The Rise of Fintech Technology in B2B Payments

How pay later services are helping businesses manage their finances and overcome cash flow obstacles.

Buy now, pay later (BNPL) services are one of the fastest-growing B2B trends of 2021. Afterpay, Klarna, and ZipPay are just a few of the household name payment solutions in Australia. In part, this is because BNPL products provide retailers with higher conversion rates and customers with diminished barriers to purchase. Instead of purchasing the latest iPhone or Koala mattress in one upfront bulk payment, customers are able access the product immediately, and pay it off over several interest-free installments. A recent report found that 5.8 million Australians have at least one BNPL account, with an exponentially increasing market of over 10 billion in postpay transactions (Mozo, 2021).

So, what are the benefits to BNPL services?

No interest is just one of the benefits, with BNPL you can get the product sooner and pay it off over multiple installments. Another drawcard is that there is less paperwork. Although these services are fast and popular, some lenders don’t look kindly upon them, and utilising them can actually hurt your credit score as well as your chances of getting a loan in the immediate future. Another limitation of traditional BNPL services are relatively low transaction limits (AfterPay max $3000). Fortunately, this is poised to change, with the introduction of B2B BNPL services offering up to $50,000 purchase limits.

There are a couple of reasons why a business might choose postpay options over a traditional loan. By using BNPL services, you gain immediate access to funds to help out your business's cash flow that you later pay back in installments. Unlike a loan, you don’t need to provide your credit score, just your business details. With either low or no interest, BNPL services are much better suited to those wanting to avoid any extra fees and to pay off a guaranteed set amount. Traditional loans often take more time to go through than purchasing through an Afterpay like service, so if you are needing that invoice paid ASAP, the money will be in your hands a whole lot faster. On the other hand, a personal loan could be useful if you’re looking to improve your credit score which you can achieve by making regular repayments. BNPL is usually limited to smaller amounts than a traditional loan so depending on how much you’re after, a personal loan could be your best bet. Nonetheless, it’s important to keep in mind that brands like HummPro are breaking through this barrier by offering sums up to 30K to businesses.

However, BNPL may not be the right option for everyone. With very little regulation, BNPL services are easily accessible to those whose situation might not be best suited to using the service. It can put users in the position of purchasing more than they can afford or overspending, and even with ‘little to no’ interest, users are often subject to late or monthly use fees. Without the same protections offered by credit cards, it is important for business owners to weigh up their credit options and find the service best suited to their needs.

Having transformed the borrowing landscape, pay later services are helping businesses manage their finances and overcome cash flow obstacles. Pay later models are being widely welcomed in the SME space with more than half stating that they would consider the model to aid in B2B transactions. As businesses continue to bounce back from the impacts of COVID-19, fin-tech innovation in postpay options is projected to revolutionise the financial services market. BNPL transactions are suggested to be responsible for over 70% of B2B sales within Australia (Floate). With relatively minimal regulations, pay later models benefit businesses with instant purchasing power, no accrued interest and empowered financial flexibility.

hummpro is another rising star in the arena of postpay options, streamlining B2B transactions and revolutionising cash flow management. It enables you to pay for things needed to run your business and unlike other companies, gives you choice when it comes to repayments. The financial institution gives businesses access to up to $30,000 and the ability to pause any repayment for an extra month for a minimal fee. If you end up needing more time, you can even change from a monthly repayment to a plan over 6-12 months for a fee as well. Humm Pro is accepted anywhere Mastercard is accepted, allowing the majority of businesses to integrate the service into their business make-up. However, unlike competitors such as Afterpay, Humm Pro will charge users a monthly usage fee, but luckily only for months that you are active.

Another big player in the pay later sector is Bizpay, a B2B focused fintech. Bizpay helps to solve cash flow problems associated with the payment of invoices. It makes it feasible for SMEs to receive 100% invoice funding of up to $50,000 within 24 hours whilst clients pay in 4 monthly installments. Oftentimes, banks find it risky to lend to SME’s, and so Bizpay fills this gap in the market. It can help improve your cash flow with its initial interest-free period, save you money on borrowing costs, and make payments hassle-free. With the newfound ability to defer payments, you’ll be in a position to be more flexible in utilising your business funds. Businesses can use Bizpay as a funding tool to automatically pay both bills and invoices, making paying any invoice more affordable for SMEs.

Traditional B2B payments can be both complex and time-consuming, luckily, fintech payment innovations are projected to help drive economic growth by streamlining transactions across the business to business space. With a multitude of buy now and pay later platforms, you have the choice to employ the service best suited to your digital business needs. We don’t want to just give you loan options, we want to give you access to the best options for your business needs.

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