B2B Buy Now Pay Later: A Guide to Boosting Business's Cash Flow

by Kieran Daly
June 2, 2023
B2B Buy Now Pay Later: A Guide to Boosting Business's Cash Flow

The rise in popularity of Buy Now, Pay Later solutions has not only been revolutionary for consumers but also a boon for B2B business owners. B2B Buy Now Pay Later has opened up a world of possibilities for business owners looking to offer embedded financing while managing their cash flow more effectively. 

At Backd, we understand that a need for capital is a reality for so many business owners, it’s what we were founded on and what continues to drive us. We know that traditional financing solutions don’t always help meet the needs of businesses across the country and that’s why we continue to expand our offerings to help support your business. Our new embedded finance solution, BackdPay, is the perfect tool for business owners to boost their cash flow while catering to their clients' needs. 

What is B2B Buy Now, Pay Later?

B2B Buy Now Pay Later is a finance payment option that allows one business to purchase items from another without paying the total sum at checkout or invoicing. This flexible payment method is serviced through a third-party provider who pays the merchant the total amount (usually minus a percentage-based facilitation charge) and then allows the buyer to pay them that amount with interest over an agreed-upon period of time. 

There are several benefits on both sides of the transaction with increased flexibility and minimum risk, as the third party shoulders the financial burden of the initial payment. Let’s take a look at how implementing B2B Buy Now Pay Later in your checkout could improve your cash flow.

How BNPL can improve your cash flow? 

1. Increase sales

As a business owner, at some point in time, you have reviewed your revenue and asked yourself, “How can I increase my sales?” The answer can vary from industry to industry and not all financial solutions are created equal. However, Buy Now Pay Later is a proven boon for modern-day business owners looking to increase their sales. 

By offering Buy Now Pay Later to your customers, you make purchasing through your business more accessible, as not all buyers will have the capital immediately on hand to make the purchases they want. This can help you increase sales and generate more revenue, improving your cash flow. 

Norway’s number one Apple Premium Reseller, Eplehuset, utilized B2B Buy Now, Pay Later services offered by Two instantly to provide their customers with a financing option that was efficient and convenient. When implementing their B2B Buy Now Pay Later option they saw a 16% year-on-year growth in their AOV orders, meaning that their customers were making larger purchases. They also have to reject 52% of their B2B orders as their sales had increased by so much in a short period of time. 

2. Faster payments

When it comes to payments, you don’t want to wait a prolonged period of time for your capital to hit your account. With Buy Now Pay Later, you can receive payment for your products or services upfront, even if your customers choose to pay over time. 

This is the benefit of having a third party to enable the payment as they will pay you the total and the buyer will then pay them back over time. You receive your payment at the time of order, regardless of the terms the buyer selects and if the buyer defaults on their payments then your income is not affected by this. This can help you improve your cash flow by allowing you to receive payment faster.

3. Reduce bad debt

The idea of offering financially flexible payment options can often come with some reservations, after all, you want to ensure that your business is kept safe and you aren’t providing your goods and/or services with a risk of not making your money back. 

The good news is that Buy Now Pay Later solutions often come with credit checks and other risk management tools, which can help you reduce the risk of bad debt. This can help you improve your cash flow by reducing the amount of money you lose due to non-payment or late payment, however, with almost all Buy Now Pay Later providers this risk is eliminated due to the provider shouldering the financial burden and paying you instantly. 

4. Improved customer relationships

Customers like to have options, especially when it affects their financial standings. While not every one of your customers may utilize Buy Now Pay Later, by providing this option in your checkout you can improve your customer relationships and loyalty. 

Buy Now Pay Later provides your clients with increased affordability by allowing them to make purchases without having to pay the full amount upfront, this helps your market appeal to a wider range of customers and provides a more accessible shopping experience. This can also add convenience to your brand by allowing clients to select their own payment terms as well as build trust by providing a payment plan that is transparent and easy to understand.

This can help you increase repeat business and generate more revenue over time, which can improve your cash flow.

5. Lower costs

Buy Now Pay Later is a relatively new solution in the B2B marketplace, because of this the emerging providers are trying to establish themselves by offering lower fees and interest rates than traditional financing and payment options. With an increased number of providers surfacing in the B2B market comes highly competitive offerings for business owners to choose from. 

The costs are lowered by increasing your sales, reducing the risk of non-payment, and increasing customer loyalty. By choosing a cost-effective Buy Now Pay Later solution, you can save money and improve your cash flow.

However, it is important to note that offering Buy Now Pay Later is not without its own costs. There is a tradeoff in regards to the fees that you may have to pay, the percentage that may be owed to the Buy Now Pay Later provider, and the investment that you may need to make in your technology to integrate Buy Now Pay Later in your checkout process. Like all financial services, it is always of paramount importance to compare and research the providers that you work with to ensure that you are selecting the best option for both you and your clients. 

B2B Buy Now Pay Later Benefits

Overall, B2B Buy Now Pay Later solutions can help businesses improve their cash flow by increasing sales, speeding up payments, reducing bad debt, improving customer relationships, and lowering costs. This payment option is looking to mirror the growth of its counterpart in the B2C market while providing businesses the chance to offer their client more options when it comes to purchasing and growing their own enterprises while holding onto their hard-earned capital.

If you are looking for ways to manage your cash flow more effectively, consider offering Buy Now Pay Later to your customers.

Buy Now, Pay Later: Powered By BackdPay

If you want to hold onto your capital while making purchases to expand further or invest in your business, then consider using Backd for your Buy Now, Pay Later needs.

Backd offers competitive rates in the B2B Buy Now, Pay Later with terms of 3, 6, or 12 months with no cost for offering or integrating this financing option. Whether you’re looking to hold onto your capital or a vendor looking to offer your customers the flexibility that BackdPay can bring to your business, don’t wait to take advantage of it. Find out more today about how you can provide your customers with financial flexibility with Backd.

What would you do with the right amount of capital?

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