Business Tips

5 reasons why Foodbomb's new buy now pay later solution is transforming the foodservice industry

17/3/2022
By
Nathan Lo Russo

2020 was a year like no other, as COVD-19 impacted people’s livelihoods, industries and businesses across the globe. Here at Foodbomb, we saw firsthand how it affected all facets of the hospitality industry, especially from the supplier and venue viewpoint.

Suppliers have always offered various methods of payment for their customers, most commonly trade accounts, providing anywhere from 7 to 30 days end of month credit. As such, suppliers carried large debtors and were potentially at risk of losing money if their customers went out of business as these accounts helped fund the venues' cash flow. Card payments and direct debit were not widely adopted (where it was), suppliers were lucky if they had 5% adoption.

As the world went into lockdown and businesses closed their doors, many venues could not pay their suppliers. Overnight, suppliers suddenly lost millions of dollars in bad debt, leaving gaping holes in their bank accounts. It was entirely unknown how venues would pay off existing accounts, let alone fund new debt, as they tried to adjust to the uncertainty of sales and the new world of COVID. 

The solution for suppliers was to minimise risk and move their customers to pay on place (POP). However, many foodservice suppliers were not set up to facilitate this. Fast forward to today, and many suppliers have successfully implemented payment gateways and venues are now accustomed to POP. Some suppliers have reported 90%+ adoption rates, which have minimised their risk and improved their business health. 

This is great for suppliers and helps push the industry in a better direction, but what’s the impact for venues if they suddenly have to pay most of their produce upfront? 

Venues spend 30% or more of their budget on food and beverage supplies. Some venue owners would also struggle to pay that much upfront, limiting their ability to invest and get additional supplies for sales spikes like weather events, seasonality, or any new equipment they may require. In a recent Foodbomb customer survey, 33% said the shift to POP had negatively affected their cash flow and held them back from investing as much as they’d like into their business. Resulting in business owners buying fewer supplies causing lower sales which has a knock-on effect on their recovery time. What could have been three months of recovery may suddenly take six months, if not longer.

We want to change that

BombPay; a buy now pay later (BNPL) solution designed specifically for hospitality venues. It’s a simple solution that gives venues increased cash flow. Whether they need additional cash and flexibility for a function, new kitchen supplies or something else, we believe this will be a tremendous value add for foodservice venues. 

How is BombPay different to a trade account with suppliers or a credit card? 

There are five distinctions and benefits compared to the traditional trade accounts the industry is use to.

  1. It’s easy as pie. Previously, venues would have to apply for a trade account with each supplier. With BombPay, you only complete one digital application and you’ll be up and running in 24-48 hours. Once approved, you can use your BombPay account to pay any 100+ suppliers on our platform. 
  2. It’s completely free! When paying by credit or debit card, you’re often hit with a transaction fee, plus if you don’t pay on time, you’re hit with 20%+ interest rates. With BombPay, there are no setup, payment or late fees. Basically, there are no fees!
  3. You get 21 days of credit across all your suppliers, putting you in control of your cash flow to order what you need. 
  4. Accounting Simplified. BombPay works seamlessly alongside your preferred accounting software with automatic reconciliation and invoices via Foodbomb’s smart accounting integrations tool. This can be a huge timesaver for venue owners and save them many financial headaches. 
  5. Click and you’re done. At checkout, it appears as a standard payment option, you simply just choose that and checkout as usual, and the rest is a piece of cake.

Interested in learning more about BombPay or how Foodbomb may be able to help your business? 

Get in touch with our Growth team to learn more, or simply sign up here

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