BNPL for B2B: How to use it in your business

When it comes to selling in the business world, the way you manage your B2B payments is a key part of the experience you provide. And with more and more buyers looking for longer payment terms, it’s no surprise that B2B buy-now-pay-later (BNPL) is growing in popularity, with the market expected to grow 106% between 2024-2028.

This follows rapid progress in the B2C space where, as of 2024, 50% of UK adults have now used BNPL (including 69% of millennials). With businesses looking to maximise flexibility and choice in their purchases in the face of a challenging economic environment, offering BNPL for B2B has the potential to help sellers attract, convert and retain more customers, while growing their revenue.

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What is B2B BNPL?

B2B Buy Now, Pay Later (BNPL) is a payment solution that enables businesses to purchase goods or services and defer payment over an agreed period, typically in installments. Unlike the usual payment methods in B2B, where buyers pay upfront or within a predefined credit term to the seller, B2B BNPL offers greater flexibility and immediate payment to sellers. That’s because instead of just involving the buyer and seller agreeing between themselves, there is a third-party finance provider facilitating the transaction. 

By adding a credit option at the point of purchase, the seller is paid straight away by the BNPL provider, while the buyer can spread the cost of the purchase over 3-12 months. This works as a win-win for both parties, leading to smoother transactions and stronger business relationships.

How does B2B BNPL work?

Here’s how the B2B BNPL process typically unfolds:

1. At checkout: A business buyer selects BNPL as a payment option during checkout, either online or offline.
2. Credit assessment: The BNPL provider conducts a quick credit check to determine the buyer's eligibility and spending limit.
3. Payment terms: Once approved, buyers can choose repayment terms—such as paying in 30, 60, or 90 days, or in installments over 3 to 12 months.
4. Immediate payment to sellers: The BNPL provider pays the seller in full as soon as the transaction is complete, eliminating the risk of delayed payments.
5. Repayment by buyers: Buyers make payments to the BNPL provider according to the agreed schedule, usually via automated deductions from their business account.

The integration of BNPL with digital payment platforms ensures that the process is seamless for both sides, with minimal manual work, and streamlined collections.

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How does B2B BNPL compare to traditional trade credit?

B2B BNPL has some similarities with traditional trade credit – a longstanding way for buyers and sellers to manage payments – but they differ significantly in structure and execution. 

Trade credit typically involves setting terms (e.g., net 30 or net 60) directly with the seller, who bears the risk of delayed payments and has to take responsibility for approving the creditworthiness of the buyer, and chasing payments as required. This is a separate administrative task, and not the core activity of the seller in question, meaning it can be slow and time consuming.

B2B BNPL relies on a specialist intermediary to manage the credit, approvals and repayments process, all integrated within the transaction. 

• BNPL providers can offer instant or near-instant approvals, thanks to specialised credit assessment tools. 
• The BNPL provider assumes the financial risk, paying the seller immediately and managing the buyer’s repayment process.

While trade credit has a long history, the traditional process is now out of step with the way many businesses buy and sell – with digital and online taking a larger and larger role.  

B2B BNPL can be integrated directly into digital sales platforms to streamline approvals, credit checking, underwriting and payment making it more accessible to businesses of all sizes. 

For SMEs, in particular, B2B BNPL removes the headache of lengthy credit applications and high eligibility thresholds, making it easier to compete with larger players.

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Which industries can benefit from B2B BNPL?

B2B BNPL can be especially impactful in industries where cash flow management and large order volumes are especially important, such as:

• Manufacturing: manufacturers often deal with substantial upfront costs for raw materials and machinery. B2B BNPL enables them to procure essential materials without tying up capital, keeping production on track and repaying in-line with sales of finished goods. 
• Construction: The construction industry frequently operates on tight cash flow margins, with projects requiring significant investment in materials and labor before payments are anywhere in sight. B2B BNPL helps contractors and suppliers bridge the gap, keeping liquidity available while meeting project deadlines.
• Retail: Retailers who need to maintain high stock levels to meet consumer demand may not always have the cash available – which can be a risk coming up to peak season. With B2B BNPL, they can bulk order inventory on credit, then repay over a set period from sales.

As a rule, industries with complex supply chains or high-value transactions stand to gain the most from B2B BNPL. By offering instant payments and extended terms, you can help more customers buy – and buy more – without taking on the risk of bad debts.

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What are the benefits of B2B BNPL?

The growing popularity of B2B Buy Now, Pay Later (BNPL) stems from its ability to deliver tangible benefits for businesses in the areas that matter most, namely cash flow management, sales growth, and operations.

Cash flow management

For businesses looking to spread the cost of purchases and sellers looking to shorten settlement cycles as compared with trade trade credit, B2B BNPL can provide major cash flow benefits.

• Immediate benefits: Sellers receive full payment upfront from BNPL providers, eliminating the risks and delays associated with traditional trade credit.
• Long-term benefits: Buyers can defer payments on essential purchases, allowing them to invest in inventory, maintain operations and generate revenue for ongoing growth.

This dual benefit ensures businesses on both sides of the transaction maintain liquidity and financial flexibility.

Increase sales and expand customer base

B2B BNPL can be a game-changer for customer acquisition and retention, especially during periods where your customers may have less capital on than usual. Offering flexible payment terms attracts buyers who need financial flexibility, allowing them to make larger purchases. Sellers often see up to a 40% increase in conversion rates, as well as an increase in average order values.

Simpler financial processes

Traditional trade credit manual credit checks and approvals from sellers, with the workload rising as sales grow, with an ever large credit book to manage. B2B BNPL replaces this with automated processes, from credit checks to payment collection. This frees up more time for businesses to focus on sales and strategic priorities rather than administrative tasks.

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Leading B2B BNPL providers in the UK

The UK boasts several reputable B2B BNPL providers, each offering unique features tailored to business needs.

• iwocaPay: Known for its seamless integration and flexibility, iwocaPay provides payment terms of up to 12 months and spending limits up to £30,000. Sellers receive payments instantly, while buyers enjoy tailored financing options​​.
• Hokodo: Focused on risk mitigation, Hokodo protects sellers against non-payment while offering buyers a simple and fast approval process​.
• TreviPay: A strong choice for multinational businesses, TreviPay specialises in custom credit solutions and supports cross-border transactions​.

Each provider has distinct terms, fees, and capabilities, so businesses should evaluate them based on their operational and financial needs.

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Key considerations for using B2B BNPL

Adopting B2B Buy Now, Pay Later (BNPL) can offer major benefits for businesses, but it’s essential to carefully assess the associated costs, risks, and compliance requirements before implementing it.

Costs and fees

B2B BNPL services involve costs that vary for sellers and buyers, depending on the provider and chosen payment terms.

For sellers:

• Transaction fees: Most providers charge a percentage of the transaction value, typically between 2-5%, or a flat fee per transaction.
• Modular Pricing Options: Providers like iwocaPay offer sellers flexibility with pricing. Sellers can either:
  
  • Absorb the cost to provide interest-free terms to buyers as a competitive advantage.
  • Pass the cost onto buyers, allowing them to pay interest for the extended terms they utilise​​.

It's important to confirm whether there are additional costs for setup, maintenance, or customization, which might apply with certain providers.

For buyers:

• Interest or service Fees: Buyers may face fees based on the length of the repayment period or the credit terms. Some providers, like iwocaPay, offer interest-free options for shorter durations (e.g., 3 months) but charge interest for longer terms (e.g., 12 months)​​.
• Flexibility to pay early: Many providers allow buyers to settle their balances early, sometimes without penalties, reducing the total cost of credit​.

Understanding these costs helps both sellers and buyers make informed decisions aligned with their financial strategies.

Default risk

While B2B BNPL offers reduced risk for sellers by ensuring upfront payments, there are still important risk factors to consider.

• For sellers: BNPL providers typically take on the credit risk, ensuring sellers receive payment regardless of whether the buyer defaults. This protects cash flow but relies on the provider’s risk management policies​.
• For buyers: Defaults can lead to additional fees, legal actions, or loss of BNPL privileges. It’s crucial for buyers to carefully manage their payment schedules to avoid these outcomes.

Impact on credit ratings

Defaults or late payments may be reported to credit agencies, potentially impacting credit scores. Businesses should ensure that BNPL is used responsibly, maintaining a balance between flexibility and fiscal discipline​​.

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B2B BNPL compliance

The regulatory environment surrounding BNPL services is designed to ensure transparency, fairness, and security for all stakeholders.

• The UK’s Financial Conduct Authority (FCA) regulates BNPL providers, setting standards for responsible lending, data security, and transparent terms​.
• Compliance includes measures like clear disclosures of fees and repayment terms, ensuring businesses and buyers fully understand their obligations​.

Compliance Requirements for Businesses:

• For sellers: Ensure your BNPL provider complies with FCA regulations and provides adequate documentation and support for your financial records.
• For buyers: Maintain accurate and up-to-date business details during the credit assessment process. This helps avoid delays or complications in approval​.

iwocaPay strictly adheres to FCA standards, using up-to-date security protocols to safeguard transactions and customer data. This includes encryption, fraud detection, and clear contractual terms that protect all parties involved​.

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What are payment terms for BNPL?

B2B BNPL solutions offer a range of payment options to suit diverse business needs, which can vary by industry, product and supplier. The terms available may also depend on the buyer’s financial health and creditworthiness.

• Short-term options, such as 30 or 60 days, are ideal for buyers with quick turnover cycles.
• Longer-term plans, like 3, 6, or 12 months, cater to businesses managing high-value purchases​​.

The more flexible terms you can offer to buyers, the better their experience. And while with trade credit, longer terms mean more risk, with B2B BNPL, sellers are paid upfront whatever happens.

BNPL providers like iwocaPay allow sellers to customise terms based on buyer profiles, offering flexibility in repayment schedules and credit limits. For instance, suppliers can extend interest-free terms to loyal buyers or incentivise new customers with promotional rates​.

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How do I integrate B2B BNPL into my sales or purchasing process?

Integration depends on your sales channels and operational setup. Most B2B BNPL providers offer flexible solutions to fit diverse business needs:

• Ecommerce Platforms: Providers like iwocaPay offer plugins for platforms like Shopify, WooCommerce, and Magento, enabling quick setup. These plugins integrate BNPL directly into your checkout flow, making it seamless for buyers to choose flexible payment terms at the point of purchase​.
• Pay Links: Pay links are a versatile solution for offline and online sales. Sellers can embed these in invoices, emails, or SMS messages, enabling buyers to access BNPL options through a simple URL​.
• API Integration: For businesses seeking a fully customised experience, APIs allow direct integration of BNPL into existing sales systems. This approach offers flexibility in branding, payment terms, and buyer experience​.

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Start using B2B BNPL today

B2B BNPL makes buying and selling easier for every side of a transaction, while reducing risk, stress and admin work. By offering flexible payment terms, you can remove barriers for your trade customers while ensuring your business gets paid upfront every time.

With iwocaPay, you gain a streamlined and secure solution built to work seamlessly with your existing systems. Whether you’re a seller looking to increase average order values or a buyer seeking greater purchasing power, iwocaPay delivers flexibility without the hassle.

• For sellers: Get paid instantly, reduce credit risk, and offer tailored payment terms that keep customers coming back.
• For buyers: Access up to £30,000 in credit and spread payments over 3 to 12 months, giving you the breathing room to focus on growth.

iwocaPay simplifies B2B payments, empowering businesses to thrive in competitive markets. 

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B2B BNPL FAQs

What is the required technology for B2B BNPL

To successfully implement B2B BNPL, you’ll need:

1. Ecommerce compatibility: Ensure your website supports integration with BNPL plugins or APIs.
2. Accounting software integration: Platforms like iwocaPay offer compatibility with Xero and other accounting tools, allowing for automated reconciliation and streamlined financial reporting​.
3. Secure payment systems: Using Open Banking or similar technologies ensures that buyer payments are processed securely, reducing the risk of failed transactions​.

How quickly can I get set up and start using B2B BNPL?

Setup times vary depending on the complexity of your chosen integration method:

• Pay Links: These require minimal setup and can be operational within hours. Sellers can generate links directly from the BNPL provider’s dashboard and start offering payment options immediately​.
• Plugins: Installing a plugin typically takes a few days, depending on your ecommerce platform and customization needs​.
• APIs: Custom integrations may take a few weeks, as they involve development resources to tailor the BNPL solution to your business requirements​.

Is B2B BNPL regulated in the UK?

Yes, the Financial Conduct Authority (FCA) oversees BNPL services in the UK. Providers like iwocaPay comply with these regulations, ensuring responsible lending practices and robust protections for both sellers and buyers​​.

Are there compliance requirements for using B2B BNPL?

Businesses adopting BNPL should consider:

• Seller responsibilities: Ensure the chosen BNPL provider is FCA-compliant, offering secure transactions and clear terms.
• Buyer documentation: Buyers must provide accurate and verifiable business information during the credit assessment phase.
• Data security: Providers like iwocaPay utilize advanced encryption and secure payment technologies to safeguard sensitive information​.

Will using BNPL affect my credit rating?

Responsible use of BNPL services won’t negatively impact your credit rating. Defaults, however, may influence ratings for buyers, so timely payments are essential​​.

How quickly can I get set up and start using B2B BNPL?

Setup is fast, often taking just a few days for basic integrations like pay links or plugins​.

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