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Embedded Fintech: Why Smart B2B Marketplaces, Apps, and Ecosystems Partner Up

B2B marketplaces, portals, and apps are exploring embedded fintech for a variety of reasons. Including payment methods in platforms increases stickiness and increases volume for more sales. There’s also a mismatch between buyer and supplier payment expectations: buyers want the 30, 60, or 90 day payment terms they’re used to while sellers want to get paid immediately. (Unlike B2C transactions, most B2B companies don’t use credit cards for their purchases and B2B suppliers generally don’t take card payments.) Consequently, many marketplaces, portals, and apps have been making quick supplier payments while extending credit to buyers, taking on the risk themselves. So, many of these organizations have been weighing the decision of whether to build their own embedded finance solution to factor invoices or work with invoice financing fintech payment companies.

Embedded Fintech Offers a Solution

As a quick reminder, invoice financing (aka invoice factoring) is financial product where a business owner sells invoices to a factoring company. The business owner receives cash for the invoice amount, usually less fees, ahead of the payment terms. The business owner’s customer, who is responsible for paying the invoice, instead pays the invoice amount to the factoring company according to the original payment terms. It’s a tool used by large enterprises and small businesses alike to increase cash flow in real time.

Some leaders running these marketplaces, portals, and apps, end up changing their minds about building their own solution, despite the idea that all companies are becoming fintech companies. Some of their reasons run parallel with the thoughts in the popular TechCrunch article, “Embedded Finance Won’t Make Every Firm Into a FinTech Company.” The reasons we’re discussing are more specific to why these organizations aren’t building their own embedded payments solution around invoice financing fintech products.

1. They Don’t Want Their Capital Tied Up

One of the biggest concerns marketplaces and other platforms have about building their own online payments solution is that their cash would be stuck in accounts receivable for long stretches of time on a regular basis. This goes back to the mismatched payment expectations between buyers and suppliers and how marketplaces, portals, and apps are sending money to sellers fast while extending buyers credit. While they wait 30, 60, 90 or more days to accept payments from buyers, their cash flow is impacted. Slow payments are causing cash flow headaches for suppliers and platforms alike. 


This is especially a problem for organizations that are trying to grow. Even though having their own invoice financial product might make sense for them at a more mature stage, new marketplaces need to make payroll and hire more staff, market themselves, and pay other day-to-day expenses. Having their working capital tied up in accounts receivable during crucial growth stages is not idea. While many large, established organizations have access to quick, inexpensive cash through digital banking products, it’s often still faster and easier to use the cash of a partner. This ensures cash is always readily available. It also offers risk management as they aren’t putting themselves out there as the lender or financial provider themselves.

2. Emerging Marketplaces, Portals, and Apps Need to Get to Market Fast

A few key trends are coming together all at once to drive the growing popularity of making B2B purchases online: 

  • Increased demand for online payment processing and mobile payments that can be done anywhere in the world in the wake of the COVID-19 pandemic. The demand for digital experiences is only continuing to grow. 
  • Customer expectations and financial experiences have changed with younger generations — 73 percent of B2B buyers are now millennials, who prefer a digital platform for their purchase experience and payments process.
  • Organizations’ need for data to make informed strategic decisions.

If you’re curious about more factors causing this shift in the B2B landscape, take a look at the article we wrote about the trends driving embedded B2B payments

The boom we’re seeing in the number of B2B marketplaces, portals, and apps is undeniable. Platforms for just about every B2B embedded finance use case are launching constantly, and Amazon Business has surpassed $25 billion in sales with no end in sight. 

Whether it’s a distributor launching their own portal so customers can buy online or a start-up creating a marketplace tailored to solve the distribution challenges facing a particular industry, becoming a leader means getting to market fast — and having cloud-based payment services will be an expected part of the core customer experience. Many of these organizations are realizing they might not have time to build their own embedded lending solution, and that partnering with an embedded fintech firm is the way to go as it gives them an edge by getting to market sooner than their competitors. 

3. They Might Not Have All the Expertise They Need In-House

As expressed in the TechCrunch article referenced earlier, a lack of deep expertise in a variety of areas — like the underlying technology required, regulatory issues, and finance itself — is one major reason why not all companies are choosing provide invoice financing fintech offerings within their own payment platforms. 

Building a solution in-house is an expensive and time-consuming endeavor, which might take marketplaces, portals, and apps away from their core business and strategies during a critical time in their development. Rather than keeping their focus on getting buyers interested in using the platforms, they are spending time and effort trying to build an integrated payments solution when they should really be focused on establishing and growing their business. To quote the famous adage, “there’s no need to reinvent the wheel.”

Another benefit is that you reap the rewards of any fintech innovation an embedded partner implements on their product. Again, companies don’t have to invest in this research and development themselves, and can simply ride on the expertise of their embedded fintech partner. 

4. Embedded Fintech Companies Already Have Data and Workflows in Place

One reason embedded finance platforms are so valuable for marketplaces, portals, and apps is because of the data generated. When the payment process is part of the platform experience, leaders have access to raw information about who is buying from which sellers, the size of the transactions, seasonality, the most popular products, and more. (These examples are only scratching the surface!) 


This data is crucial for making strategic decisions about maximizing success generally, such as defining target markets, segmenting users, and enhancing the product. But it’s also important at the individual level; this data can be used to boost sales by replicating Amazon’s practice of making personalized purchase recommendations based on previously purchased or viewed items. 


Many fintech startups and established invoice financing fintech companies alike already have data that can help, as well as the means to get embedded fintech services up and running faster, which means platform-specific data will be generated faster. Also to note, is that these invoice financing fintechs have already figured out the workflows for the payment experience so that it will both serve buyers and generate data effectively. 

5. They Want Alternate Revenue Streams

Another major benefit of partnering with an embedded fintech company for payments solutions, is that it offers an alternate revenue stream, helping to create an additional stream of income as well as a passive income opportunity. 

By partnering with an embedded financial service provider, B2B marketplaces, apps, and ecosystems can earn a percentage off of each sale made through their platform. Increased revenue for very minimal effort once onboarding is complete = a win-win situation!

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