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Pay by Invoice with Net Payment Terms meets B2B BNPL

Pay by Invoice with Net Payment Terms meets B2B BNPL

If you’ve been selling services, products or goods online to other companies for a while, you’ve probably come across the term Business-to-Business Buy Now, Pay Later, or B2B BNPL as it’s affectionately known. You may have even used it in your personal purchases and have an idea of how implementing such a tool in your e-commerce shop can exponentially increase your sales by offering your sellers maximum flexibility. In this article, we’ll explore the opportunities exposed by the evolution of Pay by Invoice with Net Payment Terms to B2B BNPL.

With capital-intensive operations, longer lead times, and liquidity to contend with, it’s no surprise B2B Buy Now Pay Later (BNPL) has been a hit among business buyers. As the commerce market evolves, BNPL is now gathering steam on B2B marketplaces, platforms, and webshops. So much so a UK study on 50 B2B stores found 28% used BNPL.

But despite the growing popularity of B2B BNPL, if you’ve been in the B2B commerce space even a little while, you know no BNPL solution is created equal. There’s some catching up to do in delivering a payment experience that’s on par with what B2C shoppers have.

This situation raises questions like, “What is BNPL in the B2B commerce space, and what makes it a worthwhile investment?”. In this article, we’ll define B2B BNPL and explore why it's always a good idea for B2B businesses.

What is a B2B BNPL solution exactly? And how does it work?

B2B BNPL is a fintech solution that allows businesses to make purchases from other businesses and defer payment for those purchases over a set period. Users then make repayments in installments until the balance clears. What makes B2B BNPL so groundbreaking is that the BNPL concept has traditionally been associated with consumer transactions, where individuals can split their payments for retail purchases into installments. Now B2B BNPL extends this service to the business sector.

With B2B BNPL, businesses can acquire the goods or services they need immediately while having the flexibility to pay for them in flexible net payment terms. This feature helps businesses manage their cash flow and working capital by easing the burden of upfront payments. By spreading out the payment, businesses can allocate their funds more strategically and potentially free up capital for other important purposes. B2B BNPL platforms typically partner with financial institutions or payment providers to offer this service.

How it works is when a business makes a purchase using B2B BNPL, the platform pays the supplier on behalf of the buyer and then sets up a repayment plan for the buyer. The repayment terms may include interest charges or fees, depending on the agreement between the platform and the buyer. The B2B BNPL provider also performs fraud and risk assessments to secure the operation. By doing this, the B2B BNPL provider becomes a sort of “trust bridge” between the merchant and the buyer.

As you can see, B2B BNPL can benefit both buyers and suppliers. Buyers can access the goods or services they need without having to make an immediate full payment, while suppliers can increase sales by offering more flexible payment options to their customers. It can also streamline the procurement process, as businesses can make purchases quickly without the need for extensive credit checks or complex financing arrangements.

However, this process has been around for what seems like forever in the B2B trade, except it was executed through Pay by Invoice and offering Net Payment Terms for commercial buyers. What the new trend on B2B BNPL offers is a digital layer on a very standard but also extremely manual process. Having a B2B BNPL provider implemented in your online webshop automatises the whole Pay by Invoice process from start to finish, building instant trust at first order between two partners who had never done business before but are willing to grow together. This characteristic is a win-win situation in such uncertain times like these.

Selling B2B? You need BNPL in your commerce toolkit. Here’s why.

Whether expanding into new markets or diversifying your product range, the right solution can upgrade your payment stack from good to great. Let’s zoom in on a few ways B2B BNPL supports growth.

Become the go-to provider

Cashflow management and the admin that comes with it is an ongoing challenge for businesses, so it pays to help make your business buyers’ money stretch. For instance, a B2B BNPL solution could help a retailer on your books order more stock for busy seasons like Q4 without straining their liquidity, thanks to the payment term offered.

In return, you can gain this customer’s trust and loyalty and become their preferred vendor. From here, you can look forward to boosted customer lifetime value, average order value (AOV), and scalability.

To put this in perspective, take Online Plastics Group (OPG), a market leader for tailored plastic sheets in the Netherlands. OPG’s fast-growing B2B arm, which operated on net terms, created a huge administrative and liquidity burden. OPG’s team performed fraud and credit risk checks, monitored buyer credit limits, and chased late invoice payments—all manually.

OPG decided to implement a flexible B2B BNPL solution with Sprinque that extended more relaxed payment terms to their customers. As a result, not only did OPG release enough capital to scale cross-border to 7 markets, but they also boosted AOV by 5-25%, saw a 10-30% adoption rate of Sprinque at checkout, and eliminated their manual workload.

Boost CX to drive more conversions

With tightening budgets and a looming recession, competition is stiff for securing business. Also, while BNPL is on the up and up, many B2B buyers still prefer to Pay by Invoice over any other payment method, according to a B2B Marktmonitor survey on 2,000 B2B buyers from Shopping Tomorrow and Ipsos.

So, if you want to lure B2B buyers away from the traditional Pay by Invoice, you’d need a solution that solves the desire to Pay by Invoice, plus better terms and a smoother payment experience.

That’s where a B2B BNPL solution comes in.

Its optimized setup will help you provide a flawless customer experience that grabs and keeps shoppers' attention through features that reduce friction in the payment journey. We’re talking quick sign-up processes, an easy-to-use platform, digitized payments, installment plans, and fair repayment terms.

Additional by-products of your improved CX can also be repeat orders, glowing reviews, and more referrals which will fortify your bottom line.

Reduce vulnerability to payment delays and defaults

Have you ever had a B2B customer go rogue on their payments with few avenues for recourse? If so, you’re not alone.

43% of B2B companies in Eastern Europe battle against late payments and more than half of UK small businesses serving the B2B sector said sluggish payments have held them back.

As a growing business, if this scenario occurs too often, it can reduce your liquidity and stunt your progress.

Thankfully, a B2B BNPL solution provides a great workaround. As a merchant, when fulfilling orders, you don’t have to worry about buyers going radio silent on payments since your BNPL provider pays the transaction and bears the risk of recovering payments. And since B2B BNPL offers installment repayment plans to buyers, they benefit too. In short, it’s a win-win situation for everyone involved.

Embrace the evolution of Pay by invoice

As the commerce world continues to change, updating your payment options to match buyer wants and needs will be essential to boosting leads and sales. So take to research your options and the right B2B BNPL solution. Once you’ve got a solution in place, ask customers for feedback on your payment experience and use it to optimize the payment journey for more conversions. Before you know it, you’ll have a business scaling faster than you can say B2B BNPL and a bottom line that makes you smile.

Looking for a reliable B2B BNPL provider? Look no further than Sprinque. Book a meeting today to discover our B2B BNPL solution.

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