BNPL and B2B Pharma

BNPL or Buy now pay later- this service is inextricably linked with modern buying experiences. Now, it is no longer limited to the private customer sector.  In 2022, you’d be hard pressed to find a B2C e-commerce site that’s not offering a deferred or instalment payment plan of some description.

In the past two years especially, the economic impact of the pandemic has helped to accelerate growth in this space because it has allowed consumers to delay or spread the payment for purchases that they would otherwise not have been able to afford. 

Now, the Buy Now, Pay Later wave is well and truly headed towards the world of B2B e-commerce – a world which is in dire need of a digital payments revolution. 

Millennials in the consumer marketplace are often at the helm of the B2B buying process in their workplaces. And they want options there, too. With the growing popularity of ecommerce and an increased demand for digital payments in the B2B marketplace, BNPL is a natural fit for customers looking for more credit options. The B2B eCommerce payment market — $4 trillion and growing — is ripe for transformation.

Arguably more important is that small business buyers need access to affordable credit and financing options. Financing has always been a challenge for small and medium-sized businesses (SMBs), and COVID has only exacerbated the problem. According to the Biz2Credit Small Business Lending Index, overall loan approval rates in December 2020 were down over 50% vs. December 2019. Big banks only granted 13.1% of SME business loan applications vs. over 28.2% in December 2019. Over the same period, small bank lending dropped even more dramatically, from over 50.6% of loan requests to just 18.2%. It’s hard to know if such precipitous declines will ever reverse themselves. 

But what is Buy now, Pay later?

“Buy now, pay later” (BNPL) is a new term for purchase on account – it means that something is purchased, and payment is received at a later date. There are many benefits for buyers of availing this facility. Some of them are:

  1. Higher Average order value : When payments are broken up over three to four months, buyers can afford to be freer and more far-reaching with their purchasing decisions. Affirm, a US-based BNPL provider, reports that merchants who provide this type of short-term financing can expect to see increases in average purchase size ranging from 31% to 84% depending on the industry.
  2. Affordable financing option in B2B market : Obtaining desirable B2B financing for small and mid-market businesses can be challenging. A short-term credit solution that’s built into the purchasing process is a welcome option for companies that could use some breathing room in the cash flow department.
  3. An easier way to pay online: With entire workforces marooned at home, B2B businesses have had to adapt their payment processes over the last year and a half. Just like consumers, B2B buyers are more receptive than ever to doing business online. Adding a buy now, pay later option to your B2B ecommerce channel may have the same explosive effect on sales as tossing a match into a pool of gasoline.

Now let us talk about the B2B pharma market. The main issues in pharma sector include the complex supply chain ,but if we go deeper payments /collection issues are also one of the major factors in pharma industry.

So BNPL can be one of the solution for this payment /credit problem in B2B pharma sector.

Suppose you are a retailer having a problem of paying your distributors on time and then think about that BNPL solution got introduced to you where your vendor will get the payment at instant and you avail the credit facility with a flexibility to pay that amount in 2 or 3 months. Won’t you be happy and be able to focus on the business now.

The other benefits of availing BNPL facility in B2B pharma are:

  1. The Average order value will be now high .
  2. When using B2B e commerce portal, financing facility is made easy.

Now what are benefit to merchants for availing this facility to their buyers.

  1. More predictable and faster cash flows: The nature of BNPL solutions means merchants get paid in full, up front. No more waiting 30 or 60 days per antiquated payment terms. Like credit card providers, BNPL solution providers ensure merchants are usually paid for transactions within 24 to 48 hours with zero chargeback facility.

Those near-instant payments mean there’s more cash flowing to your business’ bank account. This makes resource allocation, purchasing, and business planning easier and smarter. With more predictable, reliable payments, your business can operate more efficiently by:

  • Paying expenses in a timely way
  • Purchasing inventory
  • Paying down debts
  • Reinvesting in the business
  • Forecasting for the future

2. Enhanced Business Growth: Increased sales from buyers eager to hold onto their cash longer with a BNPL option has the potential to boost your bottom line. You may even find new customers in small and mid-market businesses that are hungry for financing options. When you factor in the higher conversion rates associated with offering buy now, pay later—20% to 25% higher according to Affirm—these boosts in sales could be significant.

And with faster cash flow from BNPL providers paying you upfront, you’ll have more freedom to take on initiatives that drive business growth. Since BNPL payments are digital, you’ll also save time and resources that you might otherwise spend processing checks.

3. Increased Customer loyalty: When it comes to attracting and retaining B2B customers, every interaction counts. Giving clients the flexibility of holding onto their cash longer could be an important factor for customer loyalty.

So, BNPL and B2B pharma credit facility can go hand in hand and this can organize the Pharma sector very well apart from increasing the sales and order value. By automating the offering of in-purchase financing, B2B merchants have the opportunity to significantly enhance customer loyalty, increase average order value, reduce risk, streamline revenue recognition, improve cash flow, and create important operational efficiencies on the backend. Maybe most importantly, it frees B2B merchants up to focus on growing their business instead of managing payments and financing.

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