BNPL - Buy Now Pay Later

How does BNPL work?

In physical outlets, BNPL takes the form of granting a payment extension to commercial buyers. It enables the buyers to spread their costs and delay payments without impacting sellers, who are paid in cash. In this way, cash flow is positively impacted on both sides. With online platforms, BNPL can be found on e-commerce sites and marketplaces. Taking the example of a product purchase, the steps are as follows: 

1. At the time of purchase on the platform, the commercial buyer chooses the "Buy now, pay later"
2. If it is accepted, he pays nothing at the time
3. The seller processes his order and delivers the product 
4. The financial institution providing the BNPL solution immediately pays the total amount that is due to the seller.

This same financial institution  then collects full payment from the buyer according to the agreed payment terms and bears the risk of non-payment.

BNPL is based on an algorithm that performs an instant analysis of the creditworthiness of commercial buyers. This solution in an extremely rapid exchange between the seller and the insurer to find out whether the buyer is solvent or not. The result is communicated in the form of a score that tells the seller whether or not it can grant credit. As the solution is directly integrated into the customer journey, the entire process takes place in a few thousandths of a second: all stages are managed instantaneously by the BNPL solution provider.

The advantages of BNPL for B2B commerce

Cash payment

Unlike traditional trade credit, where a sale cannot be recognised until it has been paid, the BNPL solution providers finance the transactions immediately. As a result, cash flow is greatly improved.

Protection against non-payment

Late payments or unpaid invoices are the major risks encountered when products are delivered before payment has been received. BNPL's solution transfers these non payment risks to a third party, leaving sellers free to concentrate on their business objectives. 

BNPL, credit insurance or factoring?

Providers offer a multitude of formulas with widely varying coverage and costs. Ease of integration, payment methods, risk protection and pricing are just some of the factors. AU Group's brokers put in place appropriate, long-term solutions. Call on their expertise to find products tailored to all your challenges and increase your company's growth.