B2B Buy Now, Pay Later (BNPL): How It Works and Its Benefits

Until recently, tools for buying now and paying later were exclusive to B2C relationships. Now, BNPL is making serious waves in B2B transactions too. According to a 2023 McKinsey study, the global B2B BNPL market is set to hit $180 billion by 2025, growing over 25% annually in Europe. What does this mean for your business? And how exactly does it work?

In this article, we’re breaking down everything about B2B BNPL – its mechanics, real-world applications, and the benefits it delivers. As B2B BNPL providers ourselves, we’ll also walk you through how our embedded invoice financing actually works in practice.

1 – What is BNPL in B2B: how it works and what it means for your business?

BNPL is a financing method that transforms the purchase experience. Initially a B2C phenomenon, it’s now rapidly gaining ground in B2B relationships. Let’s unpack it.

1.1 – Definition of BNPL (Buy Now, Pay Later)

BNPL lets customers acquire goods or services while postponing payment – typically through installments. It’s become a game-changer in e-commerce by offering businesses a flexible, hassle-free way to manage purchases.

1.2 – Historical uses of Buy Now and Pay Later globally

The original BNPL system? Commercial credit – invoice issuance with payment terms. It’s a century-old approach that’s evolved with digital transformation.

The explosion of online sales and SaaS subscriptions has turbocharged BNPL in B2C. With credit card processing already in place, creating installment plans for consumers is straightforward – especially for smaller purchases.

2 – BNPL in B2B: A recent evolution

Buy Now, Pay Later has entered the world of B2B commerce with unique implementation characteristics.

2.1 – Why are fintechs flocking to B2B BNPL?

Today’s economic landscape isn’t making life easy. Access to microcredit is tight, inflation is squeezing margins, and late payments are climbing. This reality hits businesses of all sizes – especially smaller companies struggling to access financing.

Cash flow challenges aren’t new. Many businesses have long struggled with limited options for funding working capital. But payment delays are making things worse – they’re now among the top causes of business failure, despite regulatory efforts. That’s why more fintechs are building B2B financing solutions like BNPL.

2.2 – What makes B2B BNPL different?

Implementing BNPL in B2B comes with unique challenges:

• Capturing comprehensive professional client information (business registration, legal structure, etc.)
• Assessing risk for potentially significant transaction amounts
• Transparently passing along BNPL credit costs (unlike B2C where margins absorb them)
• Flexibly adapting to diverse company workflows and commercial strategies

2.3 – How does B2B BNPL actually work?

B2B Buy Now Pay Later B2B works in 6 easy steps:

1. The buyer makes a purchase on the platform.
2. They choose the “Buy now, pay later” option.
3. The buyer pays nothing at checkout.
4. The seller ships the product or invoice as usual.
5. B2B BNPL pays the seller, minus commissions.
6. B2B BNPL collects full payment from the buyer according to the agreed terms.

2.4 – Why B2B marketplaces are embracing BNPL

B2B marketplaces are becoming major adoption channels for integrated financial solutions. A Digital Commerce 360 study shows 67% of B2B purchases now start on digital platforms, with marketplaces accounting for over 30% of online B2B commerce.

This trend is driven by several factors:

• Network effect: Marketplaces bring together countless buyers and sellers, creating perfect conditions for scaling financial solutions
• Standardized processes: Marketplaces create uniform buying and selling journeys, making financing integration seamless
• Rich transaction data: Platform transaction history provides valuable insights for risk assessment

3 – From “Buy Now, Pay Later” to “Sell Now, Get Paid Now”: Flipping the script

B2B BNPL gives buyers flexibility on payment terms, but what about sellers? In a world where waiting 30, 60, or even 90 days for payment is standard, sellers—especially SMEs—face serious cash flow challenges.

Embedded invoice financing turns the BNPL concept on its head: instead of “Buy Now, Pay Later,” the focus becomes “Sell Now, Get Paid Now.” Sellers receive immediate payment while buyers keep their usual terms. It’s a win-win that maintains business relationships while solving cash flow tensions.

Let’s explore the tangible benefits of these complementary approaches that are transforming B2B financial flows.

3.1 – Solving working capital challenges

Embedded invoice financing directly addresses seller cash flow issues in the B2B ecosystem. The 2023 SME treasury barometer reveals 65% of European SMEs view liquidity constraints as their primary growth barrier.

By enabling immediate seller payments, these solutions deliver:

• Enhanced visibility on incoming cash
• Freedom to invest without waiting for customer payments
• Reduced exposure to payment delays and defaults

A 2023 PwC study confirms these integrated financial approaches typically cut 15-20 days from the cash conversion cycle.

3.2 – A smoother alternative to traditional options

Compared to conventional solutions like factoring or short-term credit, embedded invoice financing stands out with its simplicity and native platform integration.

Gone are the administrative hurdles, complex contracts, and never-ending financial institution negotiations. Now, a few clicks secure immediate financing within the seller’s familiar environment.

This embedded finance approach dramatically simplifies financing access for businesses previously excluded by traditional process complexity.

3.3 – Elevating the platform experience

Seamlessly integrating financing into B2B platform interfaces marks a major user experience advancement. Sellers can now:

• Select financeable invoices directly within their regular interface
• Receive funds in hours instead of weeks
• Manage financial flows without leaving their daily ecosystem

For platforms offering these solutions, it’s about delivering high-value services that streamline the entire commercial journey.

3.4 – BNPL vs embedded invoice financing: Complementary solutions

To understand how these two approaches work together in the B2B ecosystem:

4 – How Aria’s embedded invoice financing works

Our embedded invoice financing solutions act as powerful accelerators for the entire ecosystem.

4.1 – Who benefits from integrated invoice payment?

We’ve built our solution to benefit various players across the B2B ecosystem:

By user type:

• For sellers: No more payment delays, immediate cash flow, and reduced collection administrative costs
• For buyers: Unchanged purchasing conditions with no process disruptions

By company type:

• B2B Marketplaces: Enhanced platform value for sellers, smoother transactions, and stronger partner loyalty
• Vertical SaaS: High-value financial capabilities for clients and competitive differentiation
• ERP/TMS/P2P: Enriched financial management features and optimized cash flows within familiar interfaces
• Mid-sized & large groups: Simplified supplier payments while supporting their partner ecosystem’s financial health

4.2 – What makes Aria’s B2B BNPL integration different

Our invoice financing solution delivers multiple advantages:

• API-first architecture: We integrate seamlessly into existing environments, giving vendors instant financing access from platforms they already use
• Effortless user experience: Vendors choose financeable invoices in just a few clicks – no paperwork, no complex procedures
• Comprehensive dashboard: Full management of financing, advances, and receivables assignment through an intuitive online interface

B2B BNPL transforms cash management for companies and their suppliers by embedding fintech directly into products. At Aria, we’re streamlining business with instant payment solutions for your service providers, embracing embedded finance principles. Want to learn more? Talk to one of our experts today.

5 – FAQ: Your B2B BNPL & integrated financing questions answered

A. Which sectors get the most value from B2B integrated financing?

Sectors with extended sales cycles and significant working capital needs benefit most: wholesale, manufacturing, business services, IT/Technology, agri-food, and more.

B. How is embedded invoice financing different from traditional B2B BNPL?

While both solutions are embedded finance innovations, they address different needs. Traditional B2B BNPL focuses on buyers, extending their payment terms. Embedded invoice financing serves sellers, delivering immediate payment. These complementary approaches address distinct cash flow challenges in the B2B ecosystem.