Buy now, pay later loans can increase cash flow for wholesalers and retailers in 2025 and beyond.
When we think of business-to-business sales, we think of large transactions involving millions of dollars, but many wholesale brands sell to small retailers, where transactions are in the millions rather than millions. It will be in thousands.
“We run several different hosiery brands on Cin7,” Ajoy Krishnamoorthy, CEO of Cin7, which develops cloud-based inventory management software, said in an email exchange. “We sell to kiosks and small stores.”
“These retailers place orders worth $1,000 or $10,000 and are often seasonal, making them ideal for BNPL,” Krishnamoorthy said.
cash flow
In particular, B2B BNPL can represent a cash flow opportunity for both suppliers and retailers.
For wholesalers, BNPL accelerates cash inflows and reduces credit risk. For retailers, it aligns inventory costs and revenues, provides financial headroom, and fosters growth. A win-win, BNPL powerful tools In modern B2B commerce.
wholesaler
Cash flow is essential for manufacturers, brands, and distributors.
The problem is that many people often wait to get paid. Traditional trade credit agreements have a duration of 30, 60, or 90 days. B2B BNPL addresses this issue by making payments within days.
Imagine how much more a manufacturer could produce if its $10,000 bill was paid tomorrow instead of 60 days from now. Businesses may rapidly reinvest, bring on new marketers, or expand their product lines.
BNPL reduces credit risk. Wholesalers who extend trade credit to retailers may experience late payments or default.
However, the benefits of BNPL come with costs. Financing fees are typically 3% or more. The seller can pay the commission or pass it on to the buyer. Either way, it costs money and customer relationships.
retailer
Cash flow is also important for retailers with low profit margins. BNPL loans typically have higher interest rates than credit cards and are relatively easier to access than advances from banks and finance companies.
| loan function | BNPL loan | credit card | capital loan |
|---|---|---|---|
| Approval speed | immediate or quick | Moderately | slow |
| interest rate | Often 0% in the short term | 15%-25% | 4%-10% |
| flexibility | Expensive, specialized in purchasing | High performance, general purpose | small amount long term use |
| default risk | low | Moderately | expensive |
BNPL loans also offer flexibility. Imagine a small sock vendor like the one Krishnamoorthy described. A seller decides to increase online revenue by installing a kiosk at a local mall, but doesn’t know how to predict inventory needs.
and BNPL loansellers can buy a 5-month supply of socks for their kiosks, for example, for their e-commerce shops. If the new mall location works out and the socks sell out, it’s easy to pay off the loan early. Otherwise, sellers can make monthly payments and sell their inventory online.
Interest rates will almost certainly be lower than on revolving credit cards.
This example does not have to be a physical location. BNPL’s flexible payment terms and fast application process can facilitate new opportunities online.
The risks are also relatively low. Missing a payment on a BNPL loan can result in penalties, but you can usually avoid high compound interest on credit cards.
Finally, sellers earn money as their products sell. BNPL loans improve your cash flow.
Like any other form of credit, BNPL can be misused or misused.
BNPL for B2B
Due to its potential benefits, BNPL for B2B is likely to accelerate in 2025. From what I see, it’s expected to grow by 27% this year, which roughly mirrors the 25% growth forecast for B2C.
