Buy Now Pay Later (BNPL) has of course become a convenient option for B2C, but its implementation in a B2B context requires many adjustments, as explained by Arnaud Soubien, CEO and co-founder of RollingFunds. Here he is interviewed by Aline Abeya, Sales Manager France and Benelux at Webhelp Payment Services.

We often hear people say: “BNPL is easy: there are many turnkey solutions that allow customers to pay in 3 or 4 instalments”. This is entirely true when the end consumers are private individuals… but transposing the B2C model to B2B, without asking the right questions, is doomed to fail. Why?

For many years now, with many B2C brands, there has been the option to pay in 3 or 4 instalments, without charge, as a private individual. It is also the case that  BNPL  is now an off-the-shelf product that can very easily be integrated into a marketplace type environment.

But it must be emphasised that current solutions are aimed at individuals and for average baskets of small amounts that can be charged to a bank card. From a B2B perspective, however, there are specific factors that must be taken into account, including in particular:

1 – Establishing a relationship remotely via KYC

When it comes to entering into a financial relationship, the law requires that due diligence be carried out to acquire a good “knowledge of the customer”. This is referred to as a KYC, or “Know Your Customer”, process. However, the procedures required to verify the identity of a customer differ greatly depending on the type of customer involved.

Individuals can of course prove their identity with an official identity document, but companies need to be able to prove their existence (with a certificate of incorporation, articles of association, etc.), and to identify their legal representatives (natural persons with the power to bind the company) and the beneficial owners (the main partners). The procedures to be carried out in the context of a B2B business relationship are therefore much more complexand they differ from one country to another. They are based on automated or human controls, or a mixture of the two, as offered by Webhelp KYC Services.

2 – The basket total and the payment methods

In the context of a B2B business relationship, average baskets are usually much larger, requiring limits much higher than those granted to individuals – typically from fifty or so to a few hundred euros.

In addition to risk management issues, the basket total, and therefore the due dates, cannot be charged to a bank card as is the case for individuals, given their payment limits. One must therefore look at the means of payment commonly accepted by companies (direct debits, transfers, cheques, etc.) depending on the target clientele.

3 – The margin on sales

BNPL is generally offered to individuals free of charge: “pay in 3 or 4 instalments, free of charge”. The financial costs are borne by the e-merchant. And the fees are quite high, since they are generally in the 3-4% range at the time of the transaction (i.e. for an average financing period of 30 days, an APR of more than 30% per year). In contrast, the margin on sales for B2B is much lower than for B2C. The cost of BNPL must therefore be adjusted to take this into account.

4 – Risk analysis and management

Unlike BNPL for individuals, where risk analysis can be purely statistical, given the uniform nature of the population and the granular nature of the exposure to risk, the great diversity of companies requires a specific analysis: a CAC 40 company, a medium-sized company, a VSE/SME, or even a sole-trader artisan are not analysed in the same way. Evaluating the credit risk of a company requires specific know-how and a specific model which, in addition to company size, must take into account many parameters such as the company’s activity (B2B or B2C activity), specific sector or location related factors, etc.

But the strategy for deploying a BNPL offer in B2B cannot, and should not, be defined based on these considerations alone. For a BNPL programme to be truly successful and to reflect short- and medium-term sales targets, it must meet two conditions:

  • it must be structured to serve the marketing and business strategy of the marketplace,
  • and it must be flexible enough to adapt in response to future developments.

An international dimension is often present in B2B. What constraints apply?

An e-commerce platform or B2B marketplace will often connect buyers and sellers who are separated by borders. Cross-border transactions require the specific administrative, legal, regulatory, monetary and fiscal nature of the countries concerned to be taken into account, even if these countries are all members of the European Union.

It is therefore important for the BNPL solution to be designed to “integrate” this complexity at a national and international level, in order to protect the marketplace from any risk.

What about specific business factors? Can a B2B solution be standardised?

First of all, I think it is important to remember that, in the B2B world, BNPL has existed for more than a century, under another name, and in another form: the trade receivable, an invoice with a payment deadline. In France alone this amounts to more than 650 billion euros.

However, each sector of activity has its own market practice: for example, payment periods are not the same for the sale of fresh products as for the sale of equipment and fittings. In addition, commercial policies may vary from one company to another, depending in particular on how marketing is conducted , the type of customer and internal procedures.

That’s why, at RollingFunds, we are convinced that a B2B solution cannot overlook the actual nature of the business.

“The specific nature of each sector of activity, and the marketing and commercial strategy in the short and medium term, must be taken into account from the outset of the project.” – Arnaud Soubien

To take a concrete example, that of the fashion sector – where we work in partnership with Webhelp Payment Services – one has to adapt to the specific nature of the sector, in terms of both the countries involved and their purchasing habits and payment methods. Typically, a large order will be placed at the start of each season, followed by small restocking orders as time passes. Other types of business have different customs of their own.

Ultimately, very specific risk analyses and flow analyses need to be adopted, regardless of the business sector.

As an attentive observer of this market, I can tell you that the simple roll-out of a BNPL solution from B2C to B2B, without taking into account the specific factors involved, has always resulted in failure and been a source of frustration.

What B2B financing solutions does RollingFunds offer in partnership with Webhelp Payment Services?

Webhelp Payment Services provides a range of customer relationship management services including billing, collection management and the collection of trade receivables.

As part of their partnership, Webhelp Payment Services and RollingFunds have linked up their information systems to allow Webhelp customers to easily subscribe to a financing offer that is perfectly tailored to their needs.

In addition, RollingFunds provides financing solutions dedicated to the purchase of products and services – which positions us as a key B2B player in the BNPL sector.

For example, a builder can choose to pay the Building Platform, of which Rolling Funds is a partner, for their equipment, on a deferred basis or on credit (the BNPL offer).

Our solutions are tailored to B2B players, whatever the sales channels: marketplace, an e-commerce site, a store network, click & collect, etc. Thanks to our omni-channel approach, customers have access to their payment facilities on all sales channels – just as we do for the Building Platform.

I would stress that our technical solutions are very simple to implement, being based on SaaS and APIs.

The combination of our technology and financing know-how, with Webhelp Payment Services’ 35 years of experience in managing international buying and selling transactions and customer relations, allows us to offer a range of BNPL services with high added value and adapted to the context in which companies operate and their target clientele.

How does BNPL work in a B2B marketplace?

It all depends on how far a project has advanced. Indeed, the strategy for deploying a BNPL offer is not the same for an existing B2B marketplace, with an established clientele, as it is for a developing marketplace.

But, as I see it, the first step is a BNPL offer deployment strategy that is perfectly aligned with a company’s sales and marketing strategy: target customers, payment deadlines, payment methods, etc.

It is our belief that in a B2B context we need to offer a tailor-made solution, one that corresponds to the lifetime of the marketplace, its outlook, its risk strategy, and its financial cost allocation policy. It is essential that the BNPL offer is fully aligned with the marketplace strategy.

It is this ability to adapt that we are able to offer, with our partner Webhelp Payment Services and, thanks to our technology, all without any technical complexity.

The CV of Arnaud Soubien, CEO and co-founder of RollingFunds

Arnaud Soubien started his career in the capital markets. At Crédit Agricole CIB, he worked for nearly 15 years in the structuring of corporate securitisation transactions, at European and international level. After his initial experience in the general management of a Fintech specialising in factoring, in 2018 Arnaud Soubien created the startup RollingFunds, which aims to provide financing solutions to VSEs-SMEs directly integrated into a B2B business relationship.

RollingFunds has developed a technology platform to automate the granting and management of loans for VSEs-SMEs. The financing platform is directly integrated into the tools and organisations of its key account partners, suppliers and VSEs-SMEs.

RollingFunds offers 3 types of funding:

  • 1-click credit,
  • advances on sales or other receivables,
  • the financing of purchases.

RollingFunds has just completed a new investor round with AG2R La Mondiale, CCR, PRO BTP, Truffle Capital and leading business angels, for a sum of over 5 million euros.

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