Embedded Finance in B2B: Smarter Credit, Faster Procurement

A few years ago, I sat in a warehouse with a distributor who was losing sleep over cash flow. His suppliers demanded upfront payments, his buyers took 60-90 days to clear dues, and banks wouldn’t lend without collateral. He wasn’t alone—this is the reality for millions of businesses in India’s B2B supply chain.

Procurement is the backbone of any business, but for decades, it has been plagued by financial inefficiencies. Most SMEs don’t have access to flexible credit, leaving them stuck in a cycle of delayed payments, missed opportunities, and high-interest loans from informal lenders.

Today, however, technology is rewriting the rules. Embedded finance—the integration of financial services into non-financial platforms—is transforming procurement. From real-time credit at checkout to AI-driven risk assessment, businesses now have cash flow solutions built into their supply chains.

As someone who has built a supply chain-as-a-service startup, I’ve seen firsthand how tech-enabled financing is reshaping procurement. Let’s break it down.

The Cash Flow Crunch: A Major Bottleneck in B2B Procurement

Unlike B2C transactions, where payments are instant, B2B transactions are credit-driven. Most businesses operate on a 30–90-day payment cycle, but suppliers want their money upfront. This mismatch creates working capital gaps, especially for SMEs.

Here’s what a typical procurement cycle looks like. A retailer places an order with a distributor. The distributor needs to pay the supplier upfront but doesn’t have immediate cash, Banks take weeks (if not months) to approve loans, with mountains of paperwork. The distributor either borrows at high interest rates or delays procurement, losing sales. This chokes business growth, especially for smaller players who don’t have strong financial backing.

How Embedded Finance is Reshaping Procurement

Embedded finance removes these bottlenecks by integrating credit solutions directly into procurement platforms. Businesses don’t have to wait for bank loans or navigate complex financing processes—credit is available at the point of transaction.

Some of the biggest innovations in this space include:

Buy Now, Pay Later (BNPL) for B2B : BNPL isn’t just for consumers buying smartphones; it’s now fueling B2B procurement. Many lending platforms offer BNPL for small distributors, allowing them to procure inventory now and pay later, often in 15-60 days. For example, a small FMCG distributor can now stock up before a festive season rush without worrying about immediate liquidity. The platform assesses risk using AI and transaction data, providing instant credit at checkout.

AI-Driven Credit Scoring for SMEs : Traditional banks struggle to lend to SMEs because they lack formal credit histories. Tech-driven lenders are solving this by analyzing real-time transaction data, purchase patterns, and even GST filings to offer credit. A textile trader who previously couldn’t get a loan because of lack of collateral can now access working capital simply based on digital invoicing history.

Embedded Working Capital Loans : Procurement platforms are embedding working capital loans directly into their systems. Today, there are companies offering instant credit lines, so businesses don’t have to halt production due to cash constraints.

The rise of embedded finance isn’t just about making loans easier; it’s about helping businesses grow and thrive, especially when it comes to their supply chains. With faster procurement cycles, companies can reduce downtime and speed up deliveries, making operations run smoother. Timely payments build stronger, more trusting relationships with suppliers, leading to better collaboration. For small businesses, the accessibility of credit levels the playing field, giving them more opportunities to compete. Plus, fewer businesses have to rely on informal lenders, which often come with unfair interest rates, leading to a more balanced and fair financial landscape. More importantly, embedded finance is formalizing B2B credit. Instead of relying on personal relationships and offline credit agreements, businesses now have transparent, digital financing options.

Challenges and the Road Ahead

While embedded finance is growing rapidly, several challenges remain. Many SMEs hesitate to adopt digital lending, relying instead on informal credit due to familiarity and a lack of digital trust. Additionally, AI-driven lending, while efficient, poses risks related to fraud and data security if not properly monitored. Regulatory hurdles further complicate the landscape, as the Reserve Bank of India (RBI) continues to tighten norms around digital lending to ensure transparency and fair practices.

The Future of B2B Finance is Here

However, the future is clear—embedded finance will become the default in B2B procurement. As technology matures and trust in digital finance grows, we will see an even deeper integration of credit into supply chain operations. When we talk about supply chain efficiency, we often focus on logistics, warehousing, and demand forecasting. But finance is the invisible backbone that makes it all work. Without liquidity, even the most optimized supply chain collapses. Embedded finance is solving the cash flow crisis that has held Indian businesses back for decades. Procurement is no longer just about buying—it’s about buying smartly, with financial flexibility built in.

Author: Sumit Bhatia, Co- Founder of Aksum Trademart Pvt Ltd.