The immediate impact of Covid-19 on Commerce is apparent. Across the globe, it has caused disruptions, from financial markets to global supply chains.
The pandemic has affected the entire economy spectrum, from service sectors such as travel and tourism to construction and exports.
Another sector that bore the brunt of the Covid-19 induced downturn is the Micro, Small and Medium Enterprises (MSME) sector. Extended lockdown and social distancing norms have affected the supply of finished goods and raw material purchases for MSMEs.
Survey reports show that MSMEs suffered earning losses of close to 20-50%. Further, the unavailability of workforce due to forced reverse migration also adversely impacted the production and supply process.
Due to these reasons, schemes like Buy Now Pay Later for MSMEs are a welcome aid for small businesses.
What is Buy Now Pay Later for MSMEs?
Buy Now Pay Later (BNPL) has become a very prominent option of financing for retail customers lately. Many consumers are not able to afford big-ticket purchases in the immediate term. They can opt to buy the products and services now and pay them later, in affordable instalments.
Many finance companies now offer the same benefits to businesses. The Buy Now Pay Later solution offers a new alternative to MSMEs. The buyers can get credit for inventory procurement without making any upfront payments.
This option provides financial assistance when it is in dire need of it, along with the flexibility of repayment.
Advantages of Buy Now Pay Later for MSMEs
Buy Now Pay Later schemes for Businesses provide much needed financial assistance to MSME Sellers and Buyers. When traditional sources of money lending are wary of the risk of lending in difficult times, BNPL schemes helps solve working capital challenges. It helps buyers by providing them with the flexibility to pay when they sell their goods.
How MSMEs can Benefit from Buy Now Pay Later Schemes
Through its Atmanirbhar Bharat Mission, the government of India is focused on empowering MSMEs to help them go global. They have announced many measures to help MSMEs tide over tough times.
Small Enterprises depend on credit as their default mode of operation. It increases their purchasing power and maintains cash flow. However, it is difficult for them to get credit in a post-pandemic landscape, as lenders are wary of repayment.
Several e-commerce platforms and finance companies are coming up with new schemes specifically targeted at small and medium enterprises. MSMEs can now opt for Buy Now Pay Later schemes, which allow them to meet their financial needs.
With the help of Buy Now Pay Later, they can take care of immediate financial requirements and make repayment with time at their disposal. To conclude, Buy Now Pay Later for MSMEs provides an alternative to affected Micro, Small and Medium businesses to resolve working capital issues.
The application of BNPL to B2B sector is a welcome move, and it eases many of the financial worries of SMEs. It allows them assistance, the flexibility of payment and convenience.