B2B Buy Now, Pay Later (BNPL): How It Works and Its Benefits
Until recently, tools for buying now and paying later, in instalments or with deferred payment, were only available for B2C transactions. Now, BNPL is available for B2B transactions too. What are the stakes for companies? What about its implementation?
p>Until recently, tools for buying now and paying later, in instalments or with deferred payment, were only available for B2C transactions. Now, BNPL is available for B2B transactions too.
In this article, learn everything you need to know about BNPL in B2B, including how it works, use cases, and benefits. As a B2B BNPL provider, we'll also explain how our embedded invoice financing solution works in practice.
1 – What Is BNPL (Buy Now, Pay Later)?
This term describes a financing method used during a purchase. Initially, it was only found in relationships with individuals (B2C), but it is now increasingly being used in B2B relationships as well. Let's take a closer look.
1.1 – Definition of BNPL (Buy Now, Pay Later)
BNPL, or Buy Now Pay Later, is a financing option that allows customers to purchase goods or services and pay for them at a later time, usually in instalments. It has become increasingly popular in recent years, especially in e-commerce, as it provides consumers with a flexible and convenient way to pay for purchases.
1.2 – Historical Uses of Buy Now and Pay Later Globally
The first BNPL system was commercial credit: the issue of an invoice and the granting of a payment deadline. This is a century-old scheme that has been modernised with the digitalisation of exchanges.
The explosion of online sales and subscription-based SaaS services on platforms has made it very easy to develop BNPL in B2C. With a withdrawal organised on a credit card, setting up instalment payments for individuals is a breeze, especially for low-value baskets.
2 – BNPL in B2B: A Recent Development
Buy Now, Pay Later has entered the world of B2B commerce with unique implementation characteristics.
2.1 – Why Are Fintechs Showing Interest in BNPL for B2B?
Economic conditions have been tight for months with limited access to microcredit, inflationary pressures and a growing number of unpaid debts. This applies to both individuals and businesses, especially small ones, struggling to access cash and financing.
Cash flow issues have long been a problem for some companies due to the lack of simple solutions for financing working capital requirements. However, payment delays now exacerbate the problem and are a leading cause of business failure, despite laws on the matter. To solve this problem, more FinTechs are developing financing and credit options for B2B, such as B2B Buy Now, Pay Later.
2.2 – Specificities of Implementing BNPL in B2B
Implementing Buy Now, Pay Later in B2B comes with unique challenges:
- Obtaining detailed information about professional clients.
- Analysing customer risk for larger business transactions.
- Passing on BNPL credit costs (unlike B2C BNPL where the margin covers it).
- Adapting to different company feeds and commercial strategies.
2.3 – How Does BNPL Work in B2B?
B2B Buy Now Pay Later B2B works in 6 easy steps:
- The buyer makes a purchase on the platform.
- They choose the "Buy now, pay later" option.
- The buyer pays nothing at checkout.
- The seller ships the product or invoice as usual.
- B2B BNPL pays the seller, minus commissions.
- B2B BNPL collects full payment from the buyer according to the agreed terms.
3 – Advantages of B2B BNPL as Embedded Finance
Fintechs providing BNPL financing offer a competitive edge to various clients, from SaaS to startups to e-commerce businesses and marketplaces. Unlike complex options like discounting or factoring, BNPL is simple and easy to integrate into online products, following the principle of embedded finance.
3.1 – A Solution to Companies’ Working Capital Needs
Companies need to meet payment deadlines while maintaining their cash flow. The "buy now, pay later" option is an ideal solution to achieve this. They can use BNPL providers to finance advance payments to suppliers and wait for payments from their customers to repay the credit.
3.2 – A Financing Solution That’s More Flexible Than Factoring or Short-Term Credit
Buy Now Pay Later tools provide flexibility and granularity that traditional financing options cannot match. Users can decide on a case-by-case basis whether to opt for financing or not. For example, companies don't need to subscribe to a factoring contract for all of their flows. Instead, they only pay for the financing they actually use.
3.3 – An Improved Customer Experience
Online services that offer integrated financing options give users the advantage of receiving instant payment for their services while helping to improve their cash flow. This all-in-one solution also eliminates the need for external financing, providing a competitive edge over competitors.
3.4 – A Way to Retain Users and Attract New Ones
B2B Buy Now Pay Later is a game-changer for companies seeking a competitive edge. This all-in-one service secures users' cash flow, builds customer loyalty, and creates new revenue streams. SaaS businesses can integrate invoice financing, while marketplaces can connect small suppliers to large customers to boost business volume.
4 – Aria, a Player in B2B BNPL With Embedded Payment Invoicing
At Aria, we specialise in B2B BNPL. Our motto is to help you grow your business by completely rethinking invoice financing. We have developed a process that allows your suppliers to obtain advances of up to 100% of the amount of your service purchases. We embed the invoice payment into your product.
4.1 – Tech Companies Who Benefit From Integrated Invoice Financing
DSPs want to keep their clients and service providers happy while managing their working capital. BNPL provides the flexibility they need to handle the lag between supplier payments and customer invoice collections.
As for B2B marketplaces, their primary goal is to increase sales, which requires acquiring new sellers and buyers. They seek stickiness, which means extending the user's presence on the platform, with simplified transactions and optimised cash management.
Finally, vertical SaaS companies seek to improve their product by adding an invoice financing option. This provides a better user experience with accelerated payments and financing directly accessible through a simple payment button.
4.2 – Aria Integrates B2B BNPL Into Applications Through API
Our invoice financing solution has many benefits for user companies:
- API integration, which saves time for your Dev and Tech teams.
- A comprehensive and regularly updated online documentation.
- A B2B Buy Now, Pay Later solution that adapts to the client’s billing flow (intermediaries or purchase-resale of services).
- Management of financing, advances, and assignment of receivables through an online dashboard.
B2B BNPL enhances cash management for companies and their suppliers by integrating Fintech into the product. At Aria, we streamline your business with instant payment solutions for your service providers, following the principle of embedded finance. To learn more about our services, talk to one of our experts.
