Why Buy Now, Pay Later is the Fastest Growing Payment Method for Distributors

Today’s customers have higher expectations than ever before for fast, digitised transactions.

However, it’s a mistake to assume this shift is reserved for small, day-to-day B2C purchases.

The distribution industry is experiencing this demand first-hand. In a recent Klipboard survey of over 500 distribution companies, 56% reported a ‘massive’ shift towards digital payment methods.

At the centre of this transition are credit and financing solutions, including Buy Now, Pay Later.

In fact, our research suggests distributors believe Buy Now, Pay Later will be the fastest growing payment method in the next five years.

But why is Buy Now, Pay Later so appealing to distribution businesses?

It protects cash flow

One of the biggest draws of Buy Now, Pay Later is the ability to offer flexible payment terms to customers.

Traditionally, delaying or spreading costs would mean distribution businesses taking on credit risk – agreeing to defer payments which, until they arrive, take money directly out of an organisation’s working capital.

For cash-strapped distributors operating on thin profits of 2-4%, that means less money for stock, wages and day-to-day operations, and less investment in growth.

This can build up over time. In fact, the UK government estimated that in May 2026, UK organisations were owed £70.4 billion in unpaid invoices – an average of £12,357 per business.

Buy Now, Pay Later allows distributors to offer payment terms without increasing credit limits, opening new trade accounts or growing their debtor book. It gives customers flexibility, but ensures the distributor gets paid up front and in full.

This way, customers can spread their costs over time, while the Buy Now, Pay Later provider takes on the risk and manages repayments.

It wins sales that might have been delayed

The appeal of flexibility is as relevant for distributors as it is for customers.

If a customer doesn’t have the funds available and a distributor can’t or won’t offer flexible terms, this can lead to lost business.

This is especially true for seasonal businesses that may be struggling with their own cash flow.

As a result, the buyer may end up choosing to delay work, and the long-term revenue they would offer could be lost to a competitor.

Offering Buy Now, Pay Later fixes this. Buyers can spread payments in line with their own resources, and distributors can win sales that might have been delayed.

It attracts new customers

Buy Now, Pay Later can also differentiate businesses by providing the flexible payment options customers are looking for.

For buyers strapped for cash and conscious of price, the option to spread payments over time removes a common barrier to purchase, and can give a distributor the edge when compared to the rest of the market.

In the world of B2C, research conducted by PYMNTS found that 87% of buyers that use Buy Now, Pay Later say the availability of these plans influences where they shop.

What’s more, Millennials and Gen Z buyers are 13 times more likely than baby boomers to consider financing options when deciding where to buy, which suggests they’ve grown accustomed to having payment flexibility as an option.

It’s not unreasonable to suggest that, in B2B, many buyers also place emphasis on flexible finance options when comparing different merchants.

It improves customer retention

Another crucial benefit of Buy Now, Pay Later is its ability to encourage repeat purchases from customers.

If a customer has the payment flexibility they need to manage their own cash flow, it becomes easier to make purchases – even outside of seasonal peaks and during quieter trading periods.

In fact, research conducted by the American Marketing Association found that, ‘by alleviating perceived financial constraints, Buy Now, Pay Later instalment payments encourage customers to spend more.’

Put simply, the easier and more straightforward it is for buyers to make a purchase, the more likely they’ll be to return.

It increases order value

On top of winning new customers and improving retention, offering flexible payment terms can encourage customers to spend more.

Instead of splitting the order for all the stock they need for a project over several months, Buy Now, Pay Later gives customers the option to buy it now, without the pressure to pay upfront.

As a result, customers are often able to place larger orders, add more items to their basket, or purchase higher-value products they may have otherwise delayed or scaled back.

It reduces the burden of payment administration

It’s not just the financial burden distributors take on with trade credit terms. In these arrangements, it’s ultimately up to the business to send reminders and follow up overdue invoices to make sure they get paid on time.

This takes up valuable time for staff and finance teams – in our Payments in Distribution report, 97% of the businesses we surveyed stated that they employ at least one person entirely dedicated to payments and credit control.

For an industry already facing margin pressure, slow growth and labour shortages, payment admin is another headache distributors don’t need.

Buy Now, Pay Later providers like Klarna, Billie and Affirm manage the customer’s repayment schedule, saving valuable time organisations would have spent chasing payments, answering queries and managing credit accounts.

Let your customers pay their way with Klipboard Money

With Klipboard Money, distribution businesses can enable Buy Now, Pay Later via Klarna and Affirm for B2C transactions and Billie for B2B.

There’s no need to switch platforms or adopt another provider – with Klipboard Money built into your existing business management software, you can manage payments easily, and offer buyers the flexibility in payment methods and financing they’re looking for.

If you’d like to learn more, contact the Klipboard Money team here.