Why Are More Finance Teams Considering Embedded Finance Solutions?

Offering Financial Products May Help Cash Flow and Customer Retention

Embedded finance is generally defined as any financial service that’s offered by a non-traditional/non-financial services provider. If you’ve ever rented a car and been offered auto insurance as part of the contract, then you’ve been exposed to a B2C embedded finance product.

Increasingly, B2B companies are exploring where and how embedded finance may boost their performance and growth strategies. A survey of C-level executives in B2B companies across the U.S. revealed that 65% of businesses not currently offering an embedded finance solution are now considering it.

Upselling a customer on a financial product at the moment of the purchase decision may be a game-changer for companies that are looking for ways to increase revenue and deepen customer relationships. As a result, B2B customers are seeing an uptick in offers for business loans, credit cards, and other financial services products within the digital customer service channels of their vendors and suppliers.

Finding the Right Partners

Working with a financial services institution or a financial technology provider can help a B2B company maximize the potential of embedded finance products. These firms are likely to have systems, expertise, and other resources that may be necessary for integrating financial products smoothly into the digital customer channels of non-financial companies.

Moving customers through processes that enable embedded finance transactions can be complex. One effective way to help reduce friction in these processes is to incorporate actionable, valid B2B data.

Where data is stale or spotty, businesses and financial services providers can struggle to gain visibility into the operational and financial risks that may threaten the success of embedded finance offerings. A comprehensive, current, and wide range of data from a trusted data provider can be key to a more accurate, inclusive risk assessment.

Trustworthy data sources can help enable businesses and their financial services associates to mitigate financial risk, and they can help maintain regulatory compliance. Access to meaningful, comprehensive data may also help B2B businesses and financial services firms identify and avoid fraud. Without it, embedded finance transactions may be vulnerable to common fraud schemes.


Potential Impacts and Opportunities

For B2B companies struggling with the impact of high interest rates – such as higher prices, rising customer disputes and deductions, and increasing customer account delinquencies – embedded finance solutions may provide relief for common business pain points.

Payments and Cash Flow

Customers may still be relying on slow-moving, paper-based invoices and checks instead of more efficient digital channels. They may withhold payment while a dispute is being investigated. Or they may postpone payments due to their own cash flow shortages.

B2B companies may decide to add embedded finance solutions to help automate and simplify payments. These solutions can enable them to accept more payment types (such as ACH, EFT, etc.) and payment models (pay-per-use, BNPL, or subscription models for example). These products may also help convert accounts receivable to cash more quickly and reduce the need for collections activities.

Customer Experience and Customer Retention

Embedded finance solutions can help B2B companies demonstrate their understanding of customer needs and expand their product and services offerings accordingly. By creating a more tailored digital customer experience, businesses can more effectively help customers solve for common pain points.

Customers can acquire and leverage embedded finance products smoothly through the digital customer experience, without having to access other applications or websites. By creating “stickier” customer relationships, embedded finance also can help businesses improve their cross-selling, referral, and customer retention efforts.

Risk Management

Embedded finance solutions can expand a company’s capabilities to collect, integrate, and analyze data, which in turn can help B2B companies – and their financial services and fintech partners – assess risks and make better decisions about what customers are onboarded and what terms are offered to them. (Companies should remember to follow all applicable laws related to the collection and use of data.)

Learn More about the Relationship between Embedded Finance and Data

For B2B companies that are evaluating embedded finance opportunities – or that are ready to offer an embedded finance product  – it’s vital to understand the challenges. The Dun & Bradstreet eBook, “Why Data Management Strategies Can Make or Break B2B Embedded Finance,” helps prompt important questions for companies and the financial and technology providers they may partner with regarding data access, integration, and analysis.

The information provided is for suggestion purposes only and is based on best practices. Dun & Bradstreet is not liable for the outcome or results of specific programs or tactics undertaken based on the information. Please contact an attorney or tax professional if you are in need of legal or tax advice.


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