Is B2B Buy Now, Pay Later suitable for your business?

Ethan Cumming
Content Writer

In short, the answer is “Yes, B2B Buy Now, Pay Later is suitable for the vast majority of businesses that buy from and/or sell to one another.” But that wouldn’t make for much of a blog post, now would it?

Research suggests that as much as 90% of world trade relies on trade finance, and since B2B Buy Now, Pay Later (BNPL) is essentially a modern way for businesses to access credit terms online, it follows that BNPL has the potential to be suitable for at least 9 of every 10 business transactions.

However, some businesses are reluctant to give BNPL a go. Perhaps this is due to Klarna’s less than stellar reputation in recent months. Maybe it comes down to a misunderstanding about what B2B Buy Now, Pay Later is. Either way, this blog post aims to address any misconceptions and demonstrate why B2B BNPL is an effective payment option for businesses of many types, shapes and sizes.

Does B2B BNPL exist in my industry?

Trade credit is the payment of choice in B2B across many different industries, so there’s a good chance that BNPL is applicable to the niche that your business operates in. For example, B2B BNPL is offered by merchants and marketplaces in verticals as varied as:

The above list is not exhaustive, and in some cases B2B BNPL will be referred to by another name such as 'digital trade credit'. Generally speaking, if two businesses are transacting online, B2B Buy Now, Pay Later could help to streamline and support the payment experience, regardless of the industry in question.

The advantages of B2B Buy Now, Pay Later

The advantages of B2B Buy Now, Pay Later can be split between those that impact sellers and those that impact buyers.

For sellers

We’ve established that BNPL is suitable for businesses and that it likely exists within your industry, but there’s a bit more to it than that. There are several characteristics of B2B BNPL that make it a more commercially viable and sustainable payment option for sellers than traditional trade credit:

  • The seller gets paid up front. Historically, merchants offering trade credit do so off their own balance sheet. This means that, although buyers get improved cash flow, the seller experiences the opposite. B2B BNPL providers take on the responsibility of financing the transactions, meaning that sellers get upfront payment.
  • Sellers are protected against risk. Offering credit off your own balance sheet and fulfilling orders before they’ve been paid for means that sellers often shoulder a lot of risk. In BNPL, risk is transferred to the payment partner, leaving both buyer and seller to focus on what matters most – running their businesses.
  • By nature, BNPL is built for online trade. The pandemic accelerated the shift of B2B commerce from offline to online, but traditional trade credit processes simply can’t keep up with the speed of digital trade. B2B BNPL is a digital-first product that empowers you to offer payment terms instantly, without any lengthy forms or complex credit checks.

Of course, B2B BNPL also enables merchants to sell more and grow their businesses. You’ll experience:

  • Better conversion rates – Our clients report an average increase of 40%.
  • Higher average order value (AOV) – Merchants and marketplaces integrated with Hokodo see a 30% uplift in AOV.
  • More sales – Access to BNPL on business purchases results in 24% more purchases per month.

For buyers

Of course, it’s not just merchants who reap the rewards of B2B Buy Now, Pay Later. Your buyers will benefit from:

  • Instant access to credit terms, even on their first purchase. Your buyers can wave goodbye to the tedious, hand written forms and lengthy waiting times traditionally associated with accessing trade credit. BNPL is a seamless solution and shouldn’t require an account with the provider.
  • Improved cash flow. Deferring payment by 30, 60 or 90 days gives buyers the opportunity to recoup costs before having to pay for their purchase. This promotes healthier cash flow and, ultimately, business growth.
  • Access to interest-free credit. When buyers choose to pay later for their purchase, there are no hidden fees or extra charges. 

Find out more about the Hokodo buyer experience

What next?

Right from the start we told you the short answer was “Yes, B2B Buy Now, Pay Later is suitable for the vast majority of businesses that buy from and/or sell to one another,” but you carried on reading anyway. We like you for that. 

Want to find out what to look for when choosing a B2B BNPL provider? There’s an ebook for that. Download your free copy today to learn what separates the strong providers from those who might end up letting you down.