When should you buy on account?

When should you buy on account?


Tobias Freutel, head of e-commerce at 4Care, explains the path to success taken by 4Care GmbH at the 2017 European Payment Summit.

Mail order customers in Germany preferred payment of method is payment by invoice, but for mail order companies this payment method involves considerable risk. In addition to losses from bad debt, there are costs associated with managing accounts receivable, scoring and customer service. Product catalogues like those offered by Lensbest and Netzoptiker also have a high risk of fraud, since brand name sunglasses are sought-after articles. Nevertheless, very few mail order companies want to weaken their completive positions by forgoing purchasing on account.

Companies that choose to offer purchase on account in their shops have to decide whether they are going to forge their own path, outsource some of the risk, or use a full-service provider.

Tobias Freutel, together with Marc Berg, managing director of payment service provider Klarna, gave a presentation at the European Payment Summit in Hamburg on 8 November 2017 on why the company chose to work with a service provider after seven years of going it alone.

Tobias Freutel comments, “In the end, the effort and costs involved in processing purchase on account were just too high for us. We wanted to refocus on our core competencies, which we clearly see as being in the areas of our range of products, customer loyalty and our comprehensive range of services.

Working with a major service provider like Klarna gives us security to plan ahead and time to concentrate on more important issues. We’ve heard a lot of good feedback from our group about working with Klarna, and our own experience introducing the system has shown we’ve made the right choice. We’ve had excellent support right from the beginning, and after almost two years of working together we’re still very satisfied.”