A guide to B2B Buy Now Pay Later
If you are a B2B seller, you may have been wondering how you can optimise your online shop – and rightfully so. The B2B e-commerce space has steadily grown more and more populated with all types of companies, from start-ups to SMEs and large corporations. Some say this is a direct result of the pandemic – where many businesses were forced to shut down in-person operations and move online. Others say it’s the rapid digitisation of our world – nowadays, if you do not have a digital footprint, do you really exist?
As B2B buyer demands change and shift, many sellers have been scratching their heads at how they can improve their checkout experience and increase leads and sales. And many of them have found success in something called B2B Buy Now, Pay Later (BNPL).
In this article, we’ll look at what B2B BNPL is and how they help sellers. If you are keen to learn more, read on.
Table of Contents
What exactly is B2B BNPL?
While the B2C e-commerce world is very used to Buy Now, Pay Later, B2B merchants may be less familiar with it. B2B BNPL is essentially a payment method that allows business buyers to make purchases and delay their payments. Business buyers make the transaction in seconds and receive their goods and services soon after, while they pay for their purchase 30, 60, or 90 days later. Depending on the BNPL provider, they may also be able to pay in instalments over a period.
In every B2B BNPL transaction, the BNPL provider becomes the middleman. This is similar to how, say, a credit card transaction works. When you make a purchase with a credit card, you involve a bank that issues you the credit, which allows you to delay your payment. What’s different in the case of BNPL is that the BNPL provider endeavours to pay the seller upfront or within a certain window whenever the buyer makes a transaction. The BNPL provider then deals with the invoicing of the buyer and ensures they make their payment.
How does B2B BNPL Help Sellers?
As a B2B seller, you may be acutely aware of some of the main points you experience. The reason why B2B BNPL is such a popular solution for many sellers is because they manage to solve many of these pain points for them, and it can potentially do the same for you. Below, we will look at some of the common challenges you may be facing, And how BNPL comes into play to help you alleviate them.
Chases Invoices on your Behalf
One of the biggest challenges businesses face is chasing late invoices. Studies have shown that B2B buyers are among some of the worst offenders when it comes to not paying their invoices on time. Sellers then must allocate resources to find out which invoices have not yet been paid and chase up buyers accordingly.
When B2B sellers implement BNPL into their checkout processes, the BNPL provider becomes the entity in charge of chasing those invoices.
Protects your Cash Flow
Another challenge businesses face due to late invoices is problems with cash flow. For larger companies, this may not be a huge problem. However, for many B2B start-ups and SMEs who have limited resources, a late payment can seriously derail their plans, especially when businesses purchases tend to be quite large.
With BNPL, businesses’ cash flow does not have to suffer. Regardless of what payment terms their buyer chooses at checkout, the seller will get paid on time – by the BNPL provider.
Automates your Credit Checks
Many B2B companies still conduct credit checks manually when their buyers make a purchase, which can take up to days. This greatly delays the transaction process and has the potential to be off-putting to buyers, causing them to abandon their cart or turn to other merchants.
When a B2B buyer chooses BNPL at checkout, the provider conducts an automatic credit check on behalf of the seller. Many providers are incredibly technologically advanced and use AI technology for this process, which shortens the approval process from a few days to an impressive few seconds.
The Bottom Line
There are many unique challenges faced by sellers in the B2B e-commerce space, and these prevent many companies from reaching their business objectives regardless of their size. The introduction of B2B BNPL has been a game-changer for many sellers, helping them alleviate crucial pain points. As the B2B payments space continues to expand at a rapid rate, many researchers foresee the usage of BNPL will become more prevalent with the array of benefits the payment method brings to sellers.