Payment Terms

BizPay, offering BNPL to small businesses, eyes IPO in September

“The reason BNPL increases conversion rates is because the payouts are interpreted by the brain as a discount,” he said.

Using BizPay costs a buyer about 3% of the bill to repay over four fortnights, or 4% to repay over four months. But he quotes in dollars: Paying off a $10,000 bill over four fortnights would cost $2,575, four times. It adds 3%, but the extra $75 per fortnight seems insignificant for the convenience of delaying full payment. There are late fees when a refund is missed.

BizPay settles with a supplier immediately and assumes the credit risk of the buyer, so the economics of unity demands that bad debts be brought under control. It uses data and artificial intelligence to assess credit risk.

The average invoice amount is $12,300 and the typical customer makes five transactions per month. This generates much higher revenue per user than retail BNPL; an average SME can bring in $30,000 in annual revenue.

Around 60% of BizPay customers work in professional services, including law firms, accounting and staffing. But it is trying to fund the “fast-moving consumer goods” sector, using bigger sellers to get its product to end customers.

The company, which has been in existence for two years, has 1,000 customers, which increased tenfold last year. He expects growth multiplied by 12 this year, to reach 12,000 customers.

By September, it plans to fund $30 million per month in invoice volume. It expects to be positive in earnings before interest, taxes, depreciation and amortization (EBITDA) by June 2023.

This level of funding would require between $100 million and $200 million in equity, which would be needed to secure the funding warehouses provided by the major banks.

Venture capital funds

“There’s a huge demand there,” Mr. Price said. “We need access to capital on both the equity and debt side, and we will need substantial equity – hence the plan to access public markets.

“All the investment banks are pretty optimistic about what the market is going to look like for the rest of the year, but things can change quickly. Who knows what September looks like? There might be a window, there might not be in. But we intend to be prepared for the window if it is there.

A listing would provide liquidity to a long tail of more than 450 registered investors, mostly angels but also institutions such as Macquarie Investment Management Limited, R2 Ventures, Raven Capital, SG Hiscock, Bennelong Capital and bd-capital.

The Series C round is expected to attract interest from venture capital funds from major banks. Commonwealth Bank has already dipped its toes into the bill finance fintech space by partnering with Waddle.

Like its consumer cousin, B2B BNPL operates at the intersection of point-of-sale payments and credit, but is seen more as a payment service allowing it to evade credit regulation.

BizPay is one of several fintech players seeking to disrupt commercial lending, including ASX-listed Earlypay and Butn; larger private operators like Octet and Scottish Pacific; and several other start-ups offering installments such as Marketlend, Cloudfloat, and Grapple.

Internationally, a comparison is Zilch, which raised funds last year at a valuation of half a billion dollars.

Mr Price said buy now, pay later set the emerging category apart from more traditional invoice factoring, which relieved cash flow pressures but was not used as a revenue stream for service providers. .

“The main advantage of BNPL is that it is a promotional tool to increase sales to the end customer; factoring doesn’t do that.