Inside B2B BNPL: 126 Essential Terms in B2B E-Commerce

Published Monday, 27th November 2023

B2B BNPL has quickly evolved into a fully-fledged payment solution for businesses, providing a far superior checkout experience for buyers and solving some the toughest financial and risk-based challenges of selling on net terms. But like B2B payments, B2B BNPL can be complex. Understanding the nuances of this technology can be difficult yet vital if, like a growing number of businesses, you plan on offering this to your customers.

Below, you'll find one of the most comprehensive glossaries currently available online to date, providing you with 126 straightforward and concise definitions for common terms in B2B BNPL. This resource is updated regularly.

A B C D E F G H I K L M N O P Q R S T U V W

A

ACH (Automated Clearing House): A secure and electronic funds transfer system in the United States that facilitates various financial transactions, including direct deposits, payroll payments, and bill payments.

Accounts Payable: The total amount of money a business owes to its suppliers or vendors for goods and services received but not yet paid for, representing a liability on the company's balance sheet.

Accounts Receivable: The total outstanding payments that a business is yet to receive from its customers for goods or services provided on credit, representing an asset on the company's balance sheet.

Acceptance Rate: In the context of Buy Now Pay Later (BNPL) or financing, the percentage of customers or transactions that are approved for credit or payment terms by the provider.

API (Application Programming Interface): A set of protocols and tools that allows different software applications to communicate with each other, enabling the integration of diverse systems and functionalities.

Average Order Value (AOV): A key e-commerce metric calculated by dividing the total revenue by the number of orders, providing insights into the average monetary value of transactions.

Approved Orders: Orders that have successfully met the criteria for credit approval, allowing customers to proceed with the purchase and payment.

Automated Invoicing: The process of generating and sending invoices automatically using software or tools, streamlining the billing and payment collection workflow.

B

Buy Now Pay Later (BNPL): A payment method that allows customers to make purchases and defer payment to a later date, often with interest-free instalment options.

B2B Buy Now Pay Later: A specific variant of BNPL tailored for business-to-business transactions, providing businesses with flexible payment terms for their purchases.

B2B Payments: Financial transactions between businesses, encompassing various methods such as electronic funds transfer, credit, and other mechanisms used to settle invoices and conduct business transactions.

B2B Transaction: A commercial interaction or exchange between two businesses involving the buying or selling of goods and services.

Buyer Identification: The process of verifying and authenticating the identity of a customer or business entity making a purchase, often crucial for security and fraud prevention.

B-Commerce (Business Commerce): Electronic commerce specifically focused on business-to-business (B2B) transactions, where businesses engage in online buying and selling activities.

Basket: In e-commerce, the virtual container where shoppers add items before proceeding to checkout, equivalent to a physical shopping cart in a retail store.

B2B Traffic: The web visitors, often businesses or professionals, who access a website or online platform for the purpose of exploring or engaging in business-related activities.

Business Buyer: An individual or entity that purchases goods or services on behalf of a business, often with specific business-related needs and considerations.

Batch Processing: A method of processing transactions or data in groups or batches, as opposed to real-time processing, commonly used in various business applications and data processing systems.

C

Cart Abandonment: The phenomenon where a potential customer adds items to their online shopping cart but leaves the website before completing the purchase, resulting in an incomplete transaction.

Cash Flow: The movement of funds in and out of a business, representing the net amount of cash generated or consumed over a specific period, crucial for financial health and liquidity.

Chargeback: A disputed transaction initiated by a customer with their bank or credit card issuer, leading to the reversal of funds from the merchant's account, often due to fraud or dissatisfaction.

Clawback: The retrieval of previously paid funds, typically occurring in scenarios like commission repayments or incentive-based reimbursements.

Collections: The process of pursuing and recovering overdue payments from customers who have not fulfilled their financial obligations.

Conversion Rate: The percentage of website visitors who take a desired action, such as making a purchase, subscribing, or filling out a form, reflecting the effectiveness of a marketing or sales campaign.

Credit Insurance: A financial product that protects businesses against the risk of non-payment by their customers, providing coverage for outstanding receivables.

Credit Limit: The maximum amount of credit extended to a customer by a lender or financial institution, specifying the upper boundary of permissible borrowing.

Creditor: An entity or individual to whom money is owed, often in the form of a loan or a purchase on credit.

Creditworthiness: The assessment of an individual or business's credit risk, indicating the likelihood of meeting financial obligations based on factors such as credit history, income, and debt.

Cross-Border Payments: Financial transactions that involve the transfer of funds between parties in different countries, requiring consideration of currency exchange rates and international regulations.

Credit Check: The examination of an individual or business's credit history and financial behavior to assess their creditworthiness, often performed by lenders or financial institutions.

Customer Onboarding: The process of introducing and integrating a new customer into a business, ensuring a smooth transition and understanding of products or services.

Credit Terms: The mutually agreed-upon conditions, including payment deadlines and credit limits, between a seller and a buyer for the purchase of goods or services on credit.

Conversion Rate: The percentage of website visitors who take a desired action, such as making a purchase, subscribing, or filling out a form, reflecting the effectiveness of a marketing or sales campaign.

Credit Risk: The potential financial loss or default associated with lending money or providing credit to an individual or business, often assessed through credit analysis.

Checkout: The final stage of an online purchase where customers complete their transaction by providing payment and shipping information.

Credit Line Agreement: A contractual agreement outlining the terms and conditions of a credit line extended by a lender to a borrower, specifying the maximum amount that can be borrowed.

Cash and Carry: A business model where customers pay for goods in cash at the time of purchase and carry them away, commonly associated with wholesale or retail transactions.

Cancelled Order: A purchase request that has been terminated before completion, often due to customer decision, inventory issues, or other reasons.

Card-Linked BNPL (Buy Now Pay Later): A payment method that allows customers to link a Buy Now Pay Later service directly to their credit or debit card, enabling deferred payment options for online purchases.

D

Days Sales Outstanding (DSO): A financial metric that calculates the average number of days it takes for a business to collect payment after a sale, indicating the efficiency of its accounts receivable management.

Debtor: An individual or entity that owes money to another party, typically as a result of credit extended for goods or services provided.

Deferred Payment: An arrangement allowing a buyer to postpone full payment for a purchase until a specified future date, often used to enhance purchasing flexibility.

Dispute: A disagreement or conflict between a buyer and a seller regarding a transaction, which may lead to mediation, resolution, or, in some cases, a chargeback.

Dunning: The process of communicating with customers who have overdue payments, usually involving reminders, notifications, or requests for payment to ensure timely settlement.

Debt Factoring: A financial arrangement where a business sells its accounts receivable (invoices) to a third party (factor) at a discount, providing immediate cash flow in exchange for relinquishing the right to collect on the receivables.

Direct Invoice Order: A purchase order that is generated directly by a buyer, specifying the details of the products or services they wish to acquire and the terms of the transaction.

Digital Wallet: A secure electronic system that allows users to store and manage payment information, facilitating online transactions and reducing the need to provide payment details for each purchase.

E

Electronic Fund Transfer (EFT): A digital transaction of funds between bank accounts, typically conducted through computer systems or electronic channels, enabling secure and efficient money transfers.

Electronic Money Institute: An authorised entity that issues electronic money, providing digital alternatives to traditional currency for electronic transactions.

Embedded Finance: The integration of financial services seamlessly into non-financial platforms or applications, allowing users to access financial products and services within the context of their everyday activities.

Embedded Lending: The practice of offering loan services directly within the user interface of a non-banking platform, allowing users to access credit as part of their transactional experience.

Embedded Payments: The incorporation of payment functionality directly into various digital platforms, applications, or devices, streamlining the payment process for users.

Enterprise Resource Planning (ERP) Software: Integrated software solutions that support various business processes, including accounting, human resources, and inventory management, providing a unified platform for comprehensive business management.

E-Commerce: Electronic Commerce, the buying and selling of goods and services over the internet or through online platforms, facilitating online transactions between businesses and consumers.

E-Invoicing: The electronic generation, delivery, and processing of invoices between businesses, improving efficiency and reducing the reliance on paper-based invoicing systems.

F

Financing: The provision of funds or capital to support business activities, investments, or transactions, often involving loans, credit, or other financial instruments.

Fraud Risk: The potential exposure to fraudulent activities or deceptive practices that could result in financial losses or harm to a business.

Frictionless Checkout: A seamless and effortless process for completing a purchase, designed to minimize obstacles and enhance the user experience, often leading to higher conversion rates.

Fulfilment: The complete process of receiving, processing, and delivering customer orders, encompassing inventory management, order packing, and shipping.

Field-sales: Sales activities conducted in the field, outside of a physical storefront, often involving sales representatives visiting clients or potential customers in person.

Flexible Payment Terms: Customisable and adaptable conditions for making payments, allowing businesses to offer varied payment schedules or options to their customers.

Fintech: Short for Financial Technology, it refers to innovative technologies and solutions that enhance and automate financial services, disrupting traditional banking and financial systems.

G

Gross Merchandise Value (GMV): The total value of all goods or services sold on a platform within a specific timeframe, excluding discounts or returns.

Guest Checkout: An option in e-commerce that allows customers to make a purchase without creating a user account, providing a quick and simplified checkout process.

Grouped Invoice: A consolidated invoice that combines multiple transactions or purchases into a single billing document, often used for streamlining accounting and payment processes.

H

Headless Commerce: Headless commerce refers to a modular e-commerce architecture where the front-end (customer experience layer) and back-end (commerce functionality layer) are decoupled. This separation allows for flexibility and agility in delivering content and services across various digital touchpoints, enabling businesses to adapt quickly to changing customer needs and technological advancements.

I

ID theft: Identity theft (ID theft) involves the fraudulent use of an individual's personal information, posing risks in B2B by underscoring the need for robust identity verification to safeguard sensitive business data.

Insolvency: Insolvency signifies an inability to meet financial obligations, crucial in B2B for assessing partner stability and minimizing the risk of non-payment.

International Bank Account Number (IBAN): IBAN is a standardized format for identifying international bank accounts, streamlining cross-border B2B payments and reducing errors.

Invoice: In B2B, an invoice is a formal payment request detailing products, services, and transaction terms, maintaining transparency and tracking financial transactions.

Invoice factoring: Invoice factoring involves selling accounts receivable at a discount for immediate cash flow, aiding B2B businesses in managing working capital.

Instant credit decision: This refers to automated, real-time assessments of a buyer's creditworthiness, crucial in B2B for offering flexible payment terms while minimizing payment risks.

In-store purchases: In B2B, this term involves direct procurement or point-of-sale transactions at physical locations, emphasizing the need for diverse payment solutions.

Integration: Integration is vital in B2B payments, seamlessly combining software systems to enhance efficiency, connect platforms with business processes, and offer a cohesive experience.

Instalments: Instalments are partial payments spread over time, beneficial in B2B for offering payment flexibility, attracting buyers, and supporting cash flow management.

K

Know Your Customer (KYC): KYC is a regulatory process ensuring businesses verify and understand their customers' identities, a crucial practice in B2B to mitigate fraud, adhere to compliance standards, and establish a foundation of trust between parties.

L

Legal Representative: In B2B transactions, a legal representative is an individual or entity authorised to act on behalf of a business, making decisions and entering contractual agreements. This representative legally binds the company, and their authority is often defined by legal documents or power of attorney.

Lender: A lender in B2B refers to an entity providing financial resources or capital to businesses in the form of loans or credit. Businesses often engage with lenders to secure funds for various purposes, such as expansion, operations, or managing cash flow, with agreed-upon terms for repayment.

M

Marketplace: A platform facilitating B2B transactions among multiple buyers and sellers, fostering a broader business ecosystem and optimizing transaction processes.

Merchant: A business entity specializing in the sale of goods or services, with your company focused on providing B2B payment solutions tailored to enhance merchants' financial operations.

Merchant of Record (MoR): An entity crucial in managing and processing B2B transactions on behalf of the seller, ensuring compliance, risk management, and a seamless experience for buyers and sellers.

Merchant Portal: An online interface enabling merchants to access and manage B2B transactions, enhancing transparency, efficiency, and control over payment processes.

Multi-currency Transactions: Involving B2B payments in more than one currency, this feature accommodates the diverse international nature of B2B commerce, facilitating cross-border trade for businesses.

N

Non-payment: Refers to the failure of a buyer to fulfill the financial obligation for received goods or services, presenting a risk that your B2B payment solutions aim to mitigate, ensuring smoother transactions and reduced instances of non-payment.

Net Payments: The amount a seller receives after deducting any applicable fees, taxes, or discounts from the total transaction value, illustrating the net financial impact for the seller in the B2B payment process.

O

Offer Rate: The interest or pricing terms presented to a potential buyer, a critical factor in B2B financing and BNPL solutions, influencing the attractiveness of your offerings to businesses seeking favorable terms.

Omnichannel Sales: A comprehensive approach to sales that integrates various channels, both online and offline, providing a seamless customer experience, and in the B2B payments context, ensuring flexibility and accessibility across diverse platforms.

Order to Cash Cycle: The duration it takes for a business to complete the entire process from receiving an order to collecting the corresponding payment, a key metric in B2B payments reflecting efficiency and liquidity.

One-Click Purchasing: A streamlined purchasing process where a single click completes a transaction, enhancing the speed and ease of B2B transactions, a feature that contributes to a frictionless payment experience.

P

Payment Methods: The various ways businesses can receive payments, including credit cards, bank transfers, and digital wallets, influencing the flexibility and convenience of transactions in B2B settings.

Payment Service Provider (PSP): A third-party entity facilitating payment processing between buyers and sellers in B2B transactions, managing the technical aspects of financial transactions securely.

Payment Terms: Agreed-upon terms dictating when a payment is due, crucial in B2B payments to establish clear expectations and timelines between the buyer and seller.

Purchase Order: A formal document issued by a buyer to a seller outlining the details of goods or services to be purchased, serving as a foundational element in B2B transactions.

Partial Fulfilment: The practice of shipping and invoicing part of an order, beneficial for B2B transactions where products or services may be delivered in stages.

Phone-Sales: Sales conducted through telephone communication, playing a role in B2B transactions for businesses that engage in remote sales efforts.

Payment Reconciliation: The process of matching and comparing financial transactions to ensure accuracy and consistency in B2B payments, vital for maintaining financial records.

Plugin: A piece of software that adds specific features to an existing computer program, and in the B2B context, can enhance the functionality of payment systems or platforms.

Payout: The distribution of funds to the receiving party, often associated with completed transactions in B2B payments, representing the fulfillment of financial obligations.

PEPPOL (Pan-European Public Procurement Online): A network facilitating secure and standardized exchange of electronic documents in B2B transactions, particularly in public procurement across Europe.

Point of Sale (POS): The location where a transaction occurs, typically referring to physical or virtual terminals in B2B settings, where goods or services are exchanged for payment.

Payment Gateway: A technology that facilitates the transfer of transaction data securely between a payment portal and the front-end processor, crucial in B2B e-commerce for ensuring smooth and secure transactions.

R

Real-time Underwriting: The immediate assessment and decision-making process regarding creditworthiness or risk in B2B transactions, often done automatically and in real-time to enable swift approvals.

Refund: The return of funds from the seller to the buyer, usually in response to returned goods or dissatisfaction, a key element in B2B transactions to address issues and maintain client relationships.

Retention: The strategy of maintaining and nurturing existing customer relationships in B2B, emphasizing customer satisfaction and loyalty to ensure continued business and reduce customer turnover.

Rejected Order: An order that is not accepted by the seller, typically due to various reasons such as insufficient stock or payment issues, influencing the efficiency of B2B transactions.

Remittance Advice: A document sent by a buyer to a seller, indicating the details of a payment, including the invoice number and amount, streamlining the reconciliation process in B2B payments.

S

Share of Wallet (SOW): The portion of a customer's total spending that is captured by a particular business, indicating the company's success in maximizing revenue from that customer across various products or services.

Sign-up Flow: The step-by-step process a user undergoes to register or subscribe to a service, crucial in B2B transactions to ensure a smooth onboarding experience.

Sole Trader: An individual business owner who operates and manages their enterprise alone, a common entity in B2B transactions, often distinct from larger corporations or companies.

SMB (Small and Medium-sized Business): A business classification based on size, with SMBs having a smaller scale of operations than large enterprises, influencing their approach to B2B transactions and financial considerations.

SaaS (Software as a Service): A software distribution model where applications are hosted by a third-party provider and made available to customers over the internet, a significant element in B2B transactions, providing scalable and cost-effective solutions.

Supply Chain Financing: Financial strategies and services designed to optimize and streamline the payment processes within the supply chain, benefiting both buyers and suppliers in B2B transactions.

T

Trade Credit: A B2B financing arrangement where a buyer is allowed to purchase goods or services on credit, fostering relationships between businesses by providing flexibility in payment.

Terms: The agreed-upon conditions and details of a transaction, encompassing payment deadlines, pricing, and other relevant terms crucial in B2B agreements.

Tele-sales: Sales activities conducted over the phone, a common approach in B2B transactions to reach potential clients and promote products or services remotely.

Trade Account: A commercial account established by a business to facilitate transactions with suppliers or other businesses, often involving credit terms and specific purchasing arrangements in B2B scenarios.

Transparent Credit Limit: Clearly defined and easily understandable credit limits set in B2B transactions, ensuring clarity and preventing misunderstandings between buyers and sellers.

Transactional Fee: Charges applied for individual transactions, a consideration in B2B payments, impacting the overall cost structure and financial planning for businesses engaged in transactions.


U

Underwriting: The process of evaluating and assessing the risk associated with providing credit, often used in B2B financing to determine the creditworthiness of businesses seeking financial solutions.

User Experience (UX): The overall experience and satisfaction a user has when interacting with a product or service, a critical aspect in B2B solutions to ensure efficiency, ease of use, and customer satisfaction.

User Interface (UI): The visual and interactive elements of a software or application, impacting how users engage with the product, crucial in B2B solutions to enhance usability and accessibility.

Unpaid Invoices: Invoices that remain outstanding beyond their due date, a common challenge in B2B transactions, affecting cash flow and necessitating effective credit and collections management.

Unverified Order: An order that lacks authentication or confirmation, emphasizing the importance of verification processes in B2B transactions to prevent fraud and ensure the integrity of orders.

V

Verified Order: An order that has undergone authentication or confirmation processes, crucial in B2B transactions to ensure the legitimacy and integrity of the order, reducing the risk of fraud and enhancing trust between parties.

W

White Label: A product or service provided by one company (your company or a partner) that another company (your client) rebrands as its own. This practice is common in B2B transactions, allowing businesses to offer a solution without the need for extensive development or production.

Working Capital: The difference between a company's current assets and current liabilities, representing the funds available for day-to-day operations. In the context of B2B transactions, understanding and managing working capital is vital for sustaining business activities, ensuring smooth cash flow, and supporting ongoing financial health.