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Pay Later Credit for Businesses

The concept of Buy Now Pay Later (BNPL) credit has gained massive traction among buyers. Retailers have picked up the demand to make sure that their customers find it easier to buy their products.

These days, BNPL services are becoming popular in the B2B sector. Companies that want to increase their sales from business customers are offering pay later credit for businesses. KredX offers instant BNPL financing to B2B customers when they purchase your products or services.

The following sections will cover everything to know about pay later credit for B2B transactions.

Buy Now Pay Later allows consumers to purchase products or avail services without upfront payment and pay later at a fixed date. A similar method works for merchant BNPL. This credit option can benefit merchants in terms of sales, performance and creating brand awareness. Read on to learn about merchant BNPL.

What Is Buy Now Pay Later Credit For Businesses?

Buy Now Pay Later is a payment option that allows buyers to buy something without having to pay for it upfront. Clients can sign up with a financial institution offering this facility to settle the bill on their behalf. Later, they can comfortably repay the amount to the lender within the stipulated period in three or more instalments.

Unlike a personal loan, no interest is applicable on BNPL schemes within an interest-free period of 15-45 days. However, if one fails to repay the amount within this time, interests are chargeable. The credit limit for BNPL schemes can range from Rs. 500 to Rs. 30,000, with some lenders offering credits of up to Rs. 1 lakh.

Eligibility Criteria For Pay Later Credit For Businesses

B2B enterprises can offer Buy Now Pay Later to their buyers, including dealers, retailers, distributors, stockists, etc., by partnering with lenders. The terms of such financing will depend on the B2B client's credit profile.

he following are the eligibility criteria for companies availing BNPL services:

  • Business Vintage:
  • MSMEs and firms applying for BNPL must be operational for a minimum of 6 months.

  • Buyer Types:
  • Buyers who are proprietorships, partnership firms, or private limited companies can get the pay later credit.

  • Credit Score:
  • Their CIBIL scores must be above 600. Buyers new to credit can also avail pay later credit for businesses.

Why Is BNPL Necessary For The B2B Sector?

While BNPL financing has become prevalent in the B2C sector, business to business transactions are yet to get the full benefits from this innovation. Even today, cumbersome payment processes continue to persist with inefficient financing and underwriting models.

In the current traditional model, sellers and suppliers often have to extend a short term loan to their business customers. As a result, they have to take the hassles of checking credit ratings and risks of default and late pay. Meanwhile, many buyers find it difficult to find credit options, resulting in a bad sales experience.

This is where Pay Later credit for businesses becomes essential. BNPL players offer to take away the risks and cash flow burden from sellers and suppliers that otherwise have to act as credit providers. BNPL lenders make sure that suppliers get paid 100% of the invoice amount, and absorb all default risks, manage credit decisions and collection.

Benefits Of Offering Pay Later Credit To Businesses

The following are some of the benefits of offering BNPL to B2B customers:

  • Absorbs Risks Of Defaults:
  • Without BNPL, sellers are exposed to credit and default risks as a portion of their contracts are locked till the buyers pay them. Moreover, he/she can incur expenses due to late payments and administrative work of managing complex accounting.

  • Increase In Conversions And Sales:
  • BNPL increases conversion rates and lower shopping cart abandonment rates. As business customers are able to easily afford payments, it leads to an increase in revenue. Merchants can see increases ranging from 20% to 30% in the value of sales when they offer pay later credit to businesses.

  • Bringing New Customers:
  • Offering BNPL could lead to the entry of more clients who previously felt hesitant about buying one's products. Having easy access to financing has always been a major hassle for small and medium-sized companies. Thus, BNPL can attract more business customers as it helps them grow.

  • Improves The Checkout Experience:
  • Traditional payment methods for B2B transactions are cumbersome and paper-intensive. In contrast, BNPL offers a seamless checkout experience, and it is easy to integrate it into existing systems. The conveniences of this payment system also increase customer loyalty.

Pay later credit for businesses offers appealing benefits for both B2B buyers and sellers. It reduces the risks of transactions and makes the collection a lot easier for sellers. For buyers, the flexibility of payment and increase in liquidity are its biggest advantages.

KredX offers instant credit to MSMEs and other firms in the B2B marketplace with its BNPL facility. To apply for it, simply fill out the agreement form and share your data for quick API integration.

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The following are some benefits of BNPL for suppliers:

  • Increases buyer application/takeup rates
  • Reduces their cashflow burden
  • Some providers can offer better rates and longer repayment terms
  • Easier access to credit for smaller businesses

Unlike credit cards, BNPL follows a transparent and cost-effective pricing model. It also carries less exorbitant interest rates/penalties for late payments. In contrast to credit cards, one also does not need to have a high credit score to apply for BNPL.

The first BNPL service is the consumer fee loan, where an interest fee is charged to shoppers at the point of transaction. In the merchant transaction fee loan, the customer will not incur any charges, but the merchant has to pay a transaction fee.

Yes, the same risks that apply to any debt are also applicable to BNPL. While it is very easy to buy products on credit, one must not take loans recklessly. A company may miscalculate their inventory, which could cause significant problems.