What are the advantages of deferred payment for customers and suppliers?

What is deferred payment in B2B?

As the name suggests, deferred payment is the extension of the payment period for a good or service. Payment terms are governed by law, and always specified in the contract between buyer and merchant. In general, they are set at 30 days after receipt of the product or service, 45 days end of month after issue of the invoice, or 60 calendar days.

Deferred payment is a game-changing arrangement: it allows the customer to pay not at the time of purchase, but within 90 days of it. It's a flexible practice: depending on their possibilities and preferences, the buyer can choose to pay the invoice before the 90 days, or to be debited automatically once this period has elapsed. And all at no extra cost!

Like many new products, the adoption of deferred payment first began in a few B2C chains and sectors, and is now particularly widespread in the food, fashion and paramedical sectors.

It was only in a second phase that deferred payment was extended to the B2B sector; this phenomenon has only recently become widespread, and was not introduced until 2017-2018. With the health crisis and the associated cash flow difficulties, deferred payment has become even more widespread.

The benefits of deferred payment for merchants

In terms of average basket size, B2B transactions are much larger than B2C transactions. This means that merchants have to redouble their efforts to acquire and retain customers, and that more customers need payment facilities.

Beyond the quality of products or services, it is above all the customer experience that is decisive in B2B, and that will make the difference between two merchants. In this respect, offering deferred payment is a key competitive advantage that removes a number of disincentives to purchase.

Deferred payment allows you to :

• Build customer loyalty by enhancing their experience

• Establish a relationship of trust with customers

• Increase conversion rates and the number of sales, by avoiding the obligation to pay at the time of ordering

• Better control over working capital requirements

By offering this payment facility, merchants gain a competitive edge and increase their conversion rates.

Of course, this is done without any risk of non-payment or late payment: these risks are taken care of by the platform, which means that the merchant gets paid when the order is placed, and can manage his cash flow with complete peace of mind.

The benefits of deferred payment for customers

If deferred payment is so successful, it's first and foremost because it offers numerous advantages for the buyer.

The first and most obvious advantage is flexibility. With deferred payment, the buyer chooses when it is most advantageous for him to pay for his order, enabling him to continue purchasing even if his account is not sufficiently funded. In this way, they can be delivered as soon as they wish, while managing their cash flow more flexibly.

It's important to note that this solution has nothing to do with a bank overdraft. With deferred payment, customers can use a good or service for as long as it takes to build up their cash flow, without going into overdraft. It's ideal for start-ups, or for maintaining business in times of crisis!