Small suppliers getting paid late often struggle to make their own purchases on time, and it’s a cash flow challenge that could be addressed through the introduction of buy now, pay later models.
Reports in the Sydney Morning Herald said FinTechs like Cloudfloat, which is gearing up to roll out its solution later this month, are introducing the pay later model into B2B commerce to help companies with their cash flow crunches.
“What we’re seeing now is businesses getting really crunched around payment terms,” said Cloudfloat Founder Aleem Habibullah in an interview with the publication. “It’s like there’s a freeze or jolt in the system.”
Cloudfloat will introduce an invoice financing tool that enables B2B invoices to be paid directly by Cloudfloat, and allows small businesses to pay back the bill in installments over 90 days.
Another player in the market, Openpay, told reporters the pay later model is particularly popular in the trade space.
“Commonly, tradies don’t get paid in full until the job is complete,” Openpay Chief Revenue Officer Dion Appel told the publication, “so using Openpay gives them access to funds that provides a cash flow solution to this challenge.”
Israel-based Splitit, which is listed on the Australian Securities Exchange, also noted it is seeing “increasing demand from online merchants who want to use Splitit as a B2B solution.”
Reports also pointed to Marketlend, an alternative small business lender that introduced its own pay later solution late last year, as well as Afterpay, leader in the consumer pay later market that sees potential in the B2B commerce arena.
But not everyone is convinced that such a solution is the right move.
One entrepreneur, Clean & Pure Founder Mark Chapman, said relying on pay later models “just makes you feel like you’re not very stable,” and described the model as “running on debt for your ins and your outs.”