B2B Payments

Myths, facts, and what to know about B2B buy now, pay later

Team Balance
July 27, 2023
Table of contents

Buy now, pay later revolutionized ecommerce, and it’s still continuing to do so. BNPL’s popularity has surged in recent years, and it is projected to have a 43.8% compounded annual growth rate through 2030, according to Deloitte Digital.

The story behind BNPL is that in the early 21st century, fintech companies enabled retailers to integrate installment plan lending directly into the ecommerce payment flow. This allowed consumers to get instant credit at the point of sale and pay for a purchase later.

While BNPL has been primarily associated with the B2C market, with big names like AfterPay, Klarna and now PayPal,  it is also starting to gain traction in the B2B space. This can be attributed the ongoing consumerization of B2B, and is a creative answer to the growing need for more flexible B2B ecommerce payment options and creative solutions to unlock cash flow.

However, it’s important to understand what B2B BNPL is and also what it isn’t.

In some cases, BNPL is used as a general term to simply refer to the idea of delaying payment via trade credit or net terms to a later date. Other times, it’s used in the classic sense, where merchants allow buyers to split up their dues in various installments, paid over an agreed-upon period of time.

When Balance refers to BNPL, we refer to the former. Our merchants can offer their customers net terms, directly from the checkout.

But how can embedded net terms help capitalize on the $17 trillion dollar B2B ecommerce market? Whether you need net 30, 60, or 90, how do you choose the right provider or invoice factoring provider for your business and upgrade your customer experience? In this blog, we'll walk through a list of common myths that will help you avoid falling for a subpar net terms provider. So your customers always get your best.

First, what are net terms?

Net terms are a way for businesses to extend credit to their customers. In an offline way, net terms have been around for a long time. With high average order values (AOVs), most businesses simply don't have the cash upfront to cover the purchase. Even if they did, it's a common practice to try and speed up the collection of cash from sales and delay paying vendors as long as possible. From a cash flow standpoint, this can be essential for everyone from small businesses to enterprises. The challenge, then, is offering terms in a seamless way in the online space.

For example, many providers are slow to qualify buyers and don't offer the kind of flexibility merchants need. Because offering terms digitally is still a relatively new thing, there's still not a lot of information out there on what the best solution looks like. We’re exposing 4 prevailing myths that might be standing in the way of rolling out the right B2B BNPL offering for your ecommerce store.

BNPL Myth #1: You can’t onboard buyers and offer them BNPL in the same experience

Being able to extend credit has been an expectation of the B2B market for hundreds of years, but few companies have the resources to extend credit online. The businesses that do offer credit online today are often held back by slow, tedious processes. It can take days or even weeks for a new customer to complete the underwriting process and get approved for net terms.

Essentially, merchants typically turn to banks, lenders and other legacy financial institutions to fund the transaction with working capital, but these organizations are still qualifying and updating credit limits manually. Plus, they don’t have the infrastructure to perform a truly nuanced assessment, relying on a standard set of credit checks that rarely change from customer to customer.

Companies dedicated to B2B ecommerce payments, on the other hand, manage credit risk themselves. So they have the benefit of evaluating buyers across several different industries, business models, and transaction values, by leveraging historical transactions from a network of merchants and building that expertise into risk models. The result? Faster and more accurate approvals.

This not only means your buyers get credit decisions quickly—often in real-time—so they don't have to put their entire purchasing cycles and procurement processes on hold until they know they can get the net terms they need, but it also means that many times, your buyers can onboard, qualify for net terms and then use those net terms in a purchase all in the same visit to your ecommerce channel. In terms of convenience, this is a game-changer.

BNPL Myth #2: Trust is not a real issue

In B2C, BNPL solutions are often handled and branded by the separate provider. With consumers, this typically works well. But for buy now, pay later in B2B, building trust is absolutely critical. B2B buyers are making large purchases, and they often face a series of approvals and several logistical hoops before they can even hit ‘buy’. If, after all of that, they don’t even recognize the BNPL provider, the journey may end right there. A B2B payment experience that doesn’t foster trust can have a real affect on conversion rates.

For example, many B2B buy now, pay later solutions are not white-labeled. Inserting an obscure third-party logo in your payment flow can confuse your buyers at best and jeopardize sales at worst. After all, B2B buyers are buying on behalf of their businesses, and so the stakes are much higher.

Ideally, you should be able to extend terms from your own platform with your own logo, which your customers easily recognize and trust. If you can pre-qualify buyers too, then they can shop seamlessly and check out with terms in one click. Offering that kind of superior shopping experience is the key to building loyalty, trust, and the confidence to keep coming back.

BNPL Myth #3: Payment options can be an afterthought

B2B ecommerce is a game of convenience, and if customers can’t get the flexibility they need, they will take their business elsewhere. Financing options are the first step. But how customers get to pay for their invoice can’t be overlooked.

On the due date of the invoice or ideally before the due date, buyers should have the option to pay how they want with flexible payment methods. That can mean ACH, credit card, wire, or even check. Many merchants simply don't offer more than one payment method because processing payments is no small feat and often come with high processing fees, managing multiple providers and other headaches.

If you select a financing solution that has processing built-in, the benefit is two-fold: your customer base gets a better experience and your resources don’t have to go towards building the infrastructure.

BNPL Myth #4: It takes a long time to integrate a net terms offering

Relating to the need for speed in offering BNPL, adding embedded financing solutions could take a while, meaning that you can’t start using it right from the get-go. With some solutions out there, this is the case, and requires time and resources on the part of the development team to get the net terms offering going.

Other B2B BNPL payment solutions, on the other hand, simplify the process with an in-dashboard financing option. Meaning, even if your at-checkout BNPL integration hasn’t yet been set up, you can still approve buyers from the dashboard so they can start purchasing from you on net terms immediately. This can be a game-changer for a merchant who wants to immediately help finance their buyers’ transactions, while investing in the long-game by implementing a terms offering at-checkout.

BNPL with Balance

Offering BNPL with Balance is simple, and literally takes minutes to get started. Here’s how it works:

Qualifying new customers through the dashboard

The Balance dashboard makes it easy for merchants to qualify buyers. Merchants simply navigate to a buyer's page, and click the "Qualify for terms" button.

Merchants will be then prompted to send buyers the qualification flow via email.

Buyers will receive the email with a short qualification flow that takes minutes to complete. Once they’ve gone through the flow and are approved, they’ll be notified to activate their terms, and then they can start transacting.

Through the dashboard, merchants can immediately begin extending financing to customers.

Qualifying at-checkout

Once the checkout has been integrated, it couldn’t be easier to qualify new customers. With Balance, buyers can go through the qualification process at the point of sale in a few simple steps, without ever leaving the checkout. Once approved, they can use those terms to make their purchase, all in one visit.

With these Balance's simplified qualification processes, merchants can extend BNPL to their buyers in a seamless experience, and do it quickly.

The time for B2B buy now, pay later is now

While the idea behind BNPL is straightforward, meeting the expectations of modern digital business buyers can be a challenge. Choosing the right payment partner is critical to scaling your business. Slow approval rates or a cumbersome purchasing experience can discourage customers from completing their purchase. Conversely, providing a smooth and user-friendly experience can give your business a competitive edge.

To achieve this, you need to understand the financing options that are available to you. Do you want to offer installment payments or net terms? Do you want to offer them through your own B2B checkout? By tailoring the financing experience to meet the needs of your business and customers, you can reap the benefits of ecommerce and drive growth for your organization.

But one thing is certain: In the B2B space, a smooth and consumer-like experience is a powerful way to stand out.

Ready to get your B2B BNPL offering off the ground and start offering financing to customers today? Speak one of our experts now.

Speak to an expert

See how Balance helps teams leverage
technology to drive efficiency.