How BNPL is Transforming B2B Trade Credit
During Cyber Week 2021, U.S. consumers spent nearly $34 billion in online purchases. Some of those transactions went through digital buy now pay later (BNPL) platforms like Affirm and Klarna, which give consumers a pay-over-time alternative to credit cards. These platforms make it easier and less expensive for consumers to pay in installments, and pose less risk to consumers’ credit.
Now, B2B merchants are considering BNPL as a strategy when looking to accelerate their payments and creating a more consumer-like experience for their buyers. Though ecommerce sales for U.S. distributors are projected to exceed $1 trillion by year-end, that’s only a fraction of total B2B sales. Growth potential using a BNPL platform purpose-built for B2B sales and marketplaces is capturing the attention of forward-thinking chief financial officers and ecomm executives.
Transform the Buyer Experience
BNPL offers an alternative payment option, and this expansion of choices is part of BNPL’s popularity with both B2C companies and consumers. For B2B buyers, the lack of viable payment alternatives is a barrier that many large enterprise suppliers are just now considering. In fact, 20% of B2B buyers view a lack of alternative payment options as a critical purchasing issue. BNPL in the B2B space enables merchants to provide large cohorts of buyers with an order now-pay on net terms payment option.
However, merchants must do more than simply offer pay over time alternatives. Creating a consumer-like digital experience for their buyers that is fast, simple and convenient is essential to earning a return on investment in BNPL. This includes pre-qualifying and onboarding B2B buyers in just minutes as well as giving buyers an entirely online, automated purchasing process.
Reduce DSO to 1
Another reason BNPL is attractive to B2B merchants is the unique opportunity to reduce Days Sales Outstanding (DSO). BNPL that’s built for B2B sales and marketplaces is transformative in this regard: It decreases DSO to one with guaranteed next-day payments.
BNPL Built for B2B
Of course, as with any tech innovation, all BNPL platforms are not created equal. In addition, the frontrunners in B2C BNPL platforms do not have B2B-appropriate solutions since business transactions typically have more complexity. Both of these aspects of BNPL must be taken into account in implementation decision-making by B2B merchants.
Apruve is the only provider that offers fully automated pay over time and net terms programs with guaranteed next-day payments. Apruve fully meets the BNPL needs of B2B merchants with capabilities such as:
- Credit limits that can exceed $1 million to accommodate increased AOV
- Localized transactions in over 40 countries and growing, enabling B2B companies to conduct ecommerce globally without adding back-office processes
- Flexibility to use as a stand-alone technology or combined with other A/R automation software like Billtrust, High Radius, or Blackline
Expect to see in the coming year an increase in B2B merchants offering BNPL-like payment options to their buyers. The strategy ticks so many boxes for ecommerce growth, including increasing AOV and purchase frequency, that it should not be passed up without a serious look.