Buy Now Pay Later for Business Transactions
In recent years, Buy Now Pay Later (BNPL) has emerged as one of the leading financial payment methods around the world. It is a point-of-sale financing solution that effectively addresses all the problems that consumers and businesses face alike, namely high fees, credit scores and inconvenience.
BNPL is popular among businesses as it allows them to spread their payments over a short time. Moreover, it lets them hold on to cash and check the quality of goods/services. KredX offers Buy Now Pay Later for business transactions for its clients to increase overall sales.
The following sections will cover everything to know about BNPL for business transactions.
What Is The Buy Now Pay Later Facility?
BNPL is a financing option that lets one buy a company's products and services without paying upfront. Instead, they get the flexibility to repay the credit over short repayment tenure. It is an alternative form of financing that allows clients to make purchases at no interest or additional fees.
The advantages of using BNPL for business transactions are quite simple. It increases sales as buyers can control their debt and comfortably repay them in instalments. Many companies need easy access to credit for buying equipment and raw materials, and they can easily repay when they have the cash.
For merchants, BNPL offers numerous benefits, including increased sales, conversion rates and a cost-effective financing method. More importantly, the seller gets an upfront payment without the risks of non-repayment.
How Does Buy Now Pay Later For Business Transactions Work?
B2B BNPL is a short term financial product for businesses to use with their partners, including distributors, suppliers, dealers and retailers. Their flexible nature makes sure that businesses pay dues when convenient, which increases the ease of managing cash flows.
Traditionally, companies extend a credit line to their associates based on their financial health, leading to inefficiencies. BNPL products suit small businesses, which typically have smaller cash flows, cyclical demand and working capital constraints.
When a client makes a purchase, he/she can choose the Buy Now Pay Later option at checkout. After checking the payment instalment options, the customer can complete his/her purchase. The BNPL provider pays the full purchase price to the retailer after collecting the transaction fees.
Some providers may require one to pay a small percentage of the total loan as a down payment. Customers can choose a repayment schedule at his/her convenience and repay the interest-free EMIs within the due date.
Importance Of Buy Now Pay Later For B2B Transactions
Buy Now Pay Later is a useful tool for businesses as it allows buyers and sellers to flexibly carry transactions. BNPL providers absorb the risks of sellers and make sure that they are fully paid upfront. BNPL allows firms to pay their dues as per their capacity while not having to sacrifice liquidity.
Let us say that a retailer does not have sufficient cash to purchase inventory for the busy festive seasons. He/she can use BNPL to stock up on raw materials and equipment and repay easily after a busy period of sales. Thus, BNPL can be very useful for businesses struggling with cash flow.
In addition, BNPL for business transactions offers the benefit of high conversion rates and frictional sales processes. The user’s experience is smooth and does not take more than a few minutes to process.
Benefits Of Buy Now Pay Later for Sellers
The following are some benefits that companies can get by using BNPL for business transactions:
- Higher Conversion Rates:
Many customers tend to spend a lot of time on a website but yet abandon their online shopping carts. Though some people are window shopping, other customers cannot make a purchase due to financial issues. With BNPL, a business can turn these potential shoppers into clients.
- Brings New Clients:
BNPL for business transactions may attract clients who previously felt hesitant about buying one's services/products. Online shops can reach a wider audience, including a younger demographic, if they make their products more affordable.
- Improved Customer Experience:
Business customers tend to be happier when they are offered more control over purchasing decisions. As a result of their seamless buying experience, many will become repeat customers. A positive customer experience like this results in more profits.
- Higher Average Order Value:
AOV is the amount that buyers pay when they make a purchase. Some online retailers are known to experience AOV as high as 130% after implementing BNPL for business transactions. For sellers of high-value products like jewellery and electronics, offering flexible payments can result in higher AOV.
- To Remain Competitive:
With many companies offering to make payments easier, BNPL allows one to remain competitive. Otherwise, customers may go to another shop if it offers such conveniences.
How Can A Business Apply For Buy Now Pay Later?
Lack of credit hampers many businesses. However, in today’s highly competitive markets, it can be problematic if your business partners are losing money. KredX offers Buy Now Pay Later for business transactions of any MSME/firms that trade with you.
To apply for B2B BNPL online, follow the given steps:
Step 1:Fill out the application form and sign the given agreement.
Step 2:Enter the required data for quick API integration.
Step 3:After integration, you can use BNPL as a payment mode.
Step 4:Now, you can offer credit to your buyers and increase your sales.
It is quite difficult for many small businesses to qualify for credit under traditional methods. BNPL for business transactions allow distributors and suppliers to get sufficient funds to fulfil their orders. With the popularisation of BNPL for businesses, it could dramatically change the B2B supply chain.