In partnering with our lenders we are now able to structure specialized customer financing programs for SaaS subscriptions. The SaaS subscription financing program is a non-debt financing option for SaaS companies to offer their customers. Rather than your customer having to foot the standard upfront cost of your software subscription, this is a tool for them to finance the cost over the duration of the subscription contract. Companies have historically used programs like these for the purposes of equipment sales (like when you purchase your car), and when the company does not have the balance sheet to fund one internally, bringing in a third-party lending partner has proved fruitful.
Since there is zero debt obligation by you as the software provider, companies have seen tremendous upside in this offering compared to other options in the market such as factoring or revenue-based financing facilities.
Key Program Highlights…
Not a Debt Instrument: No debt liability is taken on by you in this case whatsoever, and your client simply engages in a leasing (OpEx) structure with the financier.
End Customer Credit: The underwriting and approval process is on your end customer, not you and your financials
Enhance Customer Contracts: The underwriting and approval process is on your end customer, not you and your financials
Why Companies Use the Program…
1. Convert Monthly Customers to Annual
As software companies scale, converting monthly customer contracts to annual is a significant valuation booster – this is a tool to convert those customers, boost cash flow and valuation, while still allowing those customers to remain on a monthly payment option.
2. Realize Multi-Year Agreement Value Upfront…
If you have multi-year agreements, which tend to be paid annually, this is a tool to see the full cash value of that contract upfront while your customer is able to make monthly payments, providing a reprieve to their own cash flow.
3. Remove the “Price Tag” Objection…
Cost is one of the biggest reasons for a lost sale, SaaS companies need to charge annually upfront to maintain strong valuations, this is a tool to hold true to that contract model while your customer can make a smaller monthly payment over the duration of the subscription contract.
We are already seeing SaaS companies use this program to convert more sales opportunities and boost cash flow with multi-year agreements. As the venture market continues to evolve, companies are looking for more and more tools in which to diversify themselves in the marketplace, and offering a financing option for your software subscriptions to your customers could be just the trick.