From Fundraises to Partnerships, BNPL for Business Is on the Move

A spate of funding rounds and partnerships herald a banner year for bringing buy now, pay later (BNPL) to B2B payments.

The global momentum is underscored by headlines seen over the past few days.

As PYMNTS reported last week, B2B BNPL startup Mondu has added $13 million to its Series A funding round and has raised $56 million to boost its expansion in Europe.

Separately, Actyv.ai, based in Singapore, which provides embedded B2B BNPL offerings, has raised $12 million as part of a Pre-Series A funding round.

Partnerships and Platforms

The announcement from Actyv.ai comes just several days after news that the firm and Ratnaafin have partnered to deliver embedded B2B BNPL to enterprises.

Hokodo and Lemonway announced Wednesday (Jan. 18) that they have partnered to enable B2B marketplaces in Europe offer trade credit online.

More traditional financial services players are in the mix, too, as they join forces with FinTechs to launch BNPL. Santander, Allianz Trade and eCommerce platform Two are bringing their own BNPL solution to larger enterprises.

There’s at least some precedent for a business spreading out payments for goods and services over time, and it’s embedded in the very nature of B2B payments themselves.

Negotiating terms — say, 30, 60 or 90 days — is about as old as business itself. But it’s inefficient at best and an egregious drag on creditors’ cash flow at worst.

PYMNTS’ research has shown U.S. firms alone are owed as much as $3.1 trillion in accounts receivable on any given day. In Europe, and specifically in the U.K., per data from the U.K.’s Federation of Small Businesses, nearly one in three (30%) businesses surveyed has seen an increase late payments on invoices in the last three months. Of the firms grappling with late payments, nearly 10% said late payments threaten their viability.

For the firms selling to enterprise clients — and embracing BNPL as a payment option — there’s the benefit of being paid at the time of the initial transaction. The BNPL provider pays and generally takes on the risk that is tied to late or unpaid invoices (in effect, underwriting the buyer). There’s positive impact to the supply chain itself, no matter the vertical, as goods are delivered on within the agreed-upon timeframe.

For the buyers — the ones choosing to pay in installments — payments are due to the BNPL provider/platform. The supplier gets the cash they need; the buyer gets predictability in the timing of cash outlays through deferred payments.

Better Cash Flow Dynamics

A closer matching of buyer/supplier cash flow dynamics would, in turn, help these businesses grow without tapping more traditional financing options, such as loans, to keep operations humming in order to cover the wait for receivables to be paid.

In a November interview with PYMNTS, Plastiq Chief Operating Officer Stoyan Kenderov and Obvi CEO and Co-founder Ronak Shah said B2B BNPL can help small- to medium-sized businesses (SMBs), particularly retailers, bootstrap more efficiently and eschew taking on personal credit card debt or traditional, and now, more expensive, financing.

Those traditional financing lines are also proving hard to come by in the current operating environment. As PYMNTS reported, citing data from Biz2Credit, small business loan approval percentages fell from 14.6% in November to 14.5% in December, the lowest levels for the year. The Federal Reserve Bank of Kansas City showed declines in SMB lending activity as new small business loan balances decreased 22.1% compared to the previous year.

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