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How to Manage Collection Challenges by Utilizing B2B BNPL

Are you tired of losing money and not being able to collect from customers who don’t pay their invoices?

If so, you’re in good company. According to QuickBooks, mid-sized American businesses are missing, on average, more than $300,000 in uncollected payments. Your bottom line suffers, your business growth stagnates, and your team is exhausted trying to manage collections.

There is another way.

By partnering with a Buy-Now-Pay-Later (BNPL) provider for B2B payments, you can:

  • Offload Risks
  • Eliminate fraud and chargeback costs; and
  • Decrease the burden of collections

Let’s look at how a BNPL partnership can achieve each one of these benefits.

Offload Risks

Handling customer payments is not easy.

After all, around 50% of all B2B invoices in the US are paid late, many of them more than 90 days late! According to a survey conducted by YouGov, nearly half of US small businesses are unable to grow their business because of late payments. Because of these cash flow delays, businesses cannot:

  • Hire new employees
  • Buy inventory
  • Run their business.

By partnering with an intermediary, such as a reputable BNPL provider, you can finally say goodbye to these risks plaguing your B2B business. How?

Your BNPL provider is the one handling the payment, not your business, so they will assume any associated risks with settling sales. In fact, you will never have to worry about late payments again, since your BNPL partner will pay you immediately on day 1. Once your customer makes the first installment payment, you will receive the full amount of the invoice. All future installments will be reconciled between the customer and your BNPL provider, meanwhile your cash is already in the bank.

Mitigate risks and avoid liabilities as your BNPL vendor takes on those responsibilities.

Eliminate Fraud and Chargeback Costs

Forget about losing money to fraud.

Because BNPL providers take on payment risks, you won’t have to worry about dealing with fraudulent transactions. Even in the consumer market, these savings to merchants are quite impressive. In 2021, B2C BNPL provider Afterpay saved its participating vendors $42 million just by lowering fraud rates.

While flexible payment options are simpler and more streamlined than traditional credit, most BNPL companies in both consumer and business markets perform a variety of credit and background checks on your customers. You can save time by leaving time-consuming vetting behind and leverage the convenience of smart and automated underwriting.

But even if the customer passes a credit check, you might still worry about other risks. Since you are splitting your payment into installments and potentially allowing your customers to pay with credit cards, you may worry about the risks associated with them. Don’t worry: BNPL protects you from chargeback losses. However, any chargebacks will not affect you at all.

Keep your hard-earned revenue by offloading the costs of mitigating fraud and chargeback requests.

Decrease the burden of collections

Finally, reclaim your time and money by lowering the administrative burden and costs.

Ensuring that your business gets paid on time is really difficult. On average, U.S. businesses waste 14 hours per week chasing late payments. And that doesn’t take into account all the other time your internal team spends on reconciling other transactions, even those that went through without a delay.

Additionally, with the pandemic, the costs of managing settlements and debt collection have increased year after year. According to Atradius Collections, more than half of American businesses suffered from increased costs on managing their accounts receivable. Those costs were felt even more significantly by those businesses who self-insure credit risk.

Free your internal team from the burden of handling payments and stop accumulating bad debt expense once and for all.

A Better Way Forward

As the economy heads into a recession and companies struggle to retain talent, your business should leverage every advantage available.

Free yourself from the burdens of handling payments and all associated risks. With BNPL, you can invest your time and money into growing your organization and improve your business.

If you’re ready to partner with a B2B BNPL provider, you can schedule a free demo call with our team at Alternative Payments.

Simplify your customer payments, unlock instant cash flow

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