B2B pay later gets you paid at checkout and moves buyer risk. Invoice finance funds your own terms. How risk, cost and control compare for a supplier.
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B2B Buy Now Pay Later · Invoice Finance · Trade Credit
Offering trade customers time to pay and getting paid today are two different products. Pay later at checkout hands the buyer's debt to a platform. Invoice finance funds the terms you already give. Here is how they compare on cash, risk and cost.
Quick Answer
B2B buy now pay later pays you for each approved sale and moves the buyer's credit risk to a platform, while invoice finance advances cash against invoices on your own terms and usually leaves the risk with you. Pay later suits many smaller trade orders; your own facility suits an established ledger. The comparison table below sets out cash timing, risk and cost side by side.
Also called: trade credit platform, pay later for business, embedded trade credit. Embedded trade credit usually means the pay later option sits inside the supplier's own checkout, quote or invoice.
What is B2B buy now pay later?
B2B buy now pay later is a service that pays a supplier for a trade order at or soon after the sale and gives the business buyer time to repay the platform, on a fixed term or in instalments. The buyer chooses pay later at checkout, on a quote or through a link on the invoice. The platform checks the buyer, sets a buyer credit limit and does the collecting. The supplier gives up a merchant fee on every sale, which varies by platform, in exchange for being paid and not chasing the debt.
That is a different arrangement from your own trade terms. When you give a customer thirty days yourself, you decide who qualifies, you wait for the money and you wear the bad debt. Pay later hands those three jobs to someone else. Whether that is worth the fee depends on your margins, your order sizes and who your customers are, which is the decision this insight is built around. For where this sits among the other options for owners, see the Business Owners Hub.
Can businesses use buy now pay later in Australia?
Businesses can use buy now pay later in Australia, both as buyers spreading the cost of stock, parts and supplies and as suppliers offering it to trade customers. Consumer pay later apps are built for personal purchases, so trade buying usually runs through a platform designed for business accounts.
Those platforms assess the business before they approve it. Expect a check of the ABN, trading history and often the director, which can include a credit enquiry on the director's file. For a self-employed buyer, that is worth knowing before signing up to several platforms at once. For a supplier, the useful question is not whether the product exists but whether your buyers will use it and whether your margin can carry the fee.
How does a supplier get paid upfront when the buyer pays later?
The platform pays the supplier, less its fee, once it approves the buyer and the order is confirmed, then collects from the buyer over the agreed term. The usual sequence looks like this:
- The buyer picks pay later at checkout. Online, on a quote or through a payment link on the invoice.
- The platform approves the sale. It checks the buyer and approves the order against that buyer's credit limit, or declines it.
- You deliver and the platform settles. Settlement typically follows delivery or acceptance, with timing that varies by platform.
- The buyer repays the platform. On the term or instalments agreed with the platform, not with you.
Invoice finance runs the other way around. You sell on your own terms, issue the invoice, and a funder advances part of the value of your accounts receivable. You receive the balance, less fees, when your customer pays. There is also a third route, where a large customer runs an early payment program through its own bank, covered in supply chain finance for small suppliers.
In practice, pay later is decided sale by sale at the front of the transaction. Invoice finance is a facility that sits behind your whole ledger, drawn as invoices are raised.
Who carries the credit risk with B2B pay later and with invoice finance?
With most B2B pay later platforms, the platform carries the buyer's credit risk once it approves a sale, while with most invoice finance facilities the supplier still carries it, because facilities are commonly written with recourse. That single difference explains most of the gap in price between the two.
- Buyer non-payment on an approved sale
- Reminders, collections and chasing
- Setting and reviewing each buyer credit limit
- Disputed, short-shipped or returned goods, where the payment is reversed
- Sales the platform declines
- Unpaid invoices in a recourse invoice finance facility
Read the reversal clauses closely. Most merchant agreements let the platform claw back a payment where the buyer disputes the goods or delivery was not confirmed, so the dispute risk often comes back to you even when the credit risk does not. And a buyer the platform declines is still your customer. You either lose the sale or offer your own terms, which is where your own process for checking a customer before giving credit matters. The platform's credit limit for that buyer is its decision, not yours.
How do B2B pay later, invoice finance and trade credit insurance compare?
The three solve different problems: pay later gets you paid and moves the buyer's risk, invoice finance gets you paid on your own terms but usually leaves the risk with you, and trade credit insurance moves the risk without getting you paid any sooner.
| Question | B2B pay later | Invoice finance | Trade credit insurance |
|---|---|---|---|
| When does the cash arrive? | Soon after an approved sale is confirmed; timing varies by platform | An advance soon after you invoice, the balance when the customer pays | When the customer pays, or as a claim after a covered default |
| Who carries the bad debt? | Usually the platform, on approved sales | Usually you, unless the facility is non-recourse | Usually the insurer, within the policy limit and above any excess |
| Who sets the buyer's limit? | The platform | You set terms; the funder sets limits on each debtor | The insurer sets a limit for each buyer |
| What does it cost? | A merchant fee on every sale; varies by platform | Typically a discount fee plus a service fee; varies by funder | A premium, typically linked to insured turnover; varies by insurer |
| Does the customer know? | Yes, the buyer signs up with the platform | Disclosed facilities notify customers; confidential ones may not | Usually not |
| Does it fund invoices you already hold? | No, it works sale by sale at checkout | Yes, it works on the ledger you already have | No, cover generally applies to sales made under the policy |
| Where does it usually fit? | Many smaller trade orders, new buyers, online trade stores | Established customers on typical thirty to sixty day terms | Large exposures to a small number of buyers |
Whether your customers know a funder is involved is a choice in invoice finance, not a given. The confidential option is explained in invoice discounting in Australia.
What does B2B pay later cost a supplier?
The main cost of B2B pay later is a merchant fee on every sale, which varies by platform and is usually charged as a percentage of the order value, often higher when the buyer takes a longer term. Some platforms add setup, integration or dispute fees, and some set minimum volumes. Ask for the full fee schedule, not the headline rate.
Invoice finance is priced differently. Charges are typically a discount fee on the funds advanced plus a service or administration fee, both of which vary by funder. The funder advances a share of each approved invoice, known as the advance rate, typically somewhere around 70 to 90 per cent depending on the funder, with the balance paid when the customer settles.
The fair comparison is against your margin. On thin-margin wholesale orders, a fee taken on every sale can cost more than a facility drawn only when cash flow is tight. On high-margin orders to new buyers you would never give terms to yourself, the fee can be cheaper than one bad debt. The wider trade-offs of invoice finance itself are covered in the invoice finance guide.
Is B2B buy now pay later regulated in Australia?
Buy now pay later for consumers is now regulated as credit in Australia, but business purpose trade credit generally sits outside that consumer regime. The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 brought buy now pay later contracts under the National Credit Code, and ASIC's guidance says anyone engaging in credit activities involving those contracts has needed an Australian credit licence since 10 June 2025.
The National Credit Code is generally understood to cover credit provided to individuals for personal, domestic or household purposes. A platform giving a business time to pay for business purchases is usually treated as outside it, which means the protections consumers now have may not apply to your buyers or to you. That does not mean no rules apply at all, and where the line falls for a particular arrangement is a legal question. For a supplier, the practical step is reading the merchant agreement: reversals, dispute handling, fees and how either side can exit.
Sources: ASIC, Buy now pay later credit contracts: credit licensing (INFO 285), for the licensing of buy now pay later contracts. Read 13 November 2026.
When is your own invoice finance facility the better choice?
Your own debtor facility is usually the better choice when your customers are established businesses already paying on your terms, the orders are large, and you want to keep the customer relationship and your pricing in your own hands. Signs it fits:
- A handful of solid customers on longer terms. The classic case is paying wages while waiting on sixty day invoices, set out in funding wages on 60 day terms.
- Customers who will not sign up to a platform. Large buyers pay on their own processes and rarely change them for a supplier.
- A fee on every sale costs more than funding when needed. A facility is drawn against the invoices you choose to fund, depending on the facility type.
- One limit across the whole ledger. A funder sizes it against debtor quality and spread, and caps any one customer, explained in debtor concentration limits.
An invoice finance funder starts with who owes you the money, not only your own numbers. Pay later works the same way at the buyer level, which is why it tends to suit many smaller orders from many trade buyers, including new accounts you would rather not extend credit to yourself.
Many suppliers end up with both: pay later on the online trade store for new and occasional buyers, and invoice finance behind the established ledger. If the cash need is not tied to invoices at all, a business line of credit may fit better. The provider types behind these facilities are compared in the invoice and debtor finance providers guide.
Pay later and invoice finance answer different questions. B2B pay later gets you paid sale by sale and usually moves the buyer's credit risk to a platform, for a merchant fee on every sale. Invoice finance funds the terms you already give your established customers and usually leaves the credit risk with you, at a cost tied to what you draw. Trade credit insurance moves the risk but not the timing. Many suppliers end up using pay later at the front door and their own facility behind the ledger.
Key takeaway: compare the fee on every sale against your margin and your customer mix, then decide whether you need cash, risk cover, or both.Frequently Asked Questions
A supplier can get paid upfront and still give customers terms by having a third party fund the gap, either a B2B pay later platform at checkout or an invoice finance facility behind its own invoices. Pay later pays you for each approved sale and the platform collects from the buyer. Invoice finance advances against invoices you have issued on your own terms, and the provider types are compared in the invoice and debtor finance providers guide.
B2B buy now pay later in Australia works by a platform paying the supplier for an approved trade order and giving the business buyer a set term or instalments to repay the platform. The platform checks the buyer, which may include a credit enquiry on the director, and sets a buyer credit limit. The supplier pays a merchant fee on each sale, which varies by platform.
The risks of offering buy now pay later to business customers sit mostly in the merchant agreement: payment reversals on disputed or returned goods, fees that eat into margin, and buyers the platform declines. You also hand part of the customer relationship to the platform. Declined buyers still need a decision from you, so a clear process for checking a customer's credit helps.
Trade credit is not quite the same as buy now pay later, because trade credit is the time a supplier gives a customer to pay under the supplier's own trade terms, while B2B pay later is a third party paying the supplier and giving the buyer that time instead. With trade credit, the supplier carries the debt. With pay later, the platform usually does, on approved sales.
If a buyer disputes a pay later purchase, the platform will usually pause collection and may reverse or hold back the payment it made to the supplier until the dispute is resolved, depending on the merchant agreement. That means the dispute risk often comes back to the supplier even when the credit risk does not. Invoice finance funders treat disputed invoices in a similar way, which is part of what a funder reads in your debtor book.
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