Acronyms. Love them or hate them, they’re a key part of our industry, and one in particular has been giving me pause: B2B BNPL. With all the attention around B2C credit, the B2B world is having its moment, modernising how B2B transactions are made, and making things simpler — and more lucrative — for all parties involved.
This is great news, particularly considering the sheer size of the B2B lending market — measured in the trillions — but B2B BNPL is puzzling. In a consumer context, BNPL (in its current incarnation) refers to a new form of short term instalment credit, available at point of sale, with the cost subsidised by the merchant. The term ‘BNPL’ is therefore positioned as a new financial product that provides an alternative to using a credit card (*or simply buying later).
In the B2B market, this doesn’t translate in the same way. Buyers largely don’t expect to pay upfront. Somewhere between 60–90% of B2B commerce already involves some form of credit. The simplest form of this credit is an inter-company IOU (i.e. the supplier giving their customer permission to ‘pay later’). Or there might be a lender in the mix in the form of invoice factoring or discounting. Buyers expect to ‘pay by invoice’ with the benefit of ‘net payment terms’ (i.e. pay 30, 60 or 90 days after purchase).
‘Buy now, pay later’ is not a new behaviour or financial product in this context but if you believe, as I do, that there is an inevitable digitisation of B2B transactions then there is also a whole new set of pain points created for B2B payments, financing and purchase workflows.
It was in this context that I met the team at Sprinque.