B2B Buy Now Pay Later vs Traditional Trade Credit

Sabina Fjeld

•

January 16, 2024

•

min read

Trade credit has powered global B2B commerce for decades. According to the WTO, up to 90% of world trade hinges on deferred payments. But for today’s finance leaders—CFOs, financial controllers, and accounts receivable managers—traditional trade credit is showing its age.

Manual credit checks, delayed payments, fraud exposure, and reconciliation errors drain resources and hinder growth. Enter B2B Buy Now Pay Later (BNPL)—an embedded finance solution combining automation, real-time approvals, and instant seller payments. With AI-driven credit risk analysis and seamless ERP integrations, B2B BNPL transforms B2B payments into a growth engine.

This guide compares traditional trade credit vs B2B BNPL, helping finance professionals streamline operations, protect working capital, and fuel scalability.

What Is Trade Credit and How Does It Work?

Trade credit, also known as net terms or business credit, allows B2B buyers to delay payment (usually 14 to 90 days) after receiving goods or services.

Trade Credit Process:

Credit Assessment: Typically manual, based on financial statements or third-party data.
Credit Limits: Buyers are assigned limits based on their profile.
Invoicing & Net Terms: Suppliers send invoices with payment due in 30, 60, or 90 days.
Collections: Sellers follow up on overdue payments, often manually.

Why Do Businesses Use Trade Credit?

Improved Cash Flow for Buyers: Purchase now, pay later.
Sales Enablement: Offering credit can increase average order value (AOV) and attract more buyers.
Low Entry Barrier: Interest-free terms make it more accessible than loans.

But trade credit also comes with hidden costs and operational challenges.

Key Trade Credit Pain Points:

Credit & Fraud Risk: Sellers assume default risk.
Cash Flow Constraints: Payment delays restrict liquidity.
Manual Workload: Credit checks, chasing invoices, and reconciling payments waste time.
Limited Scalability: Manual processes don't scale efficiently.
Late Payment Issues: Result in strained buyer relationships and disrupted cash cycles.

What Is B2B Buy Now Pay Later (BNPL)?

B2B Buy Now Pay Later is a modern B2B payment solution. It provides instant credit decisions, automated fraud checks, and ensures sellers are paid upfront—even when buyers pay later.

How B2B BNPL Works:

Automated Buyer Approval: AI-driven systems assess risk in real time.
Instant Seller Payments: Sellers are paid within 24–48 hours.
Flexible Buyer Terms: Buyers can pay in instalments or delay payment.
Risk Offloading: The BNPL provider absorbs all default and fraud risk.
ERP Integration: Syncs with accounting software, automating reconciliation and reporting.

BNPL platforms like Two merge fintech innovation with operational simplicity—making B2B commerce faster, safer, and smarter.

Traditional Trade Credit vs B2B BNPL

Why Finance Leaders Are Moving to B2B BNPL

1. Cash Flow Acceleration

Free up working capital by receiving payments instantly. Use unlocked cash to reinvest in inventory, operations, or marketing.

2. Credit and Fraud Risk Mitigation

Two assumes the risk of buyer defaults, so you don’t have to. With embedded fraud detection and credit scoring, you gain peace of mind.

3. Finance Automation and Efficiency

Reduce reliance on spreadsheets and manual follow-ups. BNPL automates credit approvals, invoice reconciliation, and reporting—boosting team productivity.

4. Global Scalability

BNPL solutions are built for omnichannel sales—whether it’s eCommerce, telesales, or trade shows—scaling with your business.

5. Enhanced Buyer Experience

Frictionless checkouts, flexible terms, and fast onboarding increase AOV, conversion rate, and long-term customer loyalty.

The Bottom Line

Traditional trade credit has fueled B2B sales for decades, but it’s no longer enough. To compete in a digital-first world, finance leaders are turning to B2B Buy Now Pay Later solutions for faster cash flow, reduced credit risk, and automated payment processes.

With Two, you: