Buy now, pay later (BNPL) is making a splash in B2B payments and commerce, an unsurprising trend considering the B2B ecosystem’s habit of mimicking B2C innovations.
But the rise of BNPL in B2B emerges with a caveat. While technologies initially designed for consumers can indeed drive progress in B2B trade modernization, B2B payments workflows have a long history of BNPL. Only, it hasn’t been titled such — rather, it’s been labeled by concepts like trade credit and payment terms.
With that in mind, one wouldn’t be blamed for assuming that the sudden influx of BNPL solutions designed for B2B transactions is nothing more than a marketing ploy, an effort to repackage a legacy product with a trendy catchphrase.
Yet what Biller CEO Derek Vreeburg recently explained to PYMNTS is that the rise of B2B BNPL isn’t just about a new label for trade credit. Rather, it’s an effort to transform a legacy, outdated process that fails to meet the standards of today’s buyers and sellers.
Trade Credit’s Innovation Boost
The concept of making a purchase today with an agreement to pay for that product at a later date is the way B2B commerce has been conducted for decades.
But shifting requirements and expectations among both buyers and sellers have created a gap for trade credit solutions that adhere to modern B2B transactions.
“It all comes down to a new generation of B2B buyers,” said Vreeburg. “The majority are millennials, and they grew up with technology by buying online.”
These professionals are bringing their consumer expectations to the processes of B2B commerce and payments, and the old ways of trade credit simply aren’t cutting it. It’s not simply that “BNPL” is a familiar and recognizable phrase for the millennial buyer — it’s that those millennials are seeking trade-credit workflows that more closely mirror BNPL workflows.
Most notably, said Vreeburg, that means embedding trade credit directly at the point of purchase.
“If you really want to unburden the seller, then you need to blend in with their current ecosystem,” he said. “You see a lot of solutions that are a single solution, where you have to integrate it separately.”
BNPL is also driving innovation in the legacy trade credit space through the adoption of technologies like artificial intelligence to enhance and accelerate underwriting and risk assessments. And, unlike consumer-focused BNPL, Vreeburg noted, B2B BNPL needs technologies that can handle the uniqueness and complexities of each business buyer profile.
The User Experience
BNPL’s growing traction in B2B payments and commerce also comes down to the industry’s efforts to displace traditional trade credit’s lackluster user experience.
Those siloed and fragmented solutions and strenuous underwriting processes fail to meet the needs of the modern buyer who is increasingly searching for financing functionality that fits seamlessly within the purchasing and payments workflow. Similarly, other trade financing solutions initiated by the buyer can impose unfavorable experiences upon the seller.
Embedding BNPL functionality at the point of purchase or checkout can meet the needs of both buyer and seller.
“Buyers and sellers are both struggling with their cash flow,” said Vreeburg. “We really want to offer a buyer-like dynamic payment service in checkout so [buyers] can say, ‘My need at the moment is to pay within X days, instead of the terms given by the seller.’ But also, we want to give the seller the option to say, ‘I want to have this money earlier than my payment terms.’”
BNPL and trade credit ultimately strive for the same goal: to accelerate payments to suppliers while offering capital float to buyers. But as BNPL continues to make inroads within the growing number of B2B eCommerce and digital marketplace platforms, it’s growing clear that BNPL is not a new label for an old workflow of trade credit.
Rather, BNPL is pressing the concept of trade credit to new heights of modernization and better user experience.