Imagine a Melbourne-based streetwear brand. Like many small businesses, it has experienced some ups and downs since it launched five years ago. A website crash during a key sales event and delivery delays due to warehouse flooding resulted in some negative reviews and lost customers in the past, but recently, demand for its sustainably made streetwear has spiked.
To maintain momentum, our hypothetical founder is expanding the team, ramping up production and moving into bigger premises, but she’s wary of the cash flow issues that could result from these increased costs. But let’s say she implemented hummpro, a buy now, pay later (BNPL) solution for businesses.
Businesses can download the hummpro app to apply for up to $30,000 in funds in just a few minutes, and once approved, use it with any supplier that accepts Mastercard. Businesses have 30 days to pay it off interest free, but if they need more time, they can ‘pause’ their repayment for a further month with a small fee, or split it into six, nine, or 12 monthly payments plus a small monthly fee.
While BNPL is often associated with younger online shoppers, it’s seeing rapid uptake across different age groups and sectors. And there’s a strong case to be made for using BNPL in a business environment.
The real cost of cash flow concerns
Continuing our thought experiment, imagine the founder of the streetwear brand used to skip a paycheck in order to cover the cost of rent and payroll and buy what she needed for the business, such as packaging to ship orders and Facebook ads to acquire new customers, and the stress of juggling bills took a toll on her creativity and mental health.
But now, she can buy what she needs with hummpro — it’s accepted at any supplier that takes Mastercard — and have at least 30 days to pay it off interest free. This gives her the breathing space she needs to pay all of her staff, and herself, without worrying about running into cash flow problems.
Last summer, when the opportunity arose for the brand to open a pop-up shop on a highly trafficked shopping street in Melbourne, let’s say the founder paid for the interior design and fitout with hummpro. This meant she could focus on executing the pop-up strategy and serving customers, rather than juggling bills to make sure she had sufficient cash flow to pay staff.
The importance of accepting BNPL
Finally, imagine that after realising how flexible and convenient BNPL was for her own purchases, the founder finally started accepting BNPL at the checkout. Now, customers can buy the brand’s streetwear products with humm, hummpro’s consumer-oriented sister brand. This has led to a noticeable uplift in sales, which is having a positive knock-on effect on cash flow.
Let’s say the brand also started accepting hummpro payments from its business customers, which means it gets paid upfront, while its suppliers get more time to settle their bill. Since overdue supplier payments are one of the leading causes of cash flow issues, this has had a big impact on the business for the better.