Working Capital Management
Buy Now Pay Later for Marketplaces: The Ultimate B2B Guide
Today, business-to-business (B2B) transactions have options beyond company debit cards, credit cards, and checks. With the evolution of buy now pay later (BNPL) payment options directly embedded in B2B marketplaces and anywhere else an invoice is paid online, buyers and suppliers can finally enjoy frictionless payment options.
Pay later services often don’t require credit checks, don’t affect a buyer’s credit score, and are interest-free for buyers. For suppliers, payments processed through BNPL solutions are tracked, auditable, and may even be able to sync with bookkeeping software – in addition to being faster than manual payments ever could be.
The embedded BNPL option within B2B marketplaces, apps, and ecosystems provides even more support for merchants and businesses looking to scale. But before we can dive into pay later services, we need to revisit what a B2B marketplace looks like today.
What is a B2B marketplace?
If you can imagine Amazon or UpWork, but for B2B verticals, you’ll have an idea of what a B2B marketplace is in 2022. Business-to-Business marketplaces are essentially self-service platforms that make it a cinch for businesses to buy and sell their goods and services online. Transactions are transparent, and scouting for quality suppliers is incredibly efficient.
For many, the B2B marketplace is the future of business commerce. As an e-commerce platform, a B2B marketplace provides choice, security, agility, and value for both buyers and sellers. These solutions can often ease the burden of marketing, logistics, and sales while accelerating deals and payments.
But the latest development – buy now pay later functionality for marketplaces – aims to add even more value.
Why are buy now pay later for marketplaces taking off for B2B in 2022?
Like many innovations in the B2B space, the BNPL option has its roots in B2C commerce. The pandemic spurred accelerated growth in digital transformation, from marketplaces to BNPL payment methods. In fact, on the consumer side, BNPL growth skyrocketed to 260% year-over-year. One survey discovered that 85% of business buyers were buying the same amount or more through B2B marketplaces. But this wasn’t the only trend. (See more B2B payment trends here if you’re curious.)
The BNPL payment option for B2B transactions is still incredibly new. But already, many are considering it to be an alternative to the traditional corporate credit card. It makes sense. After all, a BNPL solution ensures sellers get paid fast while allowing buyers to pay later without the interest of credit cards, depending on the BNPL platform. For cash-strapped or rapidly expanding businesses, the BNPL market offers buyers a flexible payment option that is accessible and easy to use and suppliers the quick cash flow they need to grow.
Unlike traditional loans or lines of credit, the BNPL payment option doesn’t require lengthy applications or collateral. Furthermore, BNPL services are usually embedded in a B2B marketplace, making the payment method immediately accessible as part of the in-platform experience.
How buy now pay later is a win-win-win in B2B marketplaces
Buy now pay later for marketplaces offers several benefits to everyone involved in the transaction.
- Buyers can leverage the net terms they expect, fast approval, and a seamless buying experience that meets their budget.
- Suppliers can get paid almost instantly and gain exposure to more buyers without the headaches of payment collection.
- The Marketplace attracts more users through a frictionless experience for both suppliers and buyers without having their capital tied up by paying suppliers quickly and extending credit to buyers.
What to look for in buy now pay later solutions for B2B marketplaces
With the rapid growth of the BNPL platform and B2B marketplace, options for platforms are cropping up constantly in several different flavours. As a result, it can be challenging to decide which BNPL offering in these environments will work best for your organization.
When choosing which BNPL solution to use, we recommend looking at the following questions:
- What are the payment terms for you? When suppliers get paid fast, you can get paid fast and free up your cash flow. That’s why it’s critical to choose a BNPL offering that provides funding quickly.
- Is it a flexible payment option? Not all BNPL solutions are made equal. Large buyers won’t change their payment workflow to adapt to your platform – the BNPL solution must adapt to them. It’s important to make sure all forms of data are accepted and whether or not you can customize the payment process. A genuinely flexible payment option should also allow you to use your partner’s capital and your own.
- Are there aids to drive growth? One of the major benefits of online transactions is access to data. You should be able to get data insights that will show you how to optimize your marketing and product to drive more transactions. For example, you can use payment data to create an Amazon-like experience of suggesting related products. Revenue share for monetizing each transaction is also key.
- What is your provider’s expertise? Your partner should be an established fintech at the very least. Ideally, they should be able to use your data to underwrite for you.
Embedded BNPL with FundThrough
Payments should be a frictionless experience for everyone involved. At FundThrough, we are applying our expertise in invoice factoring and financing to an embedded payment method in B2B marketplaces. Learn more about our approach to embedded finance here.