Implementing a B2B Buy Now, Pay Later (BNPL) solution is quickly becoming a priority for corporate travel providers across Europe. With increased working capital pressures and growing customer demand for payment terms on digital platforms, B2B BNPL serves to satisfy the needs of both providers and their customers.
In this blog post, Hokodo explores five of the key reasons why corporate travel providers have begun to embrace B2B BNPL solutions. All aboard! We are ready to depart…
1. Easing working capital pressures
Let’s take a look at a standard corporate travel booking scenario. A buyer browses a booking website and chooses their transportation and accommodation plus any ancillary services. When ready, they complete their booking. The buyer does not expect to have to pay up front, so is pleased but unsurprised to find payment terms of 30 days at the checkout. However, the provider must pay for the plane tickets, hotel rooms, car rentals, airport transfers and anything else on the booking up front, which puts significant pressure on their working capital.
For most corporate travel providers, the ability that B2B BNPL has to ease this working capital pressure is one of its primary attractions. Partnering with a B2B BNPL specialist eradicates the cash flow issues traditionally associated with offering credit because the corporate travel provider receives up front payment. Their cash flow isn’t tied up in receivables, meaning that they can fulfil customer bookings as normal and have cash left to spend on product development, customer acquisition and other growth initiatives. Of course, buyers still get to pay later – the only difference is that, when they settle, it’s the B2B BNPL provider that collects payment.
2. Catering to customer requirements
As we’ve already mentioned – when someone makes a booking with a corporate travel provider, there’s a good chance that they expect the option to defer payment. Traditionally, businesses are used to receiving flexible payment terms of 30, 60 or even 90 days when buying stock, materials or services so, from their point of view, why should paying for plane tickets be any different?
Corporate clients have cash flow issues and budgeting requirements of their own which travel booking platforms must consider when designing their payment processes. B2B BNPL offers a solution to satisfy these buyer needs.
Related to this is the fact that 35% of the workforce is currently made up of millennials – a number which is predicted by Deloitte to grow to 75% by 2025. As the B2B workforce has become increasingly concentrated with digital natives, demand has grown for B2C-like online purchasing and payment experiences. To cater to these expectations, corporate travel providers are implementing tools and solutions that make business bookings as simple as their leisure counterparts.
3. Bringing corporate travel management into the 21st century
Business buyers’ growing digital expectations, combined with the impact of the COVID-19 pandemic, have accelerated the shift of B2B transactions from offline to online. With 59% of hotel bookings for business trips taking place in a digital environment, more businesses than ever are going online to fulfil their corporate travel needs.
However, due to the complexity and risk factors of B2B transactions, some elements – such as credit scoring, fraud detection and payment processing – can be difficult to replicate in an online setting. When you add in the inherent complexities of managing bookings and expenses for corporate travellers, it’s easy to see how bottlenecks and problems can occur.
The introduction of B2B Buy Now, Pay Later is one way in which corporate travel providers are bringing efficiency and automation into their processes. As a digital-first solution, B2B BNPL is aligned with the online-focused growth and development strategies of many corporate travel booking platforms.
4. Minimising the risk of non-payment
If done incorrectly, giving buyers the opportunity to defer payment can be risky business. Corporate travel platforms that offer credit off their own balance sheet are susceptible to very real credit and fraud risks that can lead to late and non-payment.
Any B2B Buy Now, Pay Later solution worth its salt will provide full protection from these risks, so corporate travel providers can focus on achieving business goals while safe in the knowledge that they will receive and keep full payment – even if a buyer defaults.
5. Operational efficiency
Earlier, we discussed the fact that certain elements of B2B transactions are difficult to recreate in a digital environment. When corporate travel providers attempt to carry out credit scoring, fraud checks, payment processing and collections in-house, it often ends up becoming an unsustainable drain on resources that would be better deployed elsewhere.
The end-to-end nature of B2B Buy Now, Pay Later means that corporate travel providers can outsource the entire trade credit management process to a third party provider, improving operational efficiency and freeing up time and resources to focus on business growth opportunities.
In this blog post we’ve included five of the main reasons why B2B BNPL is being embraced by corporate travel providers, but we’ve only just begun to scratch the surface of how flexible payment solutions are helping these companies to protect their cash flow, mitigate risk, provide an enhanced customer experience and reach growth goals. If you’d like to learn more, we invite you to book a call with one of our payments specialists.