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BNPL sets its sights on corporate payments

Providers of business-to-business buy-now-pay-later services believe that they can provide a competitive alternative to invoice factoring. As rates rise, however, the risks embedded in the process will only grow.

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The customer payment experience that conventional buy-now, pay-later (BNPL) finance offers may have become commonplace in the consumer world, but B2B payment processes have yet to catch up. Many tasks continue to be performed manually and approvals are often slow to materialize.

A number of BNPL providers have, therefore, decided to eschew the consumer market and target the corporate world instead.

In this scenario, the B2B BNPL provider offers virtually instant net terms to suppliers’ customers. The company using the service receives the full amount of the invoice less the fee levied by the service provider, who takes on responsibility for collecting payment.

Andreas Lehmann is senior vice-president operations at B2B online workshop equipment marketplace Contorion, which started using B2B BNPL in 2018.

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Andreas Lehmann, Contorion

“We were encountering challenges when it came to credit limits and risk identification and prevention,” he recalls. “Our own credit limits were very low, and while we paid for all the individual checks and everything was done to the best of our knowledge, technology or even data science was never part of the process.