Podcast June 28, 2022

Revolutionizing Buy Now, Pay Later

In the B2C space, buy now, pay later companies are one of the trendiest ways to get what you need fast.

For B2B, it’s an upticking trend that Alternative is capitalizing on.

Imagine being able to afford a small business loan that will change the capabilities and profitability of your company. That’s what Alternative is doing with its integrated solution for the changing landscape of interest and approval rates.

Baxter Lanius, CEO, and Founder at Alternative, walks us through the company’s goals and niche market.

Join us as we discuss:

  • How Alternative is creating a unique buying experience for buy now, pay later
  • Macro trends in the debt capital market
  • Why embedded finance is the payment of the future

“We focus on both the quality of product that all of our partners are offering, but then also their financial capacity and their financial fortitude.“ — Baxter Lanius

How Alternative is creating a unique buying experience for buy now, pay later

The concept of “buy now pay later” isn’t a new one. However, necessity is the mother of invention, and it’s become more than necessary to revitalize the system of payment installments.

“Many businesses in later stages use the ability to offer flexible payment plans and flexible payment solutions to their end customers.” Baxter shares, “For a lot of businesses, this doesn’t exist because they want to maximize cash upfront.”

Alternative focuses on maximizing revenue, but they take a different—or dare we say, alternative—approach.

“What we’ve assembled is a product that aligns interest between the vendors and the customers, allows us to sit in the middle, allows your end customer to pay over time, and still allows you to get paid upfront.”

What does that look like?

Broken down to the essentials, Alternative sets up a payment plan for the end customer pays their partner and their vendor on day two and provides a detailed payment plan summarized within Alternatives platform.

The use cases for Alternative range from preventing churn to encouraging brand loyalty to re-engaging inactive members, and don’t stop there.

“If you’re trying to upsell and cross-sell a customer on a new solution that may be more expensive, you can simultaneously offer them the ability to pay over time.” Baxter explains, “If you have a customer who you know is about to churn, you can use a pay overtime solution to retain them.”

“We’re allowing our partners to sell more to a broader customer base that can now balance more of the volatility around cash flow.” Baxter continues.

The alternative comes down to a sales enablement tool that helps align your interests with your end customers—their solution is built like a three-way transaction to provide capital that benefits both the buyer and the seller.

“As the macroeconomic environment worsens, there will definitely be some holes in some of these portfolios.“ — Baxter Lanius

Macro trends in the debt capital market

In the lending business, it’s wise to keep an eye on debt capital. Baxter lays out a few pointers on trends and what to watch out for from the buyer and seller perspectives regarding cash flow.

A snapshot of the current buyer mindset

What sounds better: one payment of $50,000, or x amount of $8,300 installments? Most buyers today are more likely to go for smaller payments over a set period than drop $50k all at once. That’s where Alternative comes in.

“Alternative is a platform that will continue to see a lot of success in this environment, as people are very cashflow concerned and cautious. I advise every company to adopt a solution like Alternative to better align interests with your end customers,” Baxter advises.

Meeting people where they’re at creates prosperous provider/consumer relationships.

The broader picture

In terms of the broader macroeconomic and debt capital side, the field is shifting. Baxter is keeping a close eye on the terrain. “We’ve already seen defaults start to tick up on the consumer side, which is a leading indicator for more distress to come.” he shares.

With all the innovations and rapid change across Fintech and beyond, it’s no wonder the future of debt capital is a mixed bag.

“I think you will also see in the B2B space some lenders who will get exposed from taking on too much risk on the underlying business.” Baxter says, “As the macroeconomic environment worsens, there will definitely be some holes in some of these portfolios.”

The shifting sands of the debt capital market can be ruthless to navigate for those unprepared. The best we can do is equip ourselves by staying in tune with the trends.

“There’s no reason why companies shouldn’t use buy now, pay later to pay over time and installment plans to ultimately get access to capital.“ — Baxter Lanius

Why embedded finance is the payment of the future

Embedded finance has become a theme in Fintech. “I think a lot of these software companies will embed finance into their platforms.” Baxter shares. He envisions that coming into practice in a few key ways:

  • AP
  • Lending
  • Accounts receivable
  • Stock brokerage accounts

Alternative approaches embedding Fintech by partnering with invoicing solutions on the accounts receivable side.

“We provide all of our partners with a white label link solution.” Baxter explains, “So for Currencycloud, as an example, would be Currencycloud dot financing dot link. And that link, in turn, is embedded within every single invoice that Currencycloud sends out.”

This method shows a simple differentiated approach to embedded finance that supports both provider and buyer, seamlessly integrated.

“I think the theme is definitely here to stay.” Baxter shares, “It may slow down, especially on the capital intensity side—where if you’re embedding with solutions, that requires a big balance sheet. But it allows companies to build faster, expand their product feature set, and ultimately deliver a better solution to their end customers.”

Embedded finance is the payment of the future because—when used correctly—it provides the quick and efficient experience that today’s customers expect.

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Until next time!


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