• Around 65% of B2B companies now offer e-commerce capabilities
  • The B2B ecommerce market is set to grow 17% year-on-year
  • 95% of B2B customers prefer not to pay upfront

According to a 2022 McKinsey report, around “65% of B2B companies across industry sectors now offer e-commerce capabilities, defined as fully executing a sales transaction online.” So, it’s no surprise that the business-to-business (B2B) e-commerce sector is following the lead of the more established business-to-consumer (B2C) sector with the adoption of B2B Buy Now, Pay Later (BNPL) services.

BNPL services are a long-established presence in the consumer sector, with brands such as Klarna a regular option at checkout and companies such as PayPal expanding their services to offer credit and Buy Now, Pay Later options.

SMEs are coming under pressure from cash flow issues, such as late payments. Many may be looking for loans as a solution – but with interest rates on the rise, more businesses are looking for flexibility with payment terms.

This means that B2B BNPL could offer B2B businesses a significant business advantage.

What is B2B BNPL?

B2B BNPL – or business-to-business Buy Now, Pay Later – services are a way of allowing online business buyers to purchase goods or services with extended credit terms. The buyer is offered interest-free trade credit, meaning they can pay at a later date, or in instalments, at no extra cost.

This is similar to trade credit, where the seller offers deferred payments for an agreed amount of time without charging interest. It’s quite common for BNPL service providers to provide financing to the seller by purchasing the receivables and making an upfront payment.

The demand for a Buy Now, Pay Later offering for business purchases is clear. The B2B e-commerce market is set to see an annual growth rate of 17% throughout the 2020s, and an estimated 95% of B2B customers would prefer to pay on invoice–mirroring the experience with B2C services.

While consumers are familiar with B2C BNPL services and are comfortable using them, businesses have been slower to offer similar B2B BNPL options. However, businesses are also aware that buyers prefer to pay on credit terms and look for alternative payment methods, in addition to credit card payments. BNPL could offer them a significant competitive advantage and help them to attract more buyers to their e-commerce webstores.

The opportunity B2B BNPL offers businesses

Offering business buyers the chance to buy goods or services on credit is not new. Trade credit and invoice financing both operate on a similar principle – the buyer not needing to pay upfront.

B2B BNPL is a form of trade credit, where companies like Allianz Trade have developed instant real-time credit decisioning to allow buyers a consumer-like buying experience.

What’s more, because BNPL providers are focused entirely on developing the market, they have the time and inclination to invest in AI or machine learning to reduce fraud and optimise the customer journey. Many businesses simply wouldn’t see the value in investing in their financial admin in this way.

With B2B BNPL seemingly better for buyers, better for sellers, and better placed to take advantage of key technological advances, we can confidently expect to see the BNPL market grow by 21.7% this year.

The challenges B2B businesses could face

Despite its benefits, BNPL is not yet a perfect product and it faces a number of challenges.

The customer journey is a key case in point. BNPL buyer journeys are still much more complex than handing over payment in advance, due to additional steps like know-your-customer (KYC) compliance and risk scoring.

There are also the internal and external challenges involved in adopting B2B BNPL, including the risk of a buyer defaulting (which can be mitigated by trade credit insurance) and concerns over the complex compliance and regulatory landscape surrounding BNPL.

BNPL in action in the B2B Sector

In the UK, B2B BNPL suppliers are demonstrating that their services offer businesses more opportunities than they do challenges.

Two Inc, one of the BNPL platforms active in the UK, aims to make life simpler for business customers, with a “no headache” approach to B2B payments – eliminating time-consuming admin by automating credit checks, ID verification and late payment chasing.

With other entrants into the market also eliminating some of the drawbacks of B2B BNPL while accentuating the benefits, taking advantage is becoming a priority for many businesses. Especially if they can also find the added protection that comes with trade credit insurance.

How can Allianz Trade help your business take advantage of B2B BNPL?

Allianz Trade is the world leader in  trade credit insurance, protecting your cash flow whether you’re offering trade credit, or using B2B BNPL services to secure a competitive advantage.

Allianz Trade will help you diversify the payment methods you offer at check-out, assuming responsibility for non-payment by your customers, or helping you scale your e-commerce offering to new geographies. For more information, contact our expert team today.

Remember, the B2B ecommerce market is set to see compound annual growth of 17% until the end of this decade. Protecting your business with a BNPL solution could be the key to taking advantage of that growth with a reliable partner such as Allianz Trade by your side.


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