Collaborative approach & risk platform: How to choose a B2B Buy Now, Pay Later provider

Ethan Cumming
Content Writer

We’ve arrived at the penultimate instalment of our series on how to choose a B2B Buy Now, Pay Later provider. First we explored the importance of choosing a provider with a high offer rate and strong tech performance, before moving on to a deep dive into the ease of integration and solution flexibility. Then we took a closer look at the significance of working with a provider who can support various appropriate payment methods and whose pricing aligns with the value delivered to you and your customers. Join us now as we look at two core criteria to consider when choosing a B2B BNPL provider – collaborative approach and risk platform.

Collaborative approach

Successful relationships between payment services providers and e-commerce marketplaces or merchants are built on collaboration and cooperation, but what does a collaborative approach look like in the context of B2B Buy Now, Pay Later?

In order to achieve the best customer outcomes, you need a provider willing to share vital commercial information such as:

  • Customer credit scores to support your own prospecting & KYB efforts.
  • Transparent rejection reasons when a customer cannot be approved for trade credit.
  • Ongoing monitoring of offer rate and take-up rate.

Ultimately, you’ll be looking for a provider with the ability to co-design with you the best solution for your business – a partner with appointed resources to manage the partnership both commercially and technically.

Why does a collaborative approach matter?

A/B testing drives the best results when it comes to e-commerce, but without collaboration from your B2B Buy Now, Pay Later solution provider, you’ll only ever have part of the picture. By working together you will gain deeper, holistic insights about your customers and how they interact with the payment terms extended by your partner.

We recommend avoiding providers who appear unable to leverage any lessons learned from analysing their solution’s performance and whose limited tech capabilities prevent ongoing tweaks and adjustments to your Buy Now, Pay Later offering. Providers without a product approach or a partnership mindset will ultimately be unable to provide the level of collaboration you need in order to maximise the benefits of extending payment terms to business customers online.

Instead, opt for a provider not only willing to collect data and share insights but one who does this as standard practice. This kind of collaborative approach will benefit both parties when it comes to making changes to payment terms, adapting underwriting rules or any other refinements your solution requires over time. A leading Buy Now, Pay Later provider will take an iterative approach to deliver the best offer and conversion rates over time, so this is something that you really want to get right.

Risk platform

Although we talk about risk platform as a single criterion, it can be broken down into a handful of more manageable pieces:

  • The sustainability of your provider’s offer rate.
  • The sophistication of their underwriting model.
  • The ability of your BNPL provider to take on large exposures (a.k.a. their financing and insurance capacity).
  • The effectiveness of their credit and fraud risk controls.

Why does the risk platform matter?

A B2B Buy Now, Pay Later provider with weak risk management practices could have your platform targeted by fraudsters, which can lead to your business losing money or even failing entirely. When assessing potential partners, you want to be sure that any shortlisted providers offer effective risk protection and are backed by reputable insurers and/or financiers.

How can you tell if a BNPL solution provider will protect your business from risk? For the sake of safeguarding your B2B e-commerce store or marketplace, steer well clear of any provider where you suspect weak fraud and credit risk controls. Of course, a potential partner is unlikely to admit this up front, but key indicators might include: 

  • Traditional credit risk underwriting hindered by a weak data platform.
  • Frequent shifts in offer rate caused by knee-jerk underwriting stance.
  • Limited track record in B2B underwriting.
  • A lot of small print clauses (“exclusions”) limiting the cases in which you’ll be protected against non-payment. For instance, some providers may protect you against insolvencies but not against chargebacks (a.k.a. “friendly fraud”).

Conversely, an ideal partner will be one who leverages experience and data to refine their underwriting rules and optimise their footprint, thereby minimising risk.

They will also be able to demonstrate solid financial backing from a reputable insurer or financier. For example, Hokodo is backed by Lloyd’s of London, so all merchants using our solution trade with peace of mind knowing they are fully protected against non-payments. This also provides us with stable insurance capacity, allowing us to take on large exposures.

We would love to have the opportunity to tell you more about our leading solution and show you how we can take the pain out of offering trade credit to your e-commerce customers – if you’re interested, why not book a demo today?

Download our ebook today and learn how to identify the right payments partner for your business.