McKinsey declared this ‘The Semiconductor Decade’ three years in, sales of semiconductors and board level electronics soldier on despite geopolitical uncertainty. Softer demand following the supply crunches of the pandemic will ramp back up as automakers double – and triple – down on EVs. For fabs and distributors in the space, there is no better time to make sure payments technology enables design to build design cycles for buyers, offering dynamic trade credit limits, purchase controls and simplicity when it comes to ordering (and reordering) components.
Key Findings:
- 41% of buyers surveyed want higher credit limits; several respondents also indicated a preference for longer terms
- 30% of Enterprise buyers ($500M+ annual revenue) indicated integrated invoicing as a desired future feature
- Mid-market buyers ($26m-$500m annual revenue) find the most overall value with a net terms program.
Procurement Departments Value Higher Trade Credit Limits + Longer Terms
Electronic board components and semiconductor purchases start small and rapidly ramp as a product comes out of R&D and moves into production. There is a unique need in this space for dynamic trade credit limits that accommodate initial, smaller credit line requests followed by much larger credit needs months later. Procurement departments use the same Bills of Materials (BOMs) for prototyping and production, and it is much easier for them to purchase from the same vendor(s) for all phases of a project. Enabling this with right-sized credit lines is an easy value-add for suppliers. Our survey indicates that offering longer credit terms, when possible, could also lead to increased market share from buyers.
Enterprise Buyers Want eInvoicing + Integrations into ERP Systems
E-invoicing and integrations directly into buyer AP systems are quickly becoming the norm. This is especially true for enterprise buyers. Additionally, APAC governments are legislating eInvoicing in the region, primarily to better account for taxes due. The U.S. has been slow to digitalize payments, with paper checks still all too common. However, remote work is complicating manual processes, likely driving demand for eInvoicing soon. Suppliers will need to be responsive to these demands to stay relevant.
Mid-market Buyers Value Easy, Digital Payments
Mid-market buyers found the best overall value for the current payments experience, reporting that payments on terms, tracking orders with a PO #, allowing multiple buyers per account and offering an easy online credit application were benefits. Continuing to offer new features to this group of buyers, including longer net terms will improve buyer loyalty and increase LTV.
While enterprise buyers surveyed didn’t value support as much as SMB buyers, there was a strong indication that enterprises want payments to be easy. These buyers, more than smaller manufacturers, highly valued the ability to download invoices and make payments on the platform.
Semiconductor Manufacturers + Distributers Need Better Payments Technology
TreviPay partnered with a Fortune 500 Semiconductor Manufacturer to create a payments program buyers love. Live in 40 countries, the manufacturer has recorded a 3.3x increase in order frequency and a 5.6x increase in order size when buyers pay on terms using TreviPay when compared to credit card purchasing.
TreviPay’s 40+ years of payments experience across retail, manufacturing and corporate travel leaders contribute to payments technology built for enterprise buyers and sellers.
