Buy-now pay-later loans can boost cash flow for wholesalers and retailers in 2025 and beyond.
Business-to-business sales bring to mind massive deals with million-dollar transactions, but many wholesale brands sell to small retailers, where deals are in the thousands, not millions.
“We have a few different sock brands running on Cin7, and they sell to kiosks and small shops,” said Ajoy Krishnamoorthy, the CEO of Cin7, which makes cloud-based inventory management software, in an email exchange.
“Those retailers place orders that are $1,000 or $10,000 worth and are often seasonally driven — perfect for BNPL,” stated Krishnamoorthy.
Cash Flow
In particular, BNPL for B2B may be a cash flow opportunity for both the supplier and retailer.
For wholesalers, BNPL accelerates cash inflows and reduces credit risk. For retailers, it aligns inventory costs with revenue, provides financial breathing room, and facilitates growth. Both parties benefit, making BNPL a powerful tool in modern B2B commerce.
Wholesalers
Cash flow is essential for manufacturers, brands, and distributors.
The trouble is that many often wait to get paid. Traditional trade credit arrangements have 30-, 60-, or 90-day terms. B2B BNPL addresses the issue by delivering the payment in a few days or less.
Imagine how much more a manufacturer could produce if a $10,000 invoice is paid tomorrow instead of 60 days from now. The business could rapidly reinvest, explore new marketers, or expand its product line.
BNPL mitigates credit risk. Wholesalers that extend trade credit to retailers are exposed to potential late payments or defaults.
Yet BNPL’s advantages come with a cost: loan fees of 3% or more, typically. Sellers can pay the fees or pass them to buyers. Regardless, there is a cost in money or customer relationships.
Retailers
Cash flow is also vital for retailers operating on thin margins. BNPL loans usually offer better rates than credit cards and are relatively more accessible than advances from a bank or finance company.
| Loan Feature | BNPL Loans | Credit Cards | Capital Loans |
|---|---|---|---|
| Approval speed | Instant or rapid | Moderate | Slow |
| Interest rates | Often 0% short term | 15%-25% | 4%-10% |
| Flexibility | High, purchase-specific | High, general purpose | Low, long-term use |
| Default risk | Low | Moderate | High |
BNPL loans also offer flexibility. Imagine a small sock seller like the one Krishnamoorthy described. The seller decides to augment its online revenue with a kiosk at the local mall but doesn’t know how to forecast inventory needs.
With a BNPL loan, the merchant could purchase for the kiosk, say, five months’ worth of socks for its ecommerce shop. If the new mall location works well and the socks sell out, it is easy to pay off the loan early. If not, the seller can make monthly payments and sell the inventory online.
The interest rate will almost certainly be lower than a revolving charge card.
The example need not be a physical location. BNPL’s flexible payment terms and rapid application process could fuel new online opportunities.
The risk is relatively low, too. Missing a BNPL loan payment may result in penalties but generally avoids the high compounding interest of credit cards.
Finally, the merchant could generate revenue as the merchandise sells — the BNPL loan improves cash flow.
As with any form of credit, BNPL could be abused or misused.
BNPL for B2B
With its potential benefits, BNPL for B2B will likely accelerate in 2025. I’ve seen estimates of 27% growth this year, roughly mirroring the 25% growth projection for B2C.