The COVID-19 pandemic resulted in 2020 being defined by a huge uptake of business-to-customer (B2C) payment services, such as contactless transactions and online shopping.

As businesses across the globe assess how they will bounce back and upscale their capabilities, there are unprecedented opportunities for the acceleration and adoption of fintech innovation in the business-to-business (B2B) space.

Breakthrough fintech technology in postpay options will result in a revolutionary and transformative year for B2B payments in 2021.

The past year has been a boom for B2C focused fintechs, such as the explosion of Buy Now, Pay Later (BNPL) and pay-by-instalment services. However, there continues to be a substantial gap in the B2B financial services market.

The universal challenges for B2B trade continues to be the time it takes to get paid and following up debtors.

These issues impact a company’s cash flow and access to capital.

The reasons for slow payment times include:

• Inconvenient payment processes – for suppliers and customers. Manual invoicing and paper checks are time consuming.
• Data entry errors – such as keying in incorrect credit card details. In Australia most B2B payments occur using bank transfers, which expose a business to mistakes, fraud and security breaches.
  
• Poor integration – between payments and other business systems and processes.
  

 Buy Now, Pay Later

Australia leads the way in the Asia-Pacific region for offering trade credit to customers. Trade credit now accounts for more than 70 per cent of the total value of B2B sales for Australian companies. This trend is likely to continue because BNPL is a quick way to sell goods and services. 

A major flaw with BNPL is that all of the financial risk remains with the supplier until the invoice is paid. Fintech innovations next year will help reduce this risk by offering an AfterPay type solution in the B2B space designed to help businesses get paid quicker.