dunne noted.
See also: Incorrect billing information is ‘creating havoc’ for digital payments