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Almost half of business leaders in Europe have resorted to buy now pay later (BNPL) services to smooth cash flow amid difficult economic conditions, new research has suggested.
In a survey from fintech company Marqeta, it was found that 43% of business leaders had used BNPL services in the last three months as cash flow remains an issue.
BNPL is a form of payment that essentially acts as a loan, wherein the provider will cover the cost of a purchase and the user will pay the fee over a series of instalments.
Marqeta’s survey found that over half (53%) of SMEs surveyed had between £10,000 and £75,000 owed to them by customers every month, with 36% of respondents saying that money was needed to remain solvent.
“Cash flow is the lifeblood of any business, but our survey shows that a huge number of SMBs are finding that access to capital has become cumbersome and expensive,” said Jeff Parker, SVP international at Marqeta.
“The findings from our survey suggests that while B2B BNPL options could be a big part of this change.”
While BNPL can allow companies and consumers to extend their cash flow, it also comes with its own risk of increasing liabilities.
The Financial Conduct Authority (FCA) has repeatedly warned of misleading promotions from BNPL firms that don’t effectively communicate the financial risks associated with the product.
The UK is expected to enforce tighter regulation of BNPL this year, having already outlined its plans in February.