Cash & Liquidity Management

Factoring change into the payment process

Published: Mar 2023

B2B BNPL providers are confident that challenging economic conditions will boost demand for their services.


The buy now pay later (BNPL) market has stuttered over the last 12 months with a combination of interest rate hikes impacting the cost of credit and the prospect of increased regulation leading to a sharp downgrade in the value of some of its largest players in the B2C space.

In contrast, B2B BNPL providers are increasingly confident that their offerings not only improve access to finance while reducing the risk of non-payment, but can also help businesses grow revenues.

Christian Grobe, Co-Founder and Managing Director of Billie says his company’s research and its merchants’ numbers suggest that customers are more likely to make a purchase if they have the option to pay later.

“For merchants, BNPL and corporate credit cards are comparable in terms of cash flow benefits in that both pay merchants quickly after a transaction is made,” he says. “For buyers, however, there are clear advantages. On average, buyers receive payment terms twice as long when purchasing with BNPL due to the fact that credit card bills are always settled on a fixed day in a month. With BNPL buyers always have at least 30 days until settlement, regardless of the time of purchase.”

Malte Huffmann, Co-Founder and Co-CEO of Mondu refers to surveys conducted by IBI Research in the German market that show that 95% of all companies would like flexible payment terms for online purchases, but only 45% of B2B web stores currently offer BNPL to existing and new customers at their checkout.

Case study



Printing services provider Onlineprinters started using Billie in mid-January for two main reasons. Firstly, it believed it would make payment easier for businesses and public institutions and secondly, because it boosts the company’s internationalisation as there are few other providers that enable purchase on account across borders.

“The factoring procedure offers a major operational advantage as Billie carries out the dunning structure directly,” explains Fabian Stich, Onlineprinters Chief Commercial Officer. “In addition, when customers pay via Billie we have no risk of non-payment as we receive the money anyway from the service provider.”

The advantages for his customers are that they can purchase on account as a company and have the option of managing invoices and payments centrally via a personal buyer portal to ensure they don’t miss any payment deadlines. Individual payment deadlines are also possible.

“BNPL is an important channel for us, as invoice purchasing is one of the most used payment options in the B2B sector,” says Stich. “It is cheaper than doing the factoring process ourselves and Billie also offers an integrated credit check, which means that only customers who are solvent can order with this method.”

“Businesses that offer flexible payment terms such as net terms and instalments can gain a competitive advantage while increasing their conversion rate, average order values and sales,” he says. “By replacing the outdated, manual, time-consuming credit check with one that takes place in real time, merchants can save customers time and effort by providing immediate confirmation.”

B2B merchants benefit from seamless integration, outsourced credit risk and control, and much higher sales volumes and average order values while their trade buyers benefit from instant credit decisions, increased spending power, a choice of payment methods, and more flexible repayment terms agrees Anil Stocker, CEO & Co-Founder of Kriya.

“There are a number of ways our merchants can integrate and deploy embedded finance,” he says. “These include various e-commerce integrations, which can be turned on in a matter of hours so they can quickly start offering the advantages of embedded finance to their customers.”

White-labelled B2B embedded lending is an effective customer acquisition tool for banks and lenders, who can now easily extend their reach and display their brand in front of new business customers. When financial products are made easily accessible to customers at the time and place they need them most, this serves as an entry point to turn a financing applicant into a lifetime customer.

That is the view of Yaacov Martin, CEO of Jifiti, who notes that since loans can be distributed quickly and easily when they are embedded at the point of sale, banks and lenders are able to significantly increase and broaden their B2B lending portfolios.

“Merchants that offer BNPL benefit from minimising late payments and eliminating manual processes and admin,” he says. “Invoice financing typically is very admin-intensive – an unnecessary drain on resources, time and money. As the BNPL process is automated, merchants that already offer financing can upgrade their existing manual processes.”

Sean Watkins, VP Revenue Operations at Merchant Growth also refers to the reduction or elimination of internal credit management. Companies will usually have their own credit management team that is responsible for underwriting credit applications and after the initial approval, this credit needs to be monitored on an ongoing basis. If there are any losses, there is a lengthy process of trying to collect from the buyer.

“Cash flow is one of the main benefits of B2B BNPL for both buyer and seller,” he says. “The former has the ability to break down their payments for as long as 12 months, while the latter receives next day settlements. These payment terms are offered for as little as 0%, which is obviously much more attractive to small businesses than alternative financing options.”

As outlined, it is not just fintechs that are interested in the potential of B2B BNPL. For example, Deutsche Bank has developed a solution for invoice and instalment purchases in collaboration with digital financing solutions developer Credi2 for the German market, where invoice purchasing is one of the top three payment methods for e-commerce transactions.

Earlier this year, trade credit insurance provider Allianz Trade, B2B e-commerce payments platform Two and Santander Corporate & Investment Banking (CIB) announced a partnership to deliver a B2B BNPL product.

Large multinationals seek to differentiate from their peers by offering real time payment terms to their clients at the point of checkout and also look to transfer the risk of their customers’ non-payment at a competitive rate, observes Ignacio Frutos, Global Head of Receivables at Santander CIB.

“Few providers can handle sophisticated API integrations, global coverage, cross-currency capabilities and funding scalability to support their needs,” he says. “As a result, multinationals have no choice but to invest in non-core areas (credit underwriting, dunning, reconciliation) and take risk on the balance sheet. Multinationals can now leverage an integrated global solution with cutting edge risk management and competitive rates.”

The opportunity for Santander is to offer an end-to-end solution to corporate clients who want to do more business with their long tail of customers and/or simplify their interactions with them.

“As most of them are just launching major internal projects, whoever is able to help them accelerate the time to market should be really successful,” adds Frutos. “This solution offers attractive embedded financing options and streamlines the payment cycle with little disruption for the selling corporation as we handle the technology, risk management and financing.”

From the seller’s standpoint, settlement is quick. They do not need to have the receivable on their books and then use it to access capital as it is settled at the point of sale.

According to Ashish Srimal, Co-Founder and CEO of Ratio, B2B BNPL boosts sales conversions by accelerating or closing deals that may have been delayed or even lost by offering a one-size-fits-all solution.

“BNPL allows businesses to turn recurring revenue streams into upfront cash, allowing them to fund their growth without debt, discounts, or distractions,” he says. “When customers can pay in manageable instalments tailored to their particular cash flow needs they are more likely to close faster and be open to making additional purchases, allowing the business to leverage cross-sell or upsell opportunities and increase total contract value.”

Rising interest rates are something of a double-edged sword for the sector, with increased cost of capital balanced by higher demand for flexible payment terms.

“The UK has experienced three years of extreme uncertainty – SMEs are under increased pressure due to heightened inflation and financing is much harder to secure as a result,” says Stocker. “B2B BNPL could be the solution to navigating supply price increases, inflation and utility costs and maybe even [enable companies to] forgo the need to pass on many of these rising costs to their customers.”

According to Martin, rising interest rates and economic uncertainty have sparked a shift in demand for the stable, responsible B2B loans provided by banks and other regulated lenders.

“Banks are less affected by economic instability and interest rate hikes than the BNPL fintechs as they have a lower cost of capital,” he adds. “Those banks who offer the most competitive interest rates are positioned to become leaders in this space.”

Businesses are often buying from suppliers for the purposes of growth and have a clear return on investment tied to their purchase, whether it is inventory or technology, suggests Watkins.

“This means that these are not optional purchases that can be delayed,” he says. “Economic uncertainty gets suppliers thinking more about their willingness to take credit risk, while buyers are focusing on extending their runway and improving cash flow – and B2B BNPL is one of the solutions.”

Srimal accepts that higher interest rates and economic uncertainty affect some price sensitive customers’ decisions to seek financing for purchases, but also refers to increased adoption of BNPL as a means of conserving cash by deferring payment.

“This streamlined approach allows businesses to raise capital to drive growth with no dilution of equity and no restrictive covenants or relinquishing of strategic control,” he adds. “And best of all, the new capital can be accessed immediately upon the close of every contract no matter when the product and service is delivered.”

Case study


Wholesale meat supplier Meatex has been working with Kriya since August 2022. Over this time it has experienced a 222% increase in new customer acquisition and a 14% increase in total sales with average transaction value rising by more than 50%.

Using the BNPL facility allows the company to offer clients financial flexibility when choosing the 30 or 60-day payback options explains Regional Manager, Ross Whetton. “Our clients have responded well to this,” he says. “The general feedback is that this has given them additional support with cash flow, allowing them to focus on other areas of their business.”

He acknowledges that using BNPL does come at a slight additional cost when compared to other payment options, but says the company absorbs this cost rather than passing it on to its clients and describes it as an investment in providing a superior service.

“We work closely with the risk team at Kriya to constantly review our clients and protect both businesses from bad debt or slow payments,” says Whetton. “Communication is important and monitoring buying patterns to spot anything that isn’t aligned with buying history is vital.”

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