Payments, buy now pay later comes to B2B

The 'buy now pay later' leaves the boundaries of the consumer market and becomes a new solution for supply chain finance. Bnpl in its B2B form is in fact a payment method that allows corporate customers of a large lead supplier to buy its products by postponing payment for up to 90 days compared to traditional payment terms, based on the supplier's standing.

This is the latest innovation in supply chain finance, which is playing an increasingly strategic role in companies' access to credit in the face of the liquidity squeeze between inflation and rising interest rates, as indicated by the Supply Chain Finance Observatory of the Politecnico di Milano. With this in mind, companies are increasingly exploiting supply chain relationships to reduce the cost of capital and streamline the lending process. It is no coincidence that reverse factoring, the supply chain partnership that facilitates the transfer of invoices to suppliers by exploiting the customer's creditworthiness, has seen the greatest growth among the most popular solutions, jumping 10% to EUR 8.9 billion. Still dominating the market are the more traditional formulas of factoring, which remained stable at EUR 60.4 billion, and advance invoicing, also unchanged at EUR 54 billion.

Overall, the value of the working capital of Italian companies continues to grow with an increase of between 0.5 and 3% to EUR 563-575 billion after +10% in 2022, but the market actually served by supply chain finance solutions stops at less than a quarter: EUR 130 billion, or 23% of potential, according to the Observatory's estimates. Although their numbers are still limited, B2B credit cards (+13%), dynamic discounting (+32%) and invoice trading (+24%) show double-digit growth rates. But these three solutions do not add up to 5 billion in total.

There is a slight decrease in the cash cycle, which drops to 30 days on average (-5%), but with a strong disparity that sees micro-enterprises having a cycle of more than three times as long (103 days), which jeopardises their financial sustainability. Indeed, SMEs have the most to gain from efficient management of liquidity and working capital, especially in terms of availability: 57% need access to sources of credit within a week, of which 30% within 24-48 hours, according to a survey conducted in collaboration with Workinvoice. To date, SMEs favour traditional solutions such as loans and credit lines, partly because they are still unfamiliar with supply chain finance models, which could be of great support in terms of speed and efficiency. In addition to fast and streamlined processes, companies, especially small ones, are looking for human advisory support to guide them in their financial choices. But technology can also be of help in finding the best solutions and increasing knowledge: "Companies," emphasises Antonella Moretto, director of the Observatory, "increasingly appreciate ecosystem models such as digital platforms that integrate advanced technologies to improve and speed up all processes for the choice and adoption of the most appropriate solutions for the individual company: from a simple enabler, the platform model is taking on a central role in orchestrating flows and comparing offers, with the addition of relevant ancillary solutions such as supplier risk rating or sustainability rating.