Using a B2B BNPL Solution to Improve Working Capital
Fact-checked by: Bruce Sayer
In today’s economic environment of uncertainty, supply chain woes, and rising interest rates, maximizing working capital and shortening the cash conversion cycle is more important than ever for buyer enterprises.
Even in the best of times, a working capital lift is vital and has been a key driver for companies adopting supply chain finance (SCF) programs. With SCF, the working capital lift is typically attained by implementing a terms extension for suppliers (i.e. paying in 60 days vs. 30 days; allowing the buyer to hang on to their cash for an additional month). To offset the negative impact on the suppliers, early payments are offered through a third-party funder. However, if the supplier doesn’t choose to pay the small fee for the early payment, they will be paid in full at 60 days instead of 30; not a great situation with an already strained supply chain.
The result of all this is the eschewing of attempts to implement formal terms extensions by buyers.
And it leads to an important question: how, then, do buyers achieve a working capital lift? Even if they have an early-payment program for suppliers (funded by a third party), under traditional SCF programs they still have to pay the financier at maturation of terms.
Up until now, there have been no good answers. The original terms have been the terms; the supplier was getting paid when the invoice said it was time to get paid.
But that’s not the case any more.
B2B BNPL
eCapital recently introduced B2B Buy Now, Pay Later (B2B BNPL) as part of our SCF offerings. With B2B BNPL (also known as Synthetic Term Extension), buyers have the flexibility and control to choose how long they want to hold onto their cash, while suppliers are still getting paid at terms or earlier (remember, suppliers still have the option to use the early-pay option on any or all of their approved invoices). The buyer simply chooses which supplier invoices they want to pay beyond original terms and eCapital takes care of the rest. This creates a working-capital lift without a terms extension and eases any strain on the buyer/supplier relationship.
By allowing buyers to choose which invoices are included in the B2B BNPL option, they have the flexibility to better control their working capital. That is, when they need the working-capital lift, they can pay beyond the terms, and when they don’t, they pay at terms.
For example, if a company has 30-day terms with a supplier, eCapital’s B2B BNPL allows the buyer to pay up to 60 days after the invoice date, if they choose.
As B2B BNPL is used with a comprehensive working capital and payments platform, eCapital will direct all funds to where they need to go – either to eCapital or the supplier (if early payment isn’t taken). So not only do buyers improve cash flow, but they also gain efficiencies in their AP processes and save valuable time and resources.
Conclusion
Managing working capital while keeping a healthy, viable supply chain is hard. And the current economic climate makes it even harder. What’s good for one isn’t traditionally good for the other. With eCapital’s B2B BNPL, we’ve changed that calculus. Now you can have control over your working capital while fostering a healthy supply chain.
Contact us to discover how B2B BNPL can help you unlock working capital, strengthen supplier relationships, and bring greater control and efficiency to your payables process.
Key Takeaways
- A working capital lift is vital and has been a key driver for companies adopting supply chain finance (SCF) programs.
- Under traditional SCF programs suppliers can be paid early, but buyers have to pay the financier at maturation of terms. How, then, do buyers achieve a working capital lift?
- eCapital recently introduced B2B BNPL as part of our SCF offerings.
- With B2B BNPL, buyers have the flexibility and control to choose how long they want to hold onto their cash, while suppliers are still getting paid at terms or earlier.
ABOUT eCapital
At eCapital, we accelerate business growth by delivering fast, flexible access to capital through cutting-edge technology and deep industry insight.
Across North America and the U.K., we’ve redefined how small and medium-sized businesses access funding—eliminating friction, speeding approvals, and empowering clients with access to the capital they need to move forward. With the capacity to fund facilities from $5 million to $250 million, we support a wide range of business needs at every stage.
With a powerful blend of innovation, scalability, and personalized service, we’re not just a funding provider, we’re a strategic partner built for what’s next.
eCapital Corp
eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.
