Small Businesses Benefit from Broad Range of “Buy Now Pay Later” Services

The appeal of buy now, pay later services is easy to understand.  There’s something about the psychology of seemingly getting something for nothing at the time that never fails to win over consumers and businesses alike.

Of course, this is far from a ‘something for nothing’ service and almost always involves additional charges for use of the facility. The buyer ultimately ends up paying more than they would have, had they made the purchase outright, but the flexibility of being able to pay later (or gradually) can be an absolute godsend.

By 2022, approximately 17 million consumers in the UK had used such specialist services (or apps) of some kind.  On a global basis, the figure grows to a whopping 360 million consumers, and app downloads reached almost 10 million during the first half of the year alone and further exponential growth is expected over the coming years.

Lending to Small Businesses on the Rise

One of the UK’s leading Fintech lenders, Funding Circle, believes that the market for short-term lending to smaller businesses has great potential, with this market, in particular, offering huge flexibility for lenders and businesses alike.

Consequently, Funding Circle confirmed that it would be significantly scaling up its ‘FlexiPay’ product over the coming months, in line with growing demand from smaller businesses and SMEs.

“This is the thing that I’m probably the most excited about that we’re doing”, said CEO Lisa Jacobs.

“It moves us from being a term loan product, it builds on the tech platform that we’ve built, the customer advocacy that we’ve got, and the strong position that we’re in and moves us into being a multi-product and more frequent part of our customer’s lives.”

Funding Circle initially introduced its FlexiPay service on something of a trial basis to 850 of its existing business customers, before rapidly expanding its availability as of April.

“It’s gone down very well. We’ve had nearly £12m of credit limits approved, and the engagement has been higher than we anticipated,” Jacobs added.

“Transactions are, on average, about 20 per cent higher in terms of the amount. They’re happening about twice as frequently as we had initially anticipated,”

“We will ramp up in the second half of the year as a fully-fledged product,”

“This is a really great product proposition that moves us into a new market space as well moves more into that payment space,”

“We’re really excited about this and see it being a big part of our business going forward.”

Flexible and Affordable Funding

Praised by some and criticised by others, these services are nonetheless proving immensely popular among smaller businesses with limited cash flow. With the facility offered by Funding Circle, SMEs are offered flexible credit facilities of between £2,000 and £30,000 and are able to spread the costs of purchases, investments and general outgoings over the course of three months.

All of which is offered at a flat rate of 3% against the total cost of the facility.

“We found that small businesses really find that very valuable for managing cash flow. And some of them actually get a discount for paying early And so they’re taking arbitrage and making a bit of money,” Jacobs said.  

“Others are just using it to save and manage their cash flow, particularly during bumpy periods.  Cash flow is always the thing that comes up in terms of small businesses’ biggest pain points.”