The Buy Now Pay Later (BNPL) model has gained much traction in the past few years. Though its achievement mostly shines in the B2C sector, the gradual and impactful movement towards the B2B segment seems quite hopeful for small and medium enterprises (SMEs).
Lack of credit supply is the primary challenge for SMEs but when they get the assurance of timely cash supply through SME BNPL, the production continues without any disruption. Read the following sections to learn about SME BNPL in detail.
SME BNPL- A Brief Overview
SME BNPL is a financial product that helps small businesses involved in transactions with suppliers, distributors, aggregators or B2B marketplaces.
Operational Method Of SME BNPL
In the SME BNPL model, the business buyer receives the products or stocks or inventories or supplies immediately and pays in small instalments over a certain period. On the other hand, the seller receives upfront payment of the total selling from the buyer’s financier.
Here, lenders offer a short-term credit to small businesses when they purchase or avail services from suppliers. The lender pays the suppliers in advance and the small business owner repays the loan within 15-60 days. The seller typically bears the interest for that specific tenor.
However, to enjoy the benefits of Small Business BNPL, one needs to find a reliable BNPL provider serving business heads and transactions equally.
Looking for a right financier? Find how KredX BNPL Solution can help your small business.
Benefits For SME Manufacturers
Here is a list of benefits that SME manufacturers can avail by integrating BNPL services-
- Improved Cart Conversion Rate
Every business involved in digital transactions wishes to increase cart conversion. Cart conversion refers to the scenario when consumers purchase products that are set aside for purchase in future. As purchases are made, items listed in carts start to reduce hence cart conversion and sales rate increases.
In the SME industry, continuous supply of raw materials or related items is necessary. Most small business manufacturers cannot ensure consistent production due to lack of supply. However, if brands offer extended credit periods through SME BNPL, they can attract more customers and improve cart conversion by up to 30%.
- Increased Sales
Buy Now Pay Later (BNPL) refers to a simple payment option where consumers can purchase certain products without making any upfront payment. The payment is completed at a later date at no extra charge. This feature offers the biggest benefit to SMEs, i.e., small business brands and enterprises.
By integrating the BNPL model to their payment gateways, SMEs can double their overall sales by offering flexible credit periods. Thus, they can easily increase average sales per person by up to 40%. Remember, when sales increases, entrepreneurs can easily clear stocks by adding additional stock clearance offers.
- Save On Merchant Discount Rate
Merchant Discount Rate refers to the rate charged to a merchant for processing payment through credit or debit card transactions. Adding Medium Business BNPL to your business can help get release from this transaction cost.
BNPL services allow small and medium businesses to choose two options. First, they can save up to 2% at the merchant discount rate. On the other hand, they bear the same to fetch more customers.
KredX offers SME BNPL services to help small businesses.
Benefits For SME Buyers
SME buyers can benefit in the following ways:
- Reduced Working Capital Issues
As stated earlier, SMEs typically struggle to maintain a balanced working capital after paying all the obligations, i.e., staff salaries, bills. This creates a gap in cash flow, reducing their power to purchase products from suppliers or manufacturers.
In such cases, if buyers find a supplier offering BNPL services at the payment gateway, they can purchase products or avail services and make it available later for B2C customers. Thus, the product transfer from one small business manufacturer to another small business retailer occurs smoothly with the help of SME BNPL.
- Instant Purchase
The primary aim of BNPL services is to ensure that consumers can purchase products instantly without any upfront payment. By availing this facility small businesses can stock up inventory or similar things or add other services and pay at a future date.
Thus, small businesses struggling with loan approvals from traditional lending institutions (due to reasons like low credit score) to invest in product purchase can effortlessly do the same with the help of BNPL services.
- Revolving Credit
Small business buyers can guarantee continued product purchase or service availability through SME BNPL.
They can utilise the BNPL payment option and make purchases without any limitations. Thus, the assurance of a revolving credit facility reduces the stress of small business buyers significantly.
All these benefits are accessible with KredX. Individuals involved in the SME sector can secure these benefits by following the steps mentioned below.
How To Integrate KredX SME BNPL Solutions to Your Small Business?
Small businesses can integrate KredX BNPL in the following manner:
Step 1 - Fill out the application form and sign up an agreement.
Step 2 - Provide required details and complete API integration quickly.
Step 3 - After a successful integration, BNPL will appear at the payment gateway.
Step 4 - Once business consumers purchase products, sellers will get outstanding payment within 2 minutes
BNPL services integration process with KredX is quick and hassle-free.
As small businesses are shifting towards digital models of transactions and integrating innovative payment models like Buy Now Pay Later, the need is to find the right BNPL supplier.
SMEs are likewise following the latest trends such as managing finances, logistics, sourcing digitally and introducing effective payment models like SME BNPL. Thus, when SMEs can increase sales and cart conversion rates; the biggest challenge, i.e., managing working capital requirements becomes easy, accelerating the growth of the Indian economy as a whole.