B2B BNPL: The 2023 Gold Rush Led By Flexbase Pay, Now Available for Online Merchants

8 min
Jul 26, 2022

The Buy Now Pay Later market is forecasted to exceed $3.2 trillion by 2030. And in these reports, there’s little mention of how the B2B BNPL market will contribute to growth.

We believe these forecasts are low and the B2B BNPL market alone is catapulting towards a multi-trillion dollar industry.

And until Flexbase Pay, there hasn't been a true B2B BNPL solution in the United States. 

If you're a B2B merchant looking to determine if Flexbase Pay is right for you, click here to visit our merchant page to schedule a free demo.  

A 101 Understanding of BNPL for B2B:

On a standard online site selling products to businesses, the checkout process allows you to pay via:

  • credit card
  • debit card
  • maybe ACH / online check

For a business, the current best option is to pay via credit card so they can keep cash in their bank for as long as possible.

BNPL changes the traditional checkout process by allowing an additional way to pay:

BNPL allows businesses to "buy" today with $0 down and pay for it later, usually with 0% interest. 

Frequently, the payment terms are in installments, such as 3 equal installments every 2 weeks. Or, the payment terms can be in a delayed one-time repayment for the entire transaction amount.

Here's a quick example:

A company called “ABC Construction” spends $3,000 on a bulldozer rental to complete a project. They check out online using BNPL instead of their credit card. The payment terms are $0 up front and 0% interest for 60 days.

They pay $0 up front and get access to their bulldozer rental.

ABC Construction pays off the entire $3,000 on the 60th day.

Here's the catch from the merchant/website perspective:

The equipment rental website is not the owner of the BNPL product. They don’t do the underwriting or create the tool. They integrate with a 3rd party BNPL company (such as Flexbase Pay) and pay a fee to the BNPL company. 

Fees vary depending on the merchant, but for rounding purposes, let's say 5%.

Let's use the $3,000 equipment rental example from above. Although the customer getting the rental pays $0 up front, the equipment rental company, after the 5% fee, would immediately get paid $2,850 from Flexbase Pay instead of the full $3,000 (which often is reduced by a 2.9% credit card fee, so likely closer to $2,910).

Flexbase Pay then requires ABC Construction to pay back the full $3,000 after 60 days, therefore making $150.

You're probably thinking, why would this equipment rental company pay a 5% fee to allow customers to pay through BNPL instead of just accepting credit card payments and eating the 2-3% standard credit card fee?

Because, when folks have the option to Buy Now, Pay Later, they frequently buy more compared to if they just bought on their credit card. Frequently as high as 50% more.

Back to ABC Construction - they spent $3,000 on equipment rental. If they didn't have BNPL as an option, they may have only spent $2,300 on the equipment rental. But, because they knew they could pay in 60 days through Flexbase Pay, they felt comfortable investing in an extra forklift rental for a couple days, spending $700 more than they would have if buying through their standard card.. 

In this example, it’s clear that the BNPL fee was worth it for this equipment rental company. They increased the total transaction amount by about 30%.

  • The equipment rental company sees a higher AOV (Average Order Value) due to the flexible payment terms of BNPL
  • The business gets more flexible payment terms to unlock more working capital for their business: and 
  • Flexbase Pay gets paid a small fee to facilitate the process.

Flexbase Pay: An Advanced, Easy-to-Implement B2B BNPL Solution

Flexbase Pay is a B2B BNPL solution that integrates with online marketplaces. The online marketplace takes zero credit or underwriting risk.

Flexbase Pay partners with merchants across industries within B2B, such as our partnership with Dozr, an online heavy equipment rental marketplace serving construction companies, large corporations, farmers, and more.

The payment terms for Flexbase Pay:

Flexase Pay provides 0% interest for 60 days to approved businesses. Simply put, businesses can spend $0 today to get access to raw materials, supplies, ingredients, or anything else through online marketplaces that partner with Flexase Pay, and not have to pay until 60 days from the purchase date.

Right now, businesses are using short-term bridge loans, invoice factoring, and other methods to get their hands on working capital, often paying as high as 2% per week. Compare 2% per week with a loan to 0% interest for 60 days - it’s a huge difference!

Here's how it works for businesses purchasing through Flexbase Pay on an online marketplace:

1. During checkout, they see an option to pay with Flexbase Pay

2. They go through a simple application process (5 minutes)

3. They get approved or denied for their purchase in minutes

4. If approved, they complete the transaction on the online marketplace, spending $0 up front

5. They pay off the full transaction amount within 60 days.

Here's how it works for the online marketplace integrating with Flexbase Pay on their website:

1. They add a "Pay with Flexbase Pay" button during their checkout process next to their credit card option

2. If the business is approved and completes the transaction through Flexbase Pay, then the online marketplace receive funds immediately through Flexbase Pay in exchange for a small fee

3. The business delivers the product to the customer

4. Flexbase Pay handles the repayment from the customer

How to integrate with Flexbase Pay to add it to your website:

You're probably thinking that adding Flexbase Pay's B2B BNPL solution is complicated, arduous, and requires a team of engineers.

Actually, it's quite simple. Flexbase Pay is designed to integrate with any online marketplace through the implementation of some basic code. For many merchants, the actual integration process takes hours, not days or weeks.

If your developers can't handle the integration, we actually have our developers support the implementation for free.

Why Does the B2B Market Need a BNPL Product? Why Not Just Use Klarna or Affirm?

Individual consumers and business are worlds apart from an underwriting and credit perspective.

That’s why building BNPL for individual consumers wasn’t terribly difficult.

Individuals have credit scores and other relatively easy-to-access financial data that makes underwriting smaller purchase (a $1,500 infrared sauna) much easier than underwriting a business entity looking to purchase $20,000 worth of materials.

For B2B, there are other hold-ups as well:

Many B2B commerce companies don't have a fully-functional online marketplace to begin with!

Their processes rely on ancient paper payment processes and company-specific payment terms. Some require physical checks, others can do ACH, but it has to be a clunky, direct bank-to-bank transfer (after more paperwork, of course) instead of through a third party payment processor.

What’s interesting, however, is that new e-commerce marketplaces are popping up in the B2B space to make some of those clunky general business processes more streamlined.

You’ve got brands like LandscapeHub who are revolutionizing the way companies source products in the landscape industry, touting that folks can “Search real-time inventory from hundreds of suppliers, ready to order in an instant.” They raised $9M in their Series A in early 2022.

Or brands like FullHarvest who are “the first B2B marketplace for ugly and surplus produce” who are supporting both buyers, such as procurement managers for restaurants, and sellers, such as farms, in the produce space. They raised $28M in their Series B.

The thing missing from both of these examples above? A B2B BNPL integration.

Digging Deeper into Business BNPL:

A BNPL product on a website like Nike, where the average transaction value from an individual consumer using BNPL may be $300-400, is completely different from a BNPL product on an online heavy equipment rental marketplace, where the average transaction value purchased by a business (not an individual) may be $3,000 - $4,000.

Business BNPL requires business-specific underwriting using advanced methods that surpass the traditional, legacy methods used by your average bank or financial institution.

When a restaurant chain chooses to use a BNPL product to source ingredients through an online marketplace, how does one go about quickly and effectively underwriting them for a $15,000 transaction?

The old-school methods of looking deeply into the owner, his/her individual credit score, etc isn't going to cut it. Especially with bad actors infiltrating the B2B space, either creating fake businesses or hacking email addresses within legitimate organizations.

Flexbase Pay uses algorithms and rapidly progressing AI to look at over 250 data points about the business itself such as previous bank history statements to analyze historical fluctuations, forecasting future revenue, industry-specific data (since a 7-location restaurant chain should be underwritten differently from a custom home builder), and security and fraud checks on top of comprehensively looking into the details of the business owner, such as credit history, criminal background, and more. 

All of this creates a significantly more robust system tailored to effectively underwriting businesses, not individual consumers.

Because of Flexbase Pay's business-specific approach, we can ensure higher success of on-time repayments and a lower percentage of delinquent customers or defaults, allowing us to provide hundreds of millions of dollars of working capital to businesses eager to use a BNPL product on their favorite online marketplace.

The B2B BNPL Market is Massive, Yet Underserved

Klarna, Affirm, and AfterPay are notable consumer-based BNPL solutions. Yet the B2B market has been overlooked.

There are dozens/hundreds of applications for business BNPL. Most of these applications currently don’t have a BNPL solution integrated yet.

Here are just a few examples:

- machinery equipment rental companies (such as bulldozers & cranes)

- medical equipment rental companies

- medical equipment sales

- materials suppliers (such as lumber yards)

- Auto/fleet equipment

- Industry-specific tools/equipment

- HVAC supplies

- Plumbing supplies

- Electrical supplies

- Agricultural supplies

- Restaurant equipment & ingredients

- Much more

Flexbase Pay can integrate with any B2B online marketplace in any industry to provide flexible payment terms to their customers.

If you're a merchant interested in Flexbase Pay, click here to learn more.