Offering Klarna's alternatives to traditional credit means that Xero's millions of clients (but not in Australia) can get payment in full up front.

According to Klarna, 40% of orders are paid off early, and 99% of loans are returned if a clear installment plan is provided. The company verifies a customer's eligibility before authorizing each transaction.

David Sykes, chief commercial officer, Klarna, says: “Klarna’s flexible payment options are typically associated with clothes and shoes but that has been changing for a long time.

Through this agreement, microbusiness owners of all stripes will be able to take advantage of Klarna's flexible payment options, which allow clients to select the method and time of payment.

"This includes companies where plumbers and heating engineers can use Xero to fix their customers' boilers and let them spread the cost, gardeners and landscaping services can now offer a Klarna BNPL payment option, and small businesses in the construction industry can spread the cost of smaller projects over three interest-free installments."