Cash flow maintenance and customer retention are key to the success of every business, irrespective of size. While established businesses easily get credit facilities to continue operation, most small businesses struggle to get the same due to eligibility complications or other factors. Thus without enough revenue, most small businesses cannot manage inventory efficiently, which disrupts sales, eventually leading to loss of customers. In such cases, if businesses opt for the Buy Now Pay Later facility and integrate the service into their business, they can resolve these issues and maintain a strong customer base. Wondering how?Let’s see!Buy Now Pay Later in a Nutshell‘Buy Now Pay Later enables a customer to purchase a product and pay the amount later within the stipulated time. The products offered are usually small-ticket credit options that boost online and offline businesses. Here, buyers repay the purchase amount in an instalment payment. The repayment window can open for several months or days depending on the BNPL service provider. The service or credit facility may seem beneficial only for buyers. However, businesses that have integrated the BNPL option benefit from it significantly. Read along.
Benefits ofBuy Now Pay Later for Small Businesses
Having BNPL options available in a store (both online and offline) can help to convert visitors into customers. The other benefits include:
Attract New Customers
Introducing Buy Now Pay Later services into your business can help to attract customers who previously hesitated to buy a product due to the high price. Now, price-conscious consumers can purchase premium products without any worry and convert their purchase payments into low to zero interest instalments. Thus, businesses can expose their store to millions of customers. BNPL facility is certainly one of the best decisions for purchase over a credit card as buyers can reduce the cost of purchase by routing the payment through BNPL.
When buyers get the opportunity to convert their purchases into instalment payments, they can purchase more without affecting their monthly/weekly financial expenditure. Thus, when customers place higher order values, the total order value also increases as well as the sales. Increasing order values facilitated through the BNPL credit facility thus helps in business growth.
Reduce Cart Abandonment
As per data published by India Marketers, the cart abandonment rate in India is 51%. This happens due to a lack of convenient payment options. Also, in the case of online purchase, shipping fees are one of the biggest reasons which increase the price a bit higher. However, when businesses add the Buy Now Pay Later service, they can reduce the cart abandonment rate by introducing a convenient repayment option which ultimately helps in customer retention and business growth.
Maintain Cash Flow
By making a product purchase through the BNPL option, customers get their products instantly. On the other hand, retailers or merchants receive full payment the very next day. Therefore, retailers or merchants, or small businesses can continue operation and maintain cash flow efficiently as their money is not stuck with customers even though they will pay later.
When a business opts for the BNPL financing option, it can manage inventory efficiently. The hassle-free payment option enables buyers to place orders at increased numbers; thus, product sale increases at a rapid pace. Retailers can restock products depending on the sale and popularity level. Thus, small business persons can avoid overstock or undertook issues by adding the BNPL credit facility option.
Boost Customer Lifetime Value
Customer lifetime value (CLV) refers to the entire time a customer invests in a store over a lifetime. The cost of living has increased over the last few years. In such times, keeping a customer engaged is the toughest job. Here, if small businesses integrate Buy Now Pay Later, they can reduce the financial stress of customers and increase their purchasing power. Therefore, it is clear that small businesses can benefit in multiple ways from BNPL service providers. However, the benefits increase when small businesses select KredX for credit facilities. This online platform helps small businesses resolve working capital issues, attract new customers and increase overall sales.
Working Method ofBNPL for Small Businesses
In India, the formal credit facility is fragmented, hard to access, and stuffed with paperwork and complex processes. Contrarily, BNPL presents itself as a hassle-free and ready-to-use product. Whereas buyers get their products instantly, businesses that add BNPL services get the money instantly against the products sold. Then, the BNPL service provider collects the money from the merchant with whom a buyer shops. Here is how Buy Now Pay Later works for small businesses:
Customers buy a product through a participating merchant or retailer.
At the payment gateway, they opt for BNPL and agree to the terms and conditions of the BNPL service provider.
Then the order is placed, and buyers choose to pay the entire amount at a later date with the stipulated date. Remember, the merchant or retailer gets the amount instantly or on the very next day.
Customers can choose to pay the entire amount into low to zero interest amounts.
Buy Now Pay Later is a great opportunity for small businesses that face working capital issues. This credit instrument helps small businesses secure sales, increase customer base, and manage inventory procurement with any upfront payment. Further, small businesses that have low credit scores can get credit facilities in the BNPL ecosystem and thus grow their business.
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