As spending increases so does the amount of finance options available to consumers. This also means that there is an increase in the amount of debt that may be owed to your company.

This is a guide to take you through Buy Now, Pay Later, and how they are becoming a problem for businesses.

The Problem of Buy Now, Pay Later

As society becomes more and more focused with spending online, new payment and finance options are being introduced all the time.

Particularly during Christmas, consumers often spend outside of their means, buying products that they can’t immediately afford. This is where Buy Now Pay Later becomes very appealing. It allows people to purchase a product and receive it immediately, not having to pay the costs until a later date, it is a form of credit.

Due to the pandemic of 2020, Buy Now Pay Later received a massive boost in users as customers were spending more, specifically online. Currently, there are over 11.6 millions users of Buy Now Pay Later schemes and when used correctly they can be a great option.

What Happens When You Can’t Pay?

Most of the Buy Now Pay Later schemes are interest free, with no hidden fees, when used correctly. The trouble occurs as the finance option doesn’t keep track of spending or check affordability, meaning they are often over used, resulting in many people getting into trouble.

If you can’t pay, companies often allow a short window of time for people to make the payments. If this time subsides, late fees are then introduced which can affect the customers credit score. If these are still not met then further costs may also be added.

Ultimately, a debt collection agency can then be instructed to collect the debt. Approximately in the UK, there is over £4.1 billion of debt from Buy Now Pay Later.

Is there anything changing?

As these schemes are so popular, they are not going anywhere. It is best to make sure all terms and conditions are read before accepting the terms of the loans.

Due to the amount of debt created from these schemes there are new regulations being implemented by the FCA, Financial Conduct Authority, however these won’t be enforceable until 2022 or 2023.

If you need help recovering outstanding debt in Birmingham or are interested in using our debtor tracing service then please don’t hesitate to contact our team at K2 Collections to find out more.