What is B2B Buy Now, Pay Later?

B2B Buy Now, Pay Later promises to revolutionise B2B payments.

Published 26th July, 2022
Last updated 22nd November, 2023

As far as financial innovations go, few have made waves as big as Buy Now, Pay Later, with countless providers across the B2C space like Klarna, Afterpay, and Laybuy now available to consumers. Giving customers the chance to tap into credit, especially when usually out of reach, has proved widely popular across the board with an expected market size of $115.5 billion by 2032.

Explained partly by the pandemic in 2020, US retail reported a 20% increase in online sales with more people visiting online web-stores instead of physical locations.

But the level of growth and innovation is not just exclusive to B2C. More recently, many Fintech companies around the world have begun developing BNPL solutions aimed at solving the far more complicated buying cyclings and application processes of B2B.

Although BNPL for business is still in its early stages, a recent report reveals that over half of the largest B2B marketplaces have already embraced a BNPL solution or have plans to do so. 

In this article, we aim to help business leaders understand what B2B BNPL is and how it could help you accelerate revenue, drastically improve efficiency, and offset the credit and fraud risks associated with traditional trade credit.

Table of contents

1. What is Buy Now Pay Later?
2. Why B2B BNPL and why now?
3. How does B2B Buy Now, Pay Later work?
4. The full benefits of B2B Buy Now, Pay Later
5. Why not just offer trade credit in-house?
6. What industries benefit most from B2B BNPL?
7. What B2B BNPL solutions are available?

What is Buy Now Pater Later?

Buy Now Pay Later, also referred as BNPL, is a type of short-term financing enabling customers to make a purchase and pay at a later date. The payment is often split across an instalment period, or paid off at once, usually 30 days after the purchase is made. 

Since B2B BNPL is digital, it's usually offered on e-commerce websites, marketplaces and various online platforms. Nevertheless, the realm of B2B BNPL extends beyond the virtual domain, with tailored products designed for telesales and omnichannel sales gaining prominence in the market.

Why B2B BNPL and why now?

Offering trade credit for B2B transactions has long been a difficult terrain to navigate, complicated by lengthy admin, credit risk, and tedious customer onboarding. These are typical challenges you won’t often find B2C given the less complex buying process. It also explains, in part, why B2B BNPL has lagged behind for so long.

If a business wants to simply offer trade credit, for example, there are numerous challenges they face. To establish whether a new customer is creditworthy in the first place, they must manage all credit, fraud and buyer identification checks themselves, at huge administrative expense. These processes are also largely paper-based. Alternatively, the business can enlist the help of a 3rd party company but that too comes with its own expense. Either way, this process can take anywhere from a few days to an entire month.

This, by the way, also has a negative impact of sales. The more time it takes to get a ready customer up and running, the few the sales the business will generate.

Once these checks are complete and the customer is onboarded, the business then needs to finance the invoice order. This has obvious negative cash flow implications, forcing them to become less agile and limiting their growth capabilities.

Another aspect sellers need to contend with is the administrative effort post sale. Invoices need to be managed, late payments need to be chased, uncollected payments need to be accounted for and worked into the seller's budget.

As a result of these pain points, selling on net terms is difficult to say the least.

However, huge technological strides have been made in recent years that finally bring the Buy Now, Pay Later (BNPL) model to B2B. Being described as “fintech’s answer to the age-old concept of invoice financing”, BNPL has the potential to completely change the way businesses buy and sell from one another.

Other than the immediate business benefits to sellers, it's also neccessary to consider the changing landscape of B2B buyers in general. Given 73% of all professional B2B purchasing decisions are made by millennials, the increasing assumption is that B2B companies want to offer the same seamless purchasing experience as B2C.

For example, a study by McKinsey found that 96% of B2B buyers might make a purchase in a fully end-to-end, digital self-serve model.

Additionally, more and more sellers are taking their businesses online. A further McKinsey study found that business buyers favour online purchasing due to its convenience and ease, as in-person or phone transactions are no longer efficient in terms of time.

These shifts in the way sellers and buyers interact have greatly influenced the way B2B payments work.

How does B2B Buy Now, Pay Later work?

Based on the challenges described earlier, B2B BNPL aims to solve these problems with embedded financing models, much faster approval processes, and drastically improved cash flow. The fundamental agreement between a seller and buyer is the same, but the way in which it operates is different. For example, instead of manually credit checking a customer, B2B BNPL providers offer credit, fraud, and buyer identification checks directly at the checkout. As a result, a process that can take anywhere from a couple of days to a month happens in less than 30 seconds.

Another hallmark win for B2B BNPL is the upfront payment capabilities. With traditional trade credit, sellers have to finance each invoice they offer. With B2B BNPL, the provider finances the sale and pays the seller upfront. Of course, this has massive benefits to the seller. Now, they're in a far more favourable an agile position to expand their company and ultimately sell more.

Managing invoices is typically offered by B2B BNPL providers too. The impact of unpaid invoices is substantial to businesses, especially SMBs. In fact, in the UK, a 2022 Barclays study revealed that 58% of SMEs experienced late invoice payments from customers. For medium-sized enterprises with 50 to 249 staff, the number waiting on late payments soared to 94%. It's not surprising then that a quarter of SMEs see survival as their main goal in 2023.

With B2B BNPL, there's no need to chase late payments. Providers handle this for the seller, along with all invoice management tasks.

Check out this handy video by Two Co-Founder and Strategic Sales Manager Ed Brandler to learn how Two's B2B BNPL solution works:

The full benefits of B2B Buy Now, Pay Later

At a surface level, you’d be forgiven for thinking trade credit and B2B BNPL are the same thing. There are a lot of similarities, but it’s the differences that make B2B BNPL such a revolutionary solution.

B2B BNPL solves many of the pain-points involved with offering trade credit. Simply put, it offers a way for sellers to offer trade credit in a much safer, simpler, and sophisticated way.

1. Upfront payments

One of the drawbacks of traditional trade credit is that the seller is forced to wait until the end of the invoice term until they receive payment. This can lead to a whole host of cash flow problems for the seller that prevents them from growing their business and expanding. 

To mitigate this, it’s common to resort to invoice factoring, invoice discounting, or bank loans - none of which are an optimal way of growing. But the nature of BNPL B2B means that merchants are paid upfront for their invoices, often with help from financial institutes the B2B payment platforms work with.

Any B2B payment platform worth its salt will also reconcile payments. That means saying goodbye to chasing late payments on a daily basis.

2. Removes risk for merchants

Working with third parties to run credit and ID checks is a necessity if you manage invoice purchases in-house. However, once a buyer is approved, there’s still risk involved. What happens if the buyer doesn’t pay? And how do you know if the ID verification or credit checking process was comprehensive enough? 

Merchants operating with little fraud knowledge are often left exposed, sometimes with dire consequences. BNPL B2B removes that risk. B2B payment providers perform comprehensive credit and fraud checks then and there for an uninterrupted buying experience.

For the seller, that means being able to offer net terms without the stress of fraudulent orders.

3. Cut admin time

Many merchants are simply unable to tap into the demand of purchases by invoice because it requires too much manual work. Managing an invoice payment solution in-house requires specialist staff to organise invoices and stay on top of payments. 

But with BNPL B2B, merchants can simplify operations across multiple departments and save time, making it super easy to stay organised and save multiple hours a week in manual work.

4. Higher average order value

An increase in average order value (AOV) signifies increased revenue without necessitating an expansion of your customer base. Since you’re not targeting new busineses’, your marketing and sales costs will decrease. Sellers integrated with Two see a 60% uplift in AOV on average. That’s certainly not the limit though!

5. Better conversion rates

Buyers who don’t use credit cards have to float their working capital by fronting their expenses to make purchases. And the companies who do use credit cards often run into card limits that prevent them from buying what they need. 

But BNPL B2B makes purchases seamless. Buyers no longer need to chase down that one employee with a corporate card or expense business purchases on their own account. This ultimately allows buyers to place larger orders without running into cash flow problems.

Our merchants experience a +20% uplift in conversion rate after offering BNPL B2B with Two.

6. Increased customer retention

The issue of a complicated checkout experience for B2B buyers shouldn’t be understated. In fact, 77% of B2B buyers say their latest purchase was either difficult or very complex

Loaded with useful features for this very reason, BNPL B2B solves the all too familiar challenges of merchants who want to offer their customers net terms. Offering a BNPL B2B solution that works for your customer ensures (or at the very least increases) your chances of keeping them loyal.

7. Streamlined operations:

B2B BNPL simplifies and automates the payment process for businesses, reducing the time and resources needed to manage payments. This can free you up to focus on other aspects of your operations, like growing your customer base or developing new products. B2B BNPL also eliminates the need to chase down late payments. 

8. Acquiring new customers:

By offering B2B BNPL, you can expand your customer base and attract new demographics who may not have been able to afford your products or services otherwise. This can help you tap into new markets and increase your revenue. Additionally, you can foster customer loyalty by providing a convenient and flexible payment option that meets their needs and budget. This can lead to repeat business and positive word-of-mouth, which can be a powerful tool for attracting new customers.

Why not just offer trade credit in-house?

Managing trade credit in-house has long been the norm for businesses. In fact, 95% of business customers prefer not to pay upfront

But while this approach offers a degree of control and familiarity, it often comes with inherent challenges like complexity, risk, poor customer experience, and limited scalability. Check out the table below to see a side by side comparison:

We actually wrote a whole article on this so be sure to check it out!

What industries benefit most from B2B BNPL?

The truth is, any industry that features trade credit in one form or another can benefit from B2B BNPL! But to dive a little deeper, let's look at some use cases to understand how B2B BNPL can help.


B2C e-commerce is a $3.67 trillion global industry showing no signs of slowing down. But in reality, the B2C e-commerce market dwarfed by B2B, predicted to be worth a whopping $17.9 trillion, nearly 5 times the size.

As a result of this massive difference, around 65% of B2B companies now offer e-commerce capabilities.

B2B e-commerce companies need a fast, reliable, and frictionless way of selling to the buyers with online trade credit capabilities. Offering such solutions can help with everything from B2B sales and reduced admin, to offsetting credit risk and cash flow fixes.

Are you a B2B E-Commerce Manager? Read our recent article Boosting B2B Sales in E-Commerce: Unleashing the power of BNPL.


Trade credit is an essential tool in the construction industry. It enables suppliers to extend credit to their customers, allowing them to purchase the necessary materials and equipment without paying upfront. However, offering payment terms can be risky and comes with its own set of problems. Late payments, damaged reputations, and credit risk can have a disastrous impact on both the supplier and buyer.

The process of offering trade credit in the construction industry will vary, but in its simplest form it looks something like this:

Assessment: The construction company evaluates the creditworthiness of the contractor, considering factors like financial stability, payment history, references, and legal obligations.

Credit Limit: Based on the evaluation, the construction company determines the maximum credit amount they are willing to extend to the contractor.

Terms: The construction company establishes specific payment terms and conditions, including the payment period (e.g., 30 days, 60 days).

Payment: The contractor receives goods or services on credit and is expected to make payments within the specified payment period. The construction company sends invoices and follows up on collections if needed.

This is a lengthy process that until now, has been one of the only viable options for suppliers.

The fact is, the construction industry is one of the worst hit for late payments:

Using Two however, construction suppliers can improve cash flow, perform instant credit decisions, provide a frictionless onboarding experience and boost their B2B sales.

Read more about trade credit in construction.


The wholesale industry relies on recurring customers, which is why trade credit is so important. Businesses like restaurants, for example, often place multiple orders throughout the month to top up their inventory so prefer purchasing their goods and settling their bill at the end of the month. But the process is time-consuming and creates endless paperwork.

That’s why businesses like REKKI have turned to B2B BNPL solutions like Two to simplify the entire net term purchasing journey.

Throughout the month, restaurants place multiple orders with REKKI to replenish their stock. The industry standard payment type for these orders is on invoice. But the issue is that buyers end up with multiple invoices that need to be paid at different times.

REKKI used Two’s Trade Account and grouped invoice feature to allow buyers to purchase what they need throughout the month while receiving a single invoice for all purchases.

Learn more about how Two helped REKKI.

B2B Marketplaces

B2B marketplaces have emerged as dynamic platforms revolutionising the way businesses trade with each other. Through these platforms, businesses can discover new suppliers, assess product offerings, and negotiate deals with greater ease. 

It's a win-win for buyers and suppliers, with businesses getting more visibility and a wider market reach. Plus, the whole process is smoother and often cheaper.

According to Gartner,  80% of B2B sales interactions between suppliers and buyers will occur on digital channels by 2025. To keep this momentum going, B2B marketplaces need a secure and seamless B2B payment solution.

Why? Well, today’s tech savvy consumers expect a seamless experience across digital touchpoints. And so does the business buyer, as 75% of buyers say that they expect vendors to have connected processes. A well-integrated and secure payment solution plays an important role in the decision-making process and in choosing the right B2B Marketplace. 

Sound interesting? Check out our dedicated B2B Marketplaces use case page to learn why a B2B BNPL solution like Two is perfect for your business.


In the SaaS industry, companies can subscribe to services on a pay-as-you-go basis instead of the traditional method of buying and installing software. Think of it as having your favourite apps tailored specifically for business tools. This not only reduces upfront costs but also ensures that you consistently benefit from the latest and most advanced features available. B2B SaaS is all about flexibility, enabling effortless collaboration from any corner of the globe. 

So how can B2B BNPL help? 

A trademark of the B2B SaaS industry is its business model. Buyers can choose to pay in instalments with no minimum contract length (but at a higher cost) or annually. Annual contracts are cheaper but require the buyer to pay upfront for the entire year.

B2B SaaS companies use this model to increase their sales. Only offering annual contracts requires more commitment from the buyer, often reducing the business’s conversion rates and increasing drop off rates. But it comes at a cost. Yes, the barrier of entry is lower for buyers, but as there’s typically no minimum term, their customers may not use the product for more than a month or two.

B2B BNPL solutions like Instalments from Two solve this issue. Using this solution, B2B SaaS companies can offer their customers to split annual contract costs across 3-36 months. How? Two pays the seller upfront and makes it easy for the buyer to add or remove subscriptions easily.Discover our SaaS use case page and learn more about Two’s B2B BNPL Instalments solution is perfect for selling subscription plans in SaaS.

What B2B BNPL solutions are available?

Two offers a range of B2B payment solutions to make it easier than ever to offer integrated trade credit directly at the checkout and boost B2B sales.

E-Commerce Checkout

With support for some of the most popular E-Commerce platforms like WooCommerce, Magento, and CraftCMS, Two’s E-Commerce Checkout gets you up and running straight away. Or you can integrate directly with our API.

Two’s E-Commerce Checkout allows you to offer a frictionless checkout experience for your customers to increase B2B sales and conversion rates. And with a 90% acceptance rate, you can say goodbye to turning customers away. In fact, this apple reseller was rejecting 52% of their potential B2B customers before using Two.

Learn more.

Trade Account

Onboarding customers in the traditional way is manual and time-consuming. The long it takes to get them up and running, the higher the chances they’ll abandon their basket and choose a competitor.

Two’s Trade Account provides you with a frictionless customer-onboarding experience, integrated right into your sign up flow. Customers simply fill in their details, apply for credit, and checkout in 30 seconds. In fact, Trade Account users see an 18x increase in customer retention and 11x more orders per buyer!

Plus, true one-click purchasing makes buying from you a walk in the park. With features like Grouped Invoices, your customers can receive a single invoice per purchase or grouped into weekly, fortnightly, or monthly invoices to drastically reduce admin!

Learn more.

Order Creator

Omnichannel selling has become increasingly popular in B2B. In fact, B2B customers now regularly use ten or more channels to interact with suppliers. But can your field sales or tele-sales team offer instant trade credit as easily as your e-commerce store?

Two’s Order Creator makes it simple to offer invoice purchases to all B2B customers, because sales don’t just happen in one place. Capture offline sales, get paid upfront, and offset credit risk by harnessing the total power of Two for all B2B sales.

Learn more.


Selling B2B rental services or subscription plans can be tough. In fact, only 3.8% of SaaS businesses offer annual plans as a result. Other than creating needless cash flow problems, this means B2B sales suffer.

Let your customers split payments for purchases over 3 to 24 months with Instalments. Boost B2B sales for rental services, subscription plans, and big-ticket items to drastically improve cash flow and increase B2B sales. All while Two handles the admin.

Learn more.

So, ready to take your business to the next level and offer a B2B payment solution that truly works? Speak to one of our experts today!