Around a quarter of online purchases in Germany in 2024 were paid by invoice, making payment on invoice the second-most popular method among the country’s shoppers. Paying this way is also standard practice in the business-to-business (B2B) sector, and is becoming increasingly prevalent in ecommerce.

This article explains what a payment on invoice entails, the challenges it poses in B2B, and the benefits for ecommerce businesses that offer it as a checkout choice. We’ll share a few examples of best practices, the positive impact this billing method has on your business, and explain how to integrate this option into your processes.

What’s in this article?

• What does “payment on invoice” mean?
  
• Challenges of payment on invoice in B2B
  
• What are the benefits of payment on invoice for B2B ecommerce?
  
• Best practices: Payment on invoice in B2B
  
• How can B2B companies implement payment on invoice?
  

What does “payment on invoice” mean?

Payment on invoice is a payment method in which the buyers receive their products or services instantly and pay later via invoice. In other words, the sum becomes due only upon arrival of the goods. Shoppers generally get a grace period of 14 to 30 days. The invoice is sent either with the physical delivery or digitally, after which the recipient settles the outstanding balance by the agreed date.

Challenges of payment on invoice in B2B

In B2B, payment on invoice presents certain challenges which aren’t necessarily as big a problem in business-to-consumer (B2C). Below is an overview of the key issues:

Large invoices

Bill totals tend to be much higher in B2B than they are in B2C. That means greater financial strain on the supplier if the buyer defaults on settlement. If the customer files for insolvency, it will take the company an inordinate amount of work to recover its money—if it sees a single penny at all.

Complex credit checks

Credit checks for corporate clients take far longer and are more complex than those for private buyers. While individuals’ credit in the B2C space follows a relatively uniform scoring approach, businesses must consider a range of factors, including economic condition, transaction history, and industry stability. Despite this, the review has to move quickly to prevent abandoned purchases.

Long payment terms

Another challenge in B2B payment on invoices comes from extended settlement periods. Corporate purchasers often receive 30 days or more to clear outstanding bills. These long payment terms tie up the billing company’s liquidity, making it difficult to respond quickly to market changes or to invest. Businesses have to guarantee they can continue to meet existing monetary obligations on time, specifically with large invoices.

Extra admin

Payment processing for invoices involves a lot of admin, which can be particularly challenging for smaller enterprises. Companies have to manage outstanding receivables, chase late fees, and send reminders—all of which tie up significant resources. There are also strict regulatory requirements in the B2B sector, further straining operations.

Stripe Invoicing can help you with your accounts receivable, from billing to receipt of payment. Invoicing automatically tracks invoice status, sends payment reminders, and processes refunds. AI-assisted dunning tools further help you save time and budget and secure higher revenue.

What are the benefits of payment on invoice for B2B ecommerce?

German businesses that offer payment on invoice in B2B ecommerce gain access to a number of benefits:

Greater willingness to pay and higher conversion rate

Many corporate clients prefer settling by invoice in digital channels, as it allows them to use products and services immediately without paying right away. This improves cash flow, reduces the buyer’s risk, and strengthens trust in the online store or seller.

Vendors, meanwhile, can boost revenue, since purchasers are more inclined to place larger orders if they don’t have to pay until later. Payment on invoice also reduces the risk of abandoned purchases, thereby increasing conversion rates and contributing to the business’s success.

Customer satisfaction

Corporate clients frequently invest larger sums of money and expect a reliable experience, so trust is paramount in the B2B sector. Payment on invoice provides a secure way to pay, which builds buyer confidence—especially for new customers.

A positive purchase journey increases a customer’s satisfaction after a single order, and often contributes to lasting loyalty. Happy shoppers are more likely to return, and they sometimes recommend the company to others.

Competitive edge

In the hugely crowded B2B digital market, payment on invoice can give businesses a major competitive edge. By offering this way to settle purchases, retailers stand out from competitors who only provide prepayment or other advance billing options. Payment on invoice often becomes an important unique selling point (USP) for attracting potential customers, specifically in highly contested industries with low margins.

Best practices: Payment on invoice in B2B

German B2B online retailers who successfully integrate payment on invoice into their internal workflows can look forward to a wide array of benefits.

Example 1: Automated credit checks and fast processing

A medium-sized IT company uses payment on invoice as a central part of its sales and marketing strategy. Automated credit checks allow the team to evaluate a corporate client’s creditworthiness within minutes. AI-driven tools that analyze transaction behavior and financial data make this possible through quick, straightforward integration. If the rating is acceptable, the system automatically issues the bill and ships the order right away.

The company additionally operates a flexible dunning process which automatically sends billing reminders, and adjusts due dates as necessary. This helps the organization shore up its liquidity and cut its admin to a minimum. This efficient approach has increased their conversion rate by 25% and significantly reduced the return rate.

Example 2: Flexible payment on invoice for long-term customer loyalty

A supplier of sustainable energy systems allows its business customers to pay on invoice, offering flexible terms of up to 45 days. Their buyers appreciate the extra leeway, especially when it comes to making larger investments in renewable energies. This approach builds trust, which the company has built on to establish long-term partnerships with major industry clients.

Example 3: Reduced admin

A B2B office supplies firm has introduced payment on invoice to enhance internal bookkeeping processes. Automatic billing and reliable dunning save the business valuable time and resources. AI-assisted functions monitor incoming funds and alert the company early when a client is in arrears. Thanks to the reduction in admin, the team can devote more of their attention to customer acquisition and relationship management.

How can B2B companies implement payment on invoice?

B2B companies in Germany can use Stripe Payments to integrate payment on invoice into existing workflows. Payments is a global checkout solution that enables businesses to offer more than 125 ways to pay and 135 currencies in around 200 countries.

The best thing about payment on invoice with Stripe is not having to wait for money. Stripe pays you the purchase amount immediately and sends an invoice to your customer, branded with your logo. A pre-generated risk score ensures maximum transaction security. You receive a notification the second your customer pays.

To offer payment on invoice, sign up with Stripe and select “Payment on invoice” under the Payments section. All available ways to pay are activated or disabled in a single click via the system settings page—no programming required.