PYMNTS Intelligence: Unlocking B2B Payments via BNPL

Complications run rampant in B2B payments, with small businesses especially struggling to overcome payment delays, cash management challenges and a host of other issues. While large businesses can deploy tremendous resources and extensive accounts payable (AP) teams to brute-force their way through these obstacles, small- to medium-sized businesses (SMBs) are left floundering.

New solutions such as buy now, pay later (BNPL) could help level the playing field when it comes to B2B payments, applying the same principles to the corporate sector that made it so popular for consumer transactions. This month, PYMNTS examines how BNPL can simplify and accelerate B2B payments.

BNPL offers a plethora of B2B benefits.

BNPL for B2B payments offers many of the same benefits as it does for individual consumers, but on a larger scale. The single largest benefit is its lack of interest payments, so long as all installments are made on time, in stark contrast to traditional credit, which can charge businesses up to a 60% annual percentage rate (APR).

By reducing interest payments, businesses can make B2B purchases much more cheaply, acquire more inventory and afford more premium goods and services from their suppliers. This, in turn, could result in increased sales to customers who would otherwise patronize big-box stores, as smaller organizations can offer competitive pricing.

B2B BNPL also offers businesses a much simpler method of making purchases rather than acquiring commercial loans from traditional lenders. Some card-based models even allow businesses to use their existing corporate cards when making purchases.

B2B BNPL can simplify cash flow management.

Cash flow is a constant concern for organizations and can have major implications for payroll, supplier payments or rent if not managed properly. A study found that 79% of business owners had suffered negative mental health impacts due to late payments complicating their businesses’ cash flow.

BNPL can assist significantly in managing these cash flow issues, especially as inflation continues to plague the global economy. By splitting large payments into smaller installments, BNPL can help corporates navigate the pressures of acquiring inventory and raw materials to keep their businesses viable and manage costs, improving both cash flow management and competitive standing in the marketplace.