BNPL for B2B: Internal or External Solutions? Find the Ideal Option for Your Business

“Buy Now, Pay Later”: A Necessary Revolution in B2B

Offering credit facilities to buyers is not a new concept. Since the 1990s, particularly in the B2C sector, this practice has taken on a new dimension with the rise of digitalization. B2B companies are now exploring the potential of digital payment solutions like "Buy Now, Pay Later" (BNPL), which have transformed the B2C landscape with major players such as PayPal and Klarna. However, in the B2B world, the adoption of these solutions remains in its infancy, leaving a considerable opportunity to be seized.

Although the B2B market holds immense potential, many distributors and vendors still struggle to meet the growing expectations of professional buyers. Whether for online or in-store purchases, these buyers demand payment solutions that are simple and tailored to their specific needs.

With younger generations entering the workforce, B2B purchasing behaviors are evolving rapidly. Professional buyers are now seeking experiences as seamless as those in their personal lives. Their expectations? Flexible payment options, automated approval processes, real-time validation, and impeccable after-sales service.

BNPL perfectly addresses these expectations, with one widely favored method: invoice payments. According to the B2B E-commerce Report, 95% of professional buyers prefer this solution.

In the current macroeconomic context, cash flow management is a central concern for businesses. BNPL solutions offer significant benefits to both parties: 

• For buyers: they help preserve cash flow by deferring payments.
• For distributors/vendors: they ensure immediate payment while attracting new customers seeking flexibility.

Despite these advantages, the adoption of BNPL in B2B remains far lower than in B2C. Yet, this solution is a key lever for staying competitive and driving growth. 

Faced with increasingly demanding buyers, B2B companies must modernize their payment solutions. Integrating BNPL is part of this approach. However, they are confronted with a major strategic decision: 

• Develop an internal BNPL solution
• Work with a specialized provider

Each option has its benefits and challenges, but the choice will depend on the company's specific needs, resources, and strategic priorities. 

Internal BNPL Management: Uncovering Hidden Costs and Complexity 

Adopting an internal Buy Now, Pay Later (BNPL) solution may seem appealing to some B2B companies. However, this approach often comes with significant challenges and unforeseen costs. Before taking the plunge, distributors and vendors must carefully assess the following constraints, which can make internal management both complex and costly.  

1.Identification and Scoring: A More Challenging Task in B2B

Credit assessment in B2B differs significantly from B2C, with specific hurdles: 

• Multiple Decision-Makers: In B2B, multiple stakeholders—such as purchasing managers, CFOs, and executives—are involved in decision-making. This requires a thorough evaluation of the organization’s financial health, rather than an individual’s.
• Varied Credit Profiles: Businesses have complex financial situations influenced by their industry, size, legal status, and economic performance, making evaluation more difficult.
• Extended Payment Terms: B2B transactions often involve large sums and extended payment terms, further complicating cash flow and risk management.
• Limited Data Availability: Access to necessary information, such as financial statements or credit scores, is often restricted, complicating the assessment of buyers’ reliability. 

2. Identity Fraud and Credit-Related Losses: Major Risks for Internal BNPL

The complex evaluation of B2B clients increases the risk of financial losses due to: 

• Identity Fraud: Up to 80% of BNPL losses in B2B stem from identity fraud, exacerbated by limited access to reliable databases.
• exacerbated by limited access to reliable databases. Risks with New Clients: The lack of a purchase or credit history makes it difficult to assess and secure new clients. 
• High Transaction Amounts: Since B2B orders are often larger than B2C orders, the financial impact of fraud and bad debts is amplified.

To mitigate these risks, companies may need to take out additional credit insurance, further raising operational costs.

3. The High Cost of Financing Loans 

Offering extended payment terms requires abundant cash flow. The challenges include: 

• Unstable Cash Flow: Distributors must mobilize significant liquidity, which can become problematic without access to external funding or refinancing solutions.
• Rising Capital Costs: With increasing interest rates, financing loans becomes more expensive, putting additional financial strain on companies.

Businesses lacking sufficient reserves risk compromising their financial stability, turning BNPL management into a substantial burden.

4. Personnel and Manual Procedures: A Heavy and Costly Management

Managing BNPL internally requires a dedicated team for complex tasks: 

• Credit checks.
• Payment tracking and default management.
• Debt collection and administrative follow-ups.

These often manual processes lead to: 

• High Labor Costs: Specialized employees, legal services, and collection procedures drive up payroll expenses.
• Additional Fees: Legal fees, court costs, and credit insurance premiums add to the invoice.
• Risk of Errors: Manual tasks increase the likelihood of human error, heightening the risks of unpaid debts and fraud.

Why an Internal BNPL Solution May Be Less Effective Than It Seems 

Managing a Buy Now, Pay Later (BNPL) solution internally may seem appealing at first. However, this approach comes with significant limitations. Beyond the costs and efforts required for implementation, an internal BNPL solution can quickly hinder the ambitions of distributors and vendors. Here are the main constraints to consider:

Lack of Flexibility and Payment Terms Customization

B2B buyers often have specific payment needs dictated by their business relationships and cash flow requirements. They seek flexible options, with terms ranging from 30 to 180 days, whether purchasing online or offline. 

However, internal BNPL programs often rely on standardized models, limited to rigid repayment periods (30 or 60 days). This lack of flexibility does not meet the needs of businesses, which require tailored conditions to optimize their cash flow. Although functional initially, an internal solution often proves inadequate in addressing the diverse needs of professional buyers. 

Limited Accessibility and Low Acceptance Rates

To maximize conversions, BNPL solutions should aim for an acceptance rate above 80%. However, in B2B, validating credit requests can be complex due to: 

• The diversity of buyer profiles (sole proprietors, SMEs, large companies, public institutions).
• The variability in order amounts, often ranging from €10,000 to over €100,000.

An internal solution requires multiple partnerships with third parties to offer suitable credit limits. Despite these efforts, achieving a high acceptance rate remains difficult, particularly with the need to regularly renew eligibility checks (e.g., every 60 days).

Slow Decisions and Lack of Real-Time Approval

In B2B, the speed and smoothness of payments are crucial to providing an optimal customer experience. However, internal BNPL solutions often rely on manual, time-consuming processes, involving:

• A prior financing option request.
• Submission of detailed supporting documents.
• Prolonged interaction between buyers and sellers.

This lack of responsiveness burdens the purchasing experience and negatively impacts customer satisfaction. Moreover, these slow approvals limit the distributor's ability to handle rapid growth, making internal systems difficult to scale.

Scalability and Technical Complexity

Sales growth and customer base expansion require a robust and scalable technical infrastructure. An internal BNPL solution must:

• Handle a large volume of simultaneous orders.
• Process complex data for real-time credit checks .
• Adapt to ever-changing local regulations.

These requirements represent a significant investment in human and technical resources, making internal management less viable in the long term. Continuous adjustments to meet market needs can quickly become an unsustainable burden for businesses.

Buy or Build: When Is an Internal Solution the Right Choice?

Choosing to develop an internal BNPL (Buy Now, Pay Later) solution may seem like an attractive option for distributors and vendors. However, this choice is rarely the best solution, except in very specific circumstances. Here are the situations where internal management can be considered, as well as the benefits provided by a specialized service provider for businesses seeking a scalable solution. Distributors/vendors may consider developing an internal BNPL solution if: 

• A limited number of customers: They work with fewer than a few hundred clients, mainly repeat buyers. 
• Uniform payment terms: All clients share identical payment conditions, with little variation.
• Small monthly transactions: Orders are typically under five figures per month. 
• A reliable customer base: Buyers have a solid and sustainable credit rating, and distributors/vendors have credit insurance to cover potential losses.

Outside of these situations, managing a BNPL program internally quickly becomes complex, costly, and poorly suited to the growth of a business, especially for those looking to expand their customer base. In such cases, collaborating with a specialized BNPL service provider for B2B is the ideal solution. 

The Benefits of a Specialized BNPL Provider for B2B Distributors/Vendors

Partnering with a BNPL (Buy Now, Pay Later) expert offers more than just a turnkey solution: it's a lever to optimize sales, enrich the customer experience, and strengthen the financial health of businesses. Here are the main benefits a specialized provider can bring:

Boost the Average Order Value (AOV) with Tailored Solutions

BNPL providers design customized offers tailored to the specifics of B2B, including:

• Flexible payment terms: Adjustable periods from 30 to 180 days to accommodate the long cycles typical of B2B transactions.
• High credit limits: Ability to finance large orders, reaching several hundred thousand euros.

By making purchasing more accessible and aligning solutions with the specific needs of professional buyers, these services encourage larger and more frequent orders, thereby increasing the average value of transactions.

Increase Revenue Through an Optimized Payment Experience

A BNPL provider facilitates transactions for both new and existing customers:

• Real-time identity verification and approval: Advanced tools allow for instant, accurate credit decisions.
• High approval rates: A wide range of customers, regardless of their legal form or size, can be quickly approved.

This smooth process significantly improves conversion rates during payment, while attracting new customers. The result: increased revenue and shorter repurchase cycles.

Enhance Customer Satisfaction with an Omnichannel Experience 

Specialized providers offer solutions adapted to all touchpoints:

• Real-time identity verification and approval: BNPL available online, by phone, or in-store. 
• Flexible post-purchase services: Dedicated portals allow buyers to modify payment conditions or adjust deadlines after the transaction.

These features streamline the purchasing experience and give customers more control, enhancing their satisfaction and loyalty. In B2B, a quality customer experience fosters long-term relationships and recurring orders.

Reduce Costs and Increase Operational Efficiency 

Outsourced BNPL solutions simplify management and reduce costs for distributors/vendors:

• Outsourced risk management: The provider takes on risks related to defaults, fraud, and disputes.
• Optimized cash flow: Flexible refinancing options allow payment terms to be aligned with the business’s specific needs.
• All-in-one model: A combination of guarantee funds, credit insurance, collections, and refinancing to simplify operations and reduce costs.

By outsourcing these functions, distributors/vendors improve their efficiency and focus on their core business while benefiting from optimized financial management.

Conclusion: Why Choosing a Specialized BNPL Provider is the Best Option for B2B

In the face of increasing expectations from professional buyers, who seek a payment experience as seamless as in B2C, distributors and vendors must adopt effective BNPL solutions. However, managing such a solution in-house often leads to costly and inefficient challenges, both financially and operationally.

Implementing and managing an in-house BNPL program requires significant investments in time and resources. While an in-house solution can meet specific small-scale needs, it quickly encounters major obstacles:

• Operational complexity: Managing risks, scoring, and buyer identification becomes increasingly demanding as the customer base grows.
• Reduced acceptance rates: Limited and less sophisticated processes directly impact conversions, thus hindering revenue growth.
• Restricted refinancing options: A rigid offering fails to provide flexible payment terms to meet the varied needs of professional buyers.

These limitations make an in-house solution quickly outdated as the business expands and market demands increase.

Collaborating with a BNPL expert for B2B is an optimal strategy to overcome these challenges and capitalize on market opportunities. This approach offers several advantages: :

• Improvement of key metrics: Higher acceptance and conversion rates, thanks to advanced tools and specialized expertise.
• Reduction of operational costs: Outsourcing risk management, collections, and refinancing significantly lightens the company’s burdens.
• Optimized purchasing experience: A smooth solution, tailored to the buyers’ expectations, enhances their satisfaction and loyalty, while encouraging BNPL adoption.