Fundamentally, Buy Now, Pay Later (BNPL) ensures a business can meet the demands of its customers when it comes to how they want to shop and pay. But, how does this apply to the B2B world?
According to a 2022 McKinsey report, roughly 65% of B2B companies across all industries “offer eCommerce capabilities”, selling their products and services to other businesses online. For any business that falls into this category, the argument for embedding BNPL solutions in the customer journey is compelling.
BNPL, and Banking-as-a-Service (BaaS) powered embedded finance solutions more generally, offer several notable benefits to business customers, especially small and medium sized enterprises (SMEs). Here are three of the most important:
- Managing cash flow
BNPL is instrumental in helping customers manage their cash flow effectively — according to a 2023 study by PYMNTS, this was cited as the primary reason why the majority (53%) of consumers using BNPL choose this payment method.
The same applies in the B2B space. For example, late payments are a common pain point for SMEs. BNPL enables organisations to continue making purchases while they wait for overdue payments to be settled, minimising disruption to their day-to-day operations.
Neil Chandler, CEO of Aion Bank, explains: “We often talk about the benefits of BNPL from a B2C perspective, where it’s been transformative in giving consumers the choice to stagger payments. But, there are a growing number of B2B use cases as well. Embedded lending products for SMEs can help businesses overcome similar cash flow issues. Here, BNPL can allow SMEs to better align their outflows and turnover.”
Our client METRO, a leading wholesaler in the hospitality sector, surveyed their customers about their main business challenges. The issue of upfront payment for goods and services was highlighted, as payback from clients often comes at a later date. Aion/Vodeno developed a Metro Financial Services debit card, which linked the card with the user’s primary bank account to pay for any transactions, removing the need for customers to open a new account or top-up funds to the card. The card can be used at METRO stores, as well as any other merchant. Importantly, BNPL was integrated into the card giving METRO customers the ability to make payment decisions based on their individual cash flow needs, wherever they shop.
Click here to read more about Aion/Vodeno’s work with METRO.
- Enabling expensive purchases
As with consumers, businesses are particularly drawn to BNPL when buying more expensive items, such as equipment, machinery and stock. These purchases might be essential in the running of the business, or they might be an important investment to support long-term planning. Enabling B2B customers to make purchases when needed, and pay for the items over time can make a significant impact.
- Cash retention
BNPL is not always used because a business cannot afford to make the purchase upfront. It has strategic benefits in allowing businesses to retain cash.
By delaying and staggering payments, businesses can bolster their cash reserves, which in turn, places them in a stronger position to respond to any immediate or unforeseen issues that could arise.
Chandler states: “Cash reserves are crucial in enabling businesses to overcome unexpected expenses. They also allow companies to act quickly when they see an opportunity for improving their offering and better serving customers. B2B BNPL enables businesses to keep more of their cash in their accounts.”
Greater flexibility and agility
BNPL has established itself as a must-have option in the customer journey, not just in B2C eCommerce, but in B2B as well. It supports business customers as they look to manage their own financial challenges, empowering them with greater flexibility and agility, allowing them to pay for the transactions they want, when they want.
Do you want to know about BNPL? Click here to learn how it boosts conversion, basket size and drives loyalty.
Get in touch with Vodeno today to learn about our BaaS-powered embedded finance solutions, including BNPL, and how they could transform your business.
