The 3 big motivators for Aussie businesses to switch to Buy Now – Pay Later
Australian businesses have had enough of traditional credit offerings and now want the same Buy Now – Pay Later deals they can get as consumers. Here’s why Buy Now – Pay Later is a win-win for everyone’s cashflow:
1. Small businesses are stuck using personal credit cards
Many small business owners are sick of the terms and limits of personal credit cards, but the mainstream credit card providers don’t give them much choice.
The fact is, small businesses really struggle to get business credit, even for modest amounts. Unlike consumers, their books might not show the same ‘employee-like’ regular cashflow like a consumer – and a “high growth, entrepreneurial SME is highly unlikely to demonstrate cash flow in this way”, notes a March 2019 report “Review of payment terms, times and practices” by the Australian Small Business and Family Enterprise Ombudsman.
Take one Australian software powerhouse for example: in 2002 Mike Cannon-Brookes and Scott Farquhar founded Atlassian with $10,000 of personal credit card debt because it was the most available credit option. They backed themselves with a credit choice that made them personally liable… and fortunately they successfully paid it off fairly quickly.
Sure, they were just starting out – and not every business dream will hit $50 billion valuation – but it’s unremarkably common for start-up and small business owners to put personal credit on the line. VISA reported that in Australia around $60 billion-worth of business expenses are charged on personal credit cards every year.
It sounds like a lot of money, but your small business customers’ personal credit card limits might prevent them from making big purchases. Or repeat purchases of things they really need now. Your customers who can’t access reasonable business credit wait until their cashflow is healthier – and you miss out on sales.
2. Traditional business credit is complicated
Whether you’re buying or selling, the old-fashioned ways of managing business credit heavily favour the big banks. They’ll earn decent interest whichever way the transaction is handled, plus fees for payment processing and other services. But merchants end up doing most of the heavy lifting to get paid by their small business customers. And carry a lot of the risk.
It’s complicated enough for you as the merchant to manage your own lines of credit with your suppliers and banks. Then you have to bear the burden of administering credit terms for your small business customers because they can’t get simple credit anywhere else – and your cashflow suffers.
The simple solution is to seriously restrict the lines of credit you offer customers. All the admin and hassle involved in managing lines of credit can be costly for you as it is, before factoring in unpaid invoices.
Sadly, there’s the risk of customers paying late or defaulting.
Often it’s because the small business owners have been paid late by their own customers – the worst offenders for cashflow-destroying late payments are government and big business according to the March 2019 report by the Australian Small Business and Family Enterprise Ombudsman. The same report noted 60% of businesses across Australia pay their invoices late; and “late payments are … significantly slowing the growth of Australian small businesses”.
No doubt, late payments on invoices are terrible news all round, for you and your small business customers.
3. Buy Now – Pay Later drives sales
Consumers are comfortable buying what they want on Buy Now – Pay Later plans, especially if they know the repayment terms are fair and easy to budget for. This year more than 5.8 million Australians used a Buy Now – Pay Later option when it was offered.
Your small business customers want to do good business with you – spending much larger amounts than they would for consumer purchases – because what you offer helps their own businesses succeed. And when you’ve helped them succeed, they’ll want to do bigger business with you.
So, if you want to make good sales, you need to make it easy for them.
Now you can give your business customers a Buy Now – Pay Now option with Finstro: they’ll get everything they need, and you’ll get paid instantly at the point of sale.
Finstro’s Buy Now – Pay Later service qualifies your customers quickly, often in less than 5 minutes, so you can get on with doing business:
- Your qualified customers will get the supplies and services they need from you
- You’ll get paid immediately by Finstro
- We’ll handle the line of credit for your customers – and help their cashflow by giving them fair and flexible payment terms for up to 6 months.
FIND OUT HOW QUICKLY YOU CAN SPEED UP YOUR CASHFLOW WITH FINSTRO’S SIMPLER, FAIRER BUSINESS LINE OF CREDIT FOR YOUR SMALL BUSINESS CUSTOMERS.
Call 1800 693 467