As Buy Now, Pay Later continues to develop into a fully fledged solution for B2B payments, more businesses have started seeing the benefits of a streamlined checkout experience.
But recently, we’ve been working on a new type of B2B payment solution. A solution aimed specifically at businesses selling rental services, subscription plans, and big-ticket items - Instalments!
Why B2B Instalments?
In the world of B2B rental and subscription services, customers prefer to pay on a monthly basis. In fact, only 3.8% of SaaS businesses offer annual plans as a result. B2B plans tend to have a higher price point than B2C, making one-time annual payments a less attractive option for customers. So, they simply chose to pay on a monthly basis.
There are, however, challenges that businesses face when selling like this.
For starters, issues with cash flow are common. If you only receive payment for your product or service on a monthly basis, it can be difficult to expand your business. Customers may also pay late, creating a serious knock on effect for your cash flow.
Managing recurring bills can also be a problem, especially when dealing with multiple customers on different billing cycles. That's a whole lot of paperwork you need to handle costing time and money.
And for businesses that sell big-ticket items, equal challenges are faced. Thanks to longer sales cycles in B2B and higher purchasing risk for customers, selling more expensive items can be an uphill battle. Customers are far more weary of parting with that amount of cash.
This is why Two has launched Instalments!
What is Instalments by Two?
Buyers have the option to split payments across 3-24 months with instant credit decisions at the checkout, drastically reducing purchasing hurdles.
As a seller, this equates to higher conversions and retention rates, less admin and improved cash flow. Two also takes on all credit and fraud risk!
Here's how it works:
1. When a customer chooses to pay with Instalments, they choose the repayment terms that suit them. Their monthly repayment terms are transparent and visible to them straight away.
2. Two instantly credit checks the buyer and handles ID-verification using sophisticated industry-leading methods.
3. Once the customer is approved for credit, you fulfil the order and get paid out in full by Two.
4. Your customer receives a single, updated invoice every month showing any changes they’ve made to their order. All changes to a customer’s order are handled directly by Two. If your buyer decides to cancel their subscription at any point, a final invoice will be updated automatically.
Straight from the source
Recently we caught up with Senior Technical Product Manager and Project Lead of Instalments Daniel Remenyfy to get his take on Two’s newest release. Think of him as your Instalments expert!
Why did Two build Instalments?
In the B2C BNPL sector, instalments is already the name of the game. Creating this for the B2B space fits very nicely with our vision of becoming the largest B2B payment provider by 2025!
We talk a lot to our customers and offering instalments on their own, without a software solution, is far too complex operationally. Taking out dedicated loans or drawing down lines of credit is time consuming and expensive. But buyers want to spread the cost of purchases, especially large purchases.
So, our priority was to provide companies with a consumer-grade checkout experience: instant credit and fraud decisions and configurable term lengths of 3-24 months for the buyer with no additional admin or risk for the seller. Sellers also receive daily payouts for the total purchase amount to drastically improve cash flow!
In your eyes, what value does Instalments bring to businesses?
Fundamentally, businesses can sell larger-ticket items far more easily. Buyers split the cost of more expensive purchases while the seller gets paid up front. That helps to boost cash flow, increase conversion rates, all while offsetting credit and fraud risk.
More specifically though, we currently see 3 main types of clients who are very eager to use this product:
The first group are companies who offer rental services to their buyers and want to get a boost in their cash flow. By getting paid in advance for the total contract value, they can buy more inventory to rent out.
In the second group are companies who offer subscription services and have failed to successfully launch an annual subscription product. Most of the time, this is because their buyers don’t want to pay for a full year in advance. These companies often have a very successful service, but struggle to introduce new game-changing products due to the capital investment it would require.
The third group are companies who have very high average order value offerings - think about the construction industry for example. Their buyers ask for split or delayed payments, but the seller is not comfortable building a credit and collection service from scratch due to all the complexity involved.
What’s your favourite feature of Instalments and why?
I really love the degree of flexibility we offer to our clients when it comes to invoicing rules.
A lot of buyers struggle with keeping track of all their invoices, so to them, we offer a single invoice for all their purchases and rentals every month. What was a very tedious process before suddenly becomes a single payment of a single invoice, once a month.
Some others have multiple sites, or a complex legal structure, and would prefer to have full control over how we group instalments into invoices, and what payment terms we offer. Fortunately, we have made mass-customization part of our offering.
In the future, is there anything we’re working towards to improve this product further?
We just started offering Direct Debit as a payment option on demand to selected buyers. I am very interested to see how allowing them to set up Direct Debit mandates will reduce even further the admin overhead associated with their payments, and make it a core part of our product.
Quick recap of Instalments
As mentioned above, you receive upfront payments for any sale processed through Instalments. This drastically improves your cash flow by ensuring you get paid straight away instead of waiting each month.
Two automatically reconciles payments for invoices, tracks late payers, and monitors the remaining balance of long-term purchases. This means you can say goodbye to setting up credit line agreements with your customers.
Buyers can also add new items to their rental or subscription contracts at any time. Any new items will be added as a new instalment plan by the buyer and invoiced together with existing subscriptions. All without any work from you.
Only pay for what you use
Many services charge for simply using a platform. Not with Instalments. Only pay for what you use.
Grow B2B sales
With Instalments, you make your business the leading choice for long term B2B purchases and the easiest to afford. This leads to higher conversion rates and sales for rental services, subscription services, and big ticket items.