How does a business-to-business buy-now-pay-later (B2B BNPL) platform differ from a consumer-focused one like Klarna, Afterpay, or Affirm, often referred to as “pay-in-four”?
Today’s short post will answer that question, explain why purpose-built B2B payment solutions are ideal for software and hardware buying and selling, and explore how to choose the right B2B BNPL solution for your company.
Need a refresher on what BNPL is in the first place? Read here.
What is a “pay-in-four” payment method?
As a consumer, we’ve all had this experience: you go to check out from an online store, and suddenly you see the option to pay for your purchase in 4 installments. While this might be appealing when buying a pricier item for yourself, these B2C platforms that offer flexible or deferred payments for retailers aren’t ideal for the B2B SaaS setting.
More often than not, these B2C purchases are one-off, unlike an annual or multi-year software contract for your business. Additionally, the buying cycle, processes, decision-making, and buyer profiles for business purchases are very different from consumer buying. This requires different underwriting for buyer risk assessments and different regulations for business lending vs. consumer lending, just to name a few.
How is BNPL similar and different between B2C and B2B?
Similarities with the BNPL payment method between B2C and B2B include:
- Both offer a smooth, digital purchase experience
- In both, the buyer is reviewed for risk assessment
- The buyer enjoys payment convenience by splitting their purchase into installment payments and/or delaying the start of payments
- Sellers can open new market opportunities and attract a broader customer base
- The payment method in both spaces continues to gain traction as digital purchasing is the norm
- And, both are used to make buying easier and increase sales
The core differences with BNPL in B2B are:
- As mentioned earlier, the buying cycle, processes, decision making and buyer profile in B2B is very different from B2C
- Business purchases are annual or multi-year contracts vs. one-off
- Buyer doesn’t go through a hard credit check
- Buyer risk assessment review occurs largely behind-the-scenes and before its presented as a payment option
- Transaction sizes in B2B can range from $2,500 to 6-7 figures
- B2C needs to integrate with the e-commerce platforms, whereas B2B integrates with business systems like CRM, CPQ, and ERP
- There are different regulations between consumer and business lending
And not to mention, retail billing and collections is not optimized for handling B2B sales and collections. That is why businesses looking to offer a flexible payment option to their buyers, one where they still get paid the annual or multi-year contract upfront, should explore purpose-built B2B payment solutions. And best to focus on those that specialize in your industry like SaaS, cloud and hardware purchases.
What can a B2B BNPL platform do for you?
A buy-now-pay-later platform empowers vendors to offer flexible payment terms to their customers, allowing buyers to pay for annual or multi-year contracts in monthly or quarterly installments, without resorting to discounts, which can have a negative ripple effect. Speaking of discounting, we all know sales cycles in B2B SaaS have been increasing YoY and as a result, in most cases, discounting has become the automatic go-to solution to fix a stalled deal, or even to proactively close more deals (annual upfront discount on pricing pages, anyone??). When a B2B seller is met with price negotiations in a deal cycle, before jumping right into discounting, they should ask themselves: Would price be an issue if the buyer could spread that cost out? If the buying friction has more to do with needing flexible payment terms than proving the solution’s importance and value, BNPL can be used to avoid sticker shock, circumvent budget constraints, and provide a flexible payment option. A BNPL platform such as Capchase Pay:
- Assesses your customer for risk in advance
- Provides a seamless digital payment experience
- Manages billing & collections on your behalf
- Pays you the full contract value upfront, even multi-year deals
Choosing the right B2B BNPL platform for B2B SaaS
Choosing the right BNPL partner is a major decision. Here are some factors you may want to consider:
- Does the B2B BNPL platform integrate into your CRM? This is an essential element, because platforms without seamless integrations can add work to your teams’ plates.
- Does the platform have excellent customer service? Capchase Pay provides stellar customer service both to you and your customer as we work closely with them to manage billing & collections. We know that we represent your company when we’re collecting the installment payments, and we take our responsibility as ambassadors very seriously. We were just recognized in the G2 Review Platform as Best Relationship for BNPL solutions. Our service and the flexibility of the platform can even reduce churn.
- Does the BNPL platform pay upfront? If you don’t get paid upfront, you’re missing out on the opportunity to invest cash in key areas that could power growth. Capchase Pay delivers the full ACV or TCV upon purchase, allowing you to invest where you need to.
- Is the underwriting process trustworthy and quick? Customers don’t want to wait weeks, or even days, to get approved for flexible payment terms. The proprietary Capchase Pay underwriting process ensures that customers get approved quickly and accurately – often in under 1 minute – setting you, your customer, and Capchase up for mutual success.
