Complete Guide to B2B BNPL: How It Works & Why It Matters
What is B2B BNPL?
Business-to-business buy-now-pay-later (B2B BNPL) refers to payment platforms that allow B2B vendors to offer flexible payment terms to their customers. In this short post, we’ll break down the details of what a B2B BNPL platform does, and how choosing the right platform can help your B2B SaaS company grow.
Why should you use a BNPL platform?
Address budget constraints
BNPL options empowers customers who may have budget issues to sign on for an annual contract without worrying about paying the full contract value upfront.
Meet customer needs
Flexible payment terms can also benefit customers who may not have budget issues but wish to remain liquid for other reasons.
Stop relying on discounts
The average SaaS discount is 17%, and coupled with elongated sales cycles, that’s a lot of money left on the table. With customer acquisition costs (CAC) higher than ever, it’s essential to save money where possible, and eliminating or reducing discounts is a great place to start. With flexible payment options, customers may be more likely to close without asking for discounts.
Close faster and higher
Here at Capchase, we like to think of our BNPL platform, Capchase Pay, as the ultimate way to sweeten the deal. If your customer is stalling due to budget issues, too many cooks in the kitchen, concerns about value, or lack of urgency, offering flexible payment terms can be the final push you need to seal the deal.
Get paid upfront
Capchase Pay gives you full annual contract value (ACV) upfront on Day 1, allowing you to invest cash into growth, product development, and marketing.
Get some time back
Crucially, Capchase vets your customers through a proprietary underwriting process, then manages billing and collections on your behalf, freeing up your Finance team to focus on more important tasks, and allowing your Sales teams to close more deals per quarter.
Choosing the right BNPL partner for B2B SaaS
The ideal BNPL platform will showcase the following characteristics:
- A robust and rapid underwriting process
- Seamless CRM integration
- A digital checkout page with flexible payment options
- Billing & collections management
Ready to explore it further? Let’s talk
Key Differences Between B2B and B2C BNPL Explained
Let's dig into how a business-to-business buy-now-pay-later (B2B BNPL) platform differs from a consumer-focused one like Klarna, Afterpay, or Affirm, often referred to as “pay-in-four”.
What is a “pay-in-four” 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.
Ready to explore it further? Let’s talk
The difference between B2B BNPL and payment gateways
Now, let's explore the differences and similarities between a B2B BNPL checkout and a payment gateway, and why a B2B BNPL platform can be a great choice for B2B SaaS companies looking to power growth and close more deals.
Both BNPL and payment gateways play a role in facilitating transactions between sellers and buyers.
What is a payment gateway?
A payment gateway (think Stripe, Plaid, or GoCardless) is a type of platform that powers a digital payment experience. These platforms are heavily-secured and provide a smooth checkout to customers. They act as like an intermediary between the merchant’s website and the financial institutions involved, transmitting the transaction information back and forth.
Payment gateways support various payment methods, including credit and debit cards, digital wallets and buy-now-pay-later (BNPL). In fact, Stripe selected Capchase Pay to be its first BNPL payment method in their United States market, making it possible for businesses who use Stripe, to offer Capchase Pay as a monthly payment option to their customers while they get paid the annual contract value upfront.
Remind me what BNPL is again?
BNPL is a financing option that allows buyers to purchase goods or services immediately and pay for them later with delayed terms or through installments. In B2B SaaS, typically these installments are spread into monthly or quarterly payments across the duration of their contract. But, in business purchases, contract structures can become complex and BNPL solutions need to be able to handle that payment schedule configuration.
What are some of the key differences?
- While both payment gateways and BNPL solutions offer digital checkout, or payment experiences, payment gateways do not offer credit, rather they only facilitate the immediate transfer of funds from the customer to the merchant.
Understanding this difference is crucial for businesses aiming to optimize their cash flow (and decrease the weight and burden of what’s outstanding) and at the same time, enhance their customers’ payment experience by offering flexibility.
- Another difference is that payment gateways rely on banks to handle credit risk and fraud prevention, while BNPL providers assume the credit risk associated with financing the contract. BNPL providers assess the risk of the buyer in advance to offering the payment method and manage the collection of the installment or delayed payments.
- A third difference is that payment gateways contribute to customer satisfaction by enabling the merchant to offer a seamless and secure digital payment experience, but they do not directly influence the purchasing decisions. Whereas BNPL solutions can significantly impact buyer behavior by lowering the barrier to purchase, and in many cases increasing the contract value and close rate for the business.
How the B2B BNPL flow goes
Qualifying buyers for flexible payments
In the B2B space, BNPL solutions should qualify buyers ahead of a Vendor offering the payment method to avoid any confusion or negative experience for the buyer.
For example, Capchase Pay deploys a risk assessment that occurs behind-the-scenes without even asking the buyer themselves for any data. This review is evaluating the legitimacy and good-standing of the business using public information combined with our proprietary underwriting process. Crucially, this review and approval process is incredibly quick, allowing businesses to incorporate it into their sales process seamlessly.
Creating the payment link with different term options
Capchase Pay seamlessly integrates with a business’ current processes and systems such as their CRM and CPQ to ensure an easy process for the sales team to create flexible term options aligned to their quote or offer, and at the same time giving the finance team streamlined control over what those options are.
These flexible payment options can be shared with a buyer via a payment link sent via text, email, or in the contract itself. It can also be incorporated into your digital checkout experience if your buyers can purchase directly from your website without having a sales representative create them a quote.
Either way, buyers can sign their contract and easily choose their payment frequency, timing, and preferred payment method all in one fell swoop.
Taking billing and collection burdens off your plate
After your customer is approved and your deal is closed, Capchase manages the collections on your behalf. No more billing pains or chasing payments for your finance team. Capchase provides stand-out customer service and communication throughout the payment experience and even offers a robust Pay Portal for your buyers to manage their installment payments in real-time.
And no matter what payment options your customer selects, you get paid upfront
Cash is king and time is money. Consider leveraging a B2B BNPL, flexible payment solution to be more strategic with your cash flow and put it to use as quickly as possible instead of it being tied up in collections for later.
Why Capchase?
Capchase Pay was built specifically for B2B SaaS companies, and it integrates smoothly into your existing workflows. With no obligations, Capchase Pay is fast, simple, and global, and allows you to meet customers where they’re at and boost revenue.
Capchase Pay has helped hundreds of SaaS companies close faster and higher, secure major contracts in record time, unblock stuck deals, and improve revenue management.
Getting started with Capchase
Beginning your Capchase journey is simple. You can try it out, no strings attached, and be up and running in 24 hours. Let’s talk!
