# Eliminating Payment Barriers: The Future of Supply Chain Payments is Digitization
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-14
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: How B2B Buy Now, Pay Later is Transforming Supply Chain
Meta Description: Learn how B2B BNPL options can help businesses ease supply chain issues, boost working capital, and drive growth in the digital payments era.
URL: https://financedigest.com/eliminating-payment-barriers-the-future-of-supply-chain-payments-is-digitizationhtml

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_By_ [**_KEO World_**](http://www.keoworld.com) _CEO and Founder_ _Paolo Fidanza_

A supply chain crisis born of the Covid-19 pandemic continues to grow with a reported 71% of Americans experiencing supply chain issues since the beginning of the pandemic. Surging energy prices and supply chain delays continue to threaten economic recovery, causing significant [issues for merchants and their working capital](https://youlend.com/blog/help-your-merchants-through-the-supply-chain-crisis). B2B Buy Now, Pay Later (BNPL) options can lengthen the time between ordering and paying for goods, giving businesses much needed working capital flexibility and easing the struggle to match up financing and supplies.

According to [The World Bank](https://www.worldbank.org/en/news/press-release/2022/06/29/covid-19-drives-global-surge-in-use-of-digital-payments), one result of the pandemic has been a focus on financial inclusion, driving a notable increase in digital payments globally. World Bank Group President David Malpass further states that the digital revolution is transforming the ways in which people make and receive payments. The [2020 McKinsey Global Payments Report](https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/accelerating%20winds%20of%20change%20in%20global%20payments/chapter-3-supply-chain-finance-a-case-of-convergent-evolution.pdf) shows there is incredible room for growth within supply-chain finance with a potential market of up to $17 trillion globally. The trend toward growth is likely to continue to accelerate as the pandemic and related trade conflicts continue to slow the supply chain.

**What is B2B BNPL Really Doing?**

B2B BNPL brings the ease of the B2C [buyer experience](https://www.financedigest.com/2021-the-year-of-buyer-experience.html "2021: The year of buyer experience") to B2B – offering a seamless, all-digital working capital solution that enables SMEs to purchase key recurring inventory essential to the growth of their business. B2B [BNPL is a win-win solution](https://www.financedigest.com/exploring-the-key-features-of-bnpl-solutions.html "Exploring the key features of BNPL solutions") for businesses and suppliers; businesses can take advantage of additional funding days on existing payment terms while suppliers benefit from getting paid upfront. This solution allows buyers to negotiate better terms and costs with their suppliers, enabling them to boost their purchasing power, increase cash flow, and optimize their working capital.

Compared to [digital payment](https://www.financedigest.com/can-i-please-speak-to-someone-why-building-relationships-is-still-crucial-in-digital-payments.html "“Can I please speak to someone?” Why building relationships is still crucial in digital payments") counterparts, B2B payments have been slow to digitize and modernize. It is estimated that annual B2B payments volume totals approximately $120 trillion per year globally and roughly $25 trillion per year domestically. Of the B2B (Business-to-Business) numbers being reported, only 1 out of 3 [payments are being processed](https://www.financedigest.com/are-your-payment-processes-in-cheque-for-the-new-legislation.html "ARE YOUR PAYMENT PROCESSES IN CHEQUE FOR THE NEW LEGISLATION?") electronically, versus 2 out of 3 for B2C (Business-to-Consumer) spending. The majority of these [B2B payments](https://www.financedigest.com/how-can-you-reduce-the-risk-of-fraud-in-b2b-payments.html "How can you reduce the risk of fraud in B2B payments?") are conducted by SMBs (Small-to-Medium-Sized Businesses) who make up 99% of the businesses in the US. This is a massive market and a huge opportunity for growth within the B2B electronic spending sector.

Not surprisingly, this multibillion [dollar B2B market](https://www.financedigest.com/dollar-rebounds-as-brainard-assures-markets-fed-will-stay-the-course.html "Dollar rebounds as Brainard assures markets Fed will stay the course") is attracting attention and funding, marked by heavy investments by venture capitalists and investment firms. [These kinds of announcements](https://www.pymnts.com/news/b2b-payments/2019/ivalua-transferwise-fintech-funding-unicorn/) are becoming more commonplace as the interest and growth in FinTech becomes more mainstream.

**The [Future of B2B](https://www.financedigest.com/why-embedded-finance-will-be-integral-in-the-future-of-b2b-marketplaces.html "Why embedded finance will be integral in the future of B2B Marketplaces") BNPL**

Buyer and suppliers still rely heavily on manual AP/AR processes and outdated technology which can hinder payment efficiency and stunt financial health within the [supply chain](https://www.financedigest.com/minimising-supply-chain-cyber-risks-by-asking-the-right-questions.html "MINIMISING SUPPLY CHAIN CYBER RISKS BY ASKING THE RIGHT QUESTIONS"). Traditionally, B2B payments require manual processes and human intervention. It’s not only expensive with [research firms reporting estimates of up to USD$15 to process](https://www.financedigest.com/alzheimers-research-uk-streamlines-cheque-processing-with-checkprint.html "Alzheimer’s Research UK Streamlines Cheque Processing with Checkprint") a single invoice, but it also leaves significant room for error.

The traditional B2B payments process flow starts with supplier invoicing and then trails through a long, manual process that touches the buyer, their finance team, banks, possible transit time, facilitating the payment, and finally the supplier identifying and reconciling the [payment on their end](https://www.financedigest.com/the-end-of-payments-as-we-know-it.html "The end of payments as we know it"). The automation offered through B2B BNPL [means that the buyer](https://www.financedigest.com/what-brexit-mean-for-british-buyers-in-spain.html "WHAT BREXIT MEAN FOR BRITISH BUYERS IN SPAIN") can pay the supplier directly, securely, and automatically without the added middle man.

_B2B BNPL [digitizes B2B payments](https://www.financedigest.com/italys-nexi-signs-digital-payments-deal-with-tims-olivetti.html "Italy’s Nexi signs digital payments deal with TIM’s Olivetti"), reducing supplier risk while maximizing profitability. This option enables businesses to access better pricing, inventory, and [increase their purchasing](https://www.financedigest.com/how-to-increase-repeat-purchase-rates-in-ecommerce.html "How to increase repeat purchase rates in eCommerce") power. With_ [_BNPL transaction volume expected to reach $680 billion_](https://www.pymnts.com/bnpl/2022/bnpl-for-business-fills-funding-gap-gets-suppliers-paid-quicker/) _worldwide by 2025, there is a clear indication that consumers and businesses are willing to embrace installment payments as a convenient and less expensive option for funding._

_BNPL is attractive to both the consumer and the retailer. Consider B2C BNPL transactions; consumers can avoid high interest payments if payments are made on time, and_ [_retailers can depend on_](https://www.forbes.com/sites/forbesfinancecouncil/2022/02/09/how-buy-now-pay-later-could-transform-traditional-b2b-trade-finance-models/?sh=6661bf8f7a69) _higher average order values and better conversion rates. This is translating seamlessly to the B2B markets._

_The benefits of digitizing B2B [payments can be transformative](https://www.financedigest.com/2021-predictions-realising-the-value-of-payments-transformation.html "2021 Predictions: Realising the Value of Payments Transformation") for buyers and suppliers alike. By [streamlining tedious AR/AP processes and giving suppliers real-time visibility into payment](https://www.financedigest.com/emvco-streamlines-approval-process-for-mobile-payment-devices.html "EMVCo Streamlines Approval Process for Mobile Payment Devices") processes, buyers and suppliers can reduce the operational expenses associated with outdated payments processes. [Digitization means](https://www.financedigest.com/making-sure-that-finservs-digital-transformation-doesnt-mean-digital-exclusion.html "Making sure that FinServ’s digital transformation doesn’t mean digital exclusion") that all parties can more accurately manage and forecast cash flow._

**The** [Bottom Line](https://www.financedigest.com/the-severe-impact-of-downtime-on-companies-bottom-lines.html "The severe impact of downtime on companies’ bottom lines")

The [supply chain](https://www.financedigest.com/5-steps-to-successful-supply-chain-finance.html "5 Steps to successful supply chain finance") issues that have been plaguing businesses are unlikely to disappear anytime in the immediate future. In order to continue to be successful in this new climate, businesses need to be ready to think outside the box and look at innovative [ways to work around](https://www.financedigest.com/5-time-efficient-ways-to-travel-around-the-philippines.html "5 Time-Efficient Ways to Travel Around the Philippines") supply issues. B2B BNPL solutions will continue to benefit [businesses as they are adopted into mainstream financing](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances") options.


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