In today’s dynamic and competitive digital landscape, staying ahead of the curve is detrimental for business success. With BNPL emerging for businesses as a financing option, businesses can leverage funds and resources to expand and grow their businesses to unprecedented success. Leveraging BNPL enables businesses to make purchases and defer payment over time, typically in interest-free installments. By incorporating BNPL into your business financial strategy, you can provide increased cash flow, purchasing power, and flexibility, which can proactively remove any financial barriers that can potentially upscale your business. This article will serve as a guide, offering insights into the benefits of BNPL for your business. We will explore how BNPL can fuel your finances, resources, and ultimately generate substantial revenue growth.
What is BNPL (Buy now, Pay Later) for Businesses
BNPL (buy now, pay later) is a short-term financing solution that allows you to purchase items and pay them over time. BNPL is typically associated with consumer transactions and holds immense untapped potential for businesses as well. By embracing BNPL for procurement needs, businesses can unlock a range of strategic advantages.
BNPL options vary from one contract to another. Some BNPL require an upfront payment and some don’t. However, what makes BNPL an advantage for customers and businesses alike is the ability to loan a product or a service without growing interest, as long as payments are paid on time. Understanding BNPL can help you plan your budget and estimate payment terms, ensuring you can afford payments and make them on time.
The Benefits of BNPL (Buy now, Pay later) for Businesses in eCommerce
By leveraging BNPL for business procurement and purchasing, companies can optimize their financial resources, drive operational efficiency, and position themselves for sustainable growth. This strategic approach empowers businesses to meet their procurement needs promptly while maintaining financial stability. Here are some of the advantages of opting for a BNPL financing solution for your business:
- Procurement Optimization:
Businesses can utilize BNPL to optimize their procurement processes. By leveraging BNPL, businesses can acquire the necessary inventory, office equipment, or raw materials without the need for large upfront investments. This flexibility empowers businesses to maintain healthy cash flow, allocate resources strategically, and streamline their procurement operations. BNPL streamlines the procurement process for businesses. Rather than navigating complex financing options or seeking external credit, businesses can leverage BNPL to make purchases directly from suppliers. This simplifies the procurement workflow, reduces administrative overhead, and accelerates the procurement cycle.
- Improved Cash Flow Management
BNPL allows businesses to manage their cash flow more effectively by spreading out payments over time. This flexibility enables businesses to preserve their capital and allocate resources strategically, ensuring smooth operations and minimizing financial strain. Instead of making immediate, full payments, businesses can spread out their expenses over time. This improves cash flow, preserving capital for other critical business needs and supporting sustainable growth.
- Increased Purchasing Power
BNPL provides businesses with increased purchasing power, allowing them to acquire essential equipment, office supplies, or raw materials without the need for large upfront investments. This enables businesses to make necessary purchases promptly, facilitating operational efficiency and supporting growth initiatives.
- Enhanced Budgeting and Planning
By utilizing BNPL for business procurement, businesses can align their expenses with their budget cycles and long-term financial plans. The ability to make purchases on a deferred payment basis helps businesses forecast and allocate funds more accurately, avoiding sudden cash outflows and facilitating better financial planning.
- Scalability and Flexibility
BNPL accommodates the changing needs and growth trajectory of businesses. It allows businesses to scale their operations by acquiring additional equipment or resources as required, without significant upfront costs. Whether expanding inventory, upgrading technology, or investing in infrastructure, businesses can utilize BNPL to acquire the necessary resources promptly. This flexibility enables businesses to adapt to market demands swiftly and seize growth opportunities without being constrained by financial limitations.
- Streamlined Operations
By integrating BNPL into their eCommerce operations, businesses can simplify and expedite their internal processes. BNPL eliminates the need for complex financing arrangements or seeking external credit, allowing businesses to make direct purchases from suppliers. This streamlines the procurement workflow, reduces administrative overhead, and accelerates the overall operational cycle.
- Risk Mitigation
BNPL providers often assume the risk of non-payment, reducing the financial burden and potential losses for businesses. This protection provides businesses with peace of mind, as they can proceed with necessary purchases while minimizing the risk of default or non-payment.
- Competitive Advantage
Adopting BNPL for business procurement can give companies a competitive edge. It allows businesses to invest in critical resources, equipment, or commodities promptly, enabling them to operate more efficiently, meet customer demands, and stay ahead of competitors who may be limited by cash flow constraints.
Exploring the Downsides of BNPL for Businesses
While Buy Now, Pay Later (BNPL) presents numerous advantages for businesses, it’s important to consider the potential disadvantages as well. Before integrating BNPL into your business operations, take into account the following factors:
- Cost of Financing
BNPL providers often charge fees for their services. While these costs can be manageable, they can add up over time, impacting the overall cost of procurement. It’s essential to carefully assess the financial implications and compare the fees and interest rates offered by different BNPL providers to ensure that they align with your business’s budget and financial goals.
- Dependency on Third-Party Providers
By incorporating BNPL, businesses become reliant on third-party providers for financing. This dependency means that any issues or disruptions in the BNPL provider’s service can potentially impact your business’s ability to make necessary purchases or meet financial obligations. It’s important to choose reputable and reliable BNPL providers to mitigate these risks.
- Impact on Cash Flow
While BNPL can help manage cash flow by spreading out payments, it’s crucial to consider the long-term impact on your business’s financial health. Committing to regular BNPL repayments can reduce your available cash reserves and limit your ability to respond to unforeseen expenses or investment opportunities. Careful financial planning is necessary to ensure that BNPL repayments do not strain your business’s overall cash flow.
- Potential for Overextension
BNPL can provide businesses with increased purchasing power, but it’s important to use it responsibly. The temptation to overspend or take on excessive debt can lead to financial strain in the long run. Businesses must carefully evaluate their financial capabilities and ensure that they can comfortably meet their BNPL repayment obligations without compromising their overall financial stability.
- Limited Supplier Acceptance
Not all suppliers may accept BNPL as a payment option. This can restrict your choices when it comes to sourcing materials, equipment, or services. Before fully embracing BNPL, consider whether your preferred suppliers or vendors are compatible with this payment method. It may require finding alternative suppliers or negotiating payment terms with existing ones.
- Administrative Complexity
Integrating BNPL into your business operations may introduce additional administrative complexities. Managing multiple payment methods, tracking repayment schedules, and reconciling transactions can create additional work for your finance or accounting team. Businesses must have robust systems in place to handle these complexities effectively.
How to Apply for BNPL for Businesses in eCommerce
Research BNPL Providers: Start by researching different BNPL providers that cater specifically to businesses. Look for reputable providers with a track record of working with businesses in your industry. Evaluate their offerings, terms, and customer reviews to find the provider that aligns best with your business needs.
Assess Eligibility Criteria: Each BNPL provider may have specific eligibility criteria for businesses. These criteria could include factors such as annual revenue, creditworthiness, and time in business. Evaluate the requirements of different providers to determine which ones you are eligible to apply for.
Gather Required Documentation: Prepare the necessary documentation required by BNPL providers. This may include financial statements, tax returns, business licenses, and other relevant business information. Organize these documents to streamline the application process and demonstrate your business’s financial stability and credibility.
Submit Application: Once you have selected a BNPL provider and gathered the required documents, submit your application. Most providers offer online application processes, making it convenient and efficient. Follow the instructions provided by the provider and ensure that you complete all required fields accurately.
Await Approval and Terms: After submitting your application, the BNPL provider will review your application and assess your eligibility. This process may take some time, depending on the provider. Once approved, the provider will communicate the terms and conditions of the BNPL agreement, including interest rates, repayment schedules, and any additional fees.
Review and Accept Terms: Carefully review the terms and conditions presented by the BNPL provider. Pay close attention to interest rates, repayment terms, and any potential penalties or fees. Ensure that you fully understand the agreement before accepting it. Seek clarification from the provider if you have any questions or concerns.
One BNPL program provider is Shoppable Business, a B2B eCommerce platform in the Philippines that aims to help businesses to grow and expand through business digitization. Shoppable Business provides business non-collateral financing to help eligible small to medium size businesses reach their goals. Eligible businesses can apply for up to ₱20 million in funding. With thousands of vetted suppliers in Shoppable Business, you can get fast approvals for a BNPL payment option for suppliers in the marketplace, allowing you to procure items for your business easily.
Why Become a Seller in Shoppable Business
- Access to a large customer base – giving businesses an opportunity to expand their reach and increase sales
- Increased visibility and brand awareness – a platform for businesses to showcase their products/services and potentially attract new customers
- BNPL (Buy now, Pay later) – grow your ASP; buyers/companies can apply for loans up to ₱150,000.00
Why Become a Buyer in Shoppable Business
- Wide product selection from different categories – a one-stop-shop solution for businesses’ procurement needs
- Save company time and money – Customized orders, RFQ for specific quantities, bundles, configuration, Track their orders, view purchase history
- Need it now but limited budget – Buy Now Pay Later – apply and get up to ₱150,000.00
- 100% Authentic products only every time you buy.
Join Shoppable Business as a buyer or a seller, and get your business approved through Shoppable Business’ Lending and BNPL program today!
