Software Financing: How to Scale Your SaaS Cash Flow With BNPL

BNPL
May 23, 2023 · by Alisher Akbarov
Software Financing: How to Scale Your SaaS Cash Flow With BNPL

Financing is a crucial element in the success and growth of any business. However, traditional financing options such as bank loans, debt financing, and venture capital may not always be the best fit for the needs of a SaaS business. This is where Buy Now Pay Later (BNPL) comes into play as an attractive option that offers several benefits for SaaS companies. In this article, we will explore how to grow your cash flow by offering BNPL financing options to your SaaS customers.

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Contents:
What is Software Customer Financing?
Benefits of BNPL as Software Financing
Easy and quick application process
No collateral
Non-dilutive
Low commission fee
How to Grow Your Cash Flow With BNPL
Instant cash boost
Competitive edge and new customers
Customer retention
Risk-free

What is Software Customer Financing?

Graphic of stacked money representing software customer financing

Customer financing allows customers to pay for a product or service through installments rather than making a full payment upfront. This type of financing can be offered by your SaaS business directly or through a third-party financing partner. We recommend you to partner with a third-party financing provider to save time and avoid risks. Financing options may include loans, credit lines, Buy Now Pay Later options, or other forms of credit.

The purpose of customer financing is to make it easier for customers to purchase goods or services that they might not otherwise be able to afford. According to PYMNTS, high costs and lack of financing rank high on the list of concerns businesses face when it comes to making payments. Moreover, customer financing allows your B2B customers to manage runway better, and have a budget for other strategic spends. By offering flexible payment options, you help your customers manage their finances more effectively, while at the same time receiving annual-worth of cash upfront.

Software customer financing is when your B2B customers use financing options to purchase your annual subscriptions, and pay for them over time. To buy your software, a B2B company can use various types of financing: bank loan, debt financing, revenue-based financing, venture capital, financing from an angel investor and so on. But all of these ways are time-consuming, and some of them may cost your customer equity. That’s when ‌BNPL financing comes in.

Benefits of BNPL as Software Financing

Graphic of laptop, chart, and up arrow representing benefits of BNPL as software financing

BNPL software financing can provide significant advantages over traditional financing options for B2B customers looking to purchase your annual subscription plan. BNPL offers a faster, more streamlined process, and greater flexibility in repayment terms. 

Easy and quick application process

The application process for BNPL financing is often simple and straightforward, and can be completed online in a matter of days or hours. For example, Comfi as a BNPL provider offers instant approval for financing, allowing your customers to complete their purchase right away.

No collateral 

BNPL does not require the borrower to put up collateral to secure the financing. This can be beneficial for businesses and startups that do not have significant assets to pledge as collateral, or may not want to risk losing their assets in case of not being able to repay the loan. 

Non-dilutive

BNPL software financing is non-dilutive, which allows businesses to raise capital without giving away part of the ownership. This can be important for startups and small businesses that want to maintain control over their operations and do not want to give up equity to investors.

Low commission fee

Some BNPL providers offer low commission rates, making it an affordable option for those who need to finance their software purchase. For example, Comfi charges 7-11% when you make a sale through their service.

How to Grow Your Cash Flow With BNPL

Graphic of a vacuum cleaner sucking in coins representing growth of cash flow

Providing BNPL as a software financing option can help boost your business’s cash flow significantly. That’s how it does it.

Instant cash boost

Integrating a BNPL option as a vendor can be an effective way to scale your cash flow. By partnering with a BNPL third-party provider, you can receive the full sum minus their fee upfront within hours or days. This can help you improve your cash flow, as you don’t have to wait for customers to pay in installments to receive the full payment for your annual plan.

The process is simple – the customer opts for the BNPL option during checkout, and then pays the sum in installments directly to the third-party provider, while the provider pays you the whole sum upfront minus their commission fee. This allows you to receive the whole payment, while the customer is able to spread the cost of the purchase over time. It’s a win-win for both you and your customers. 

Competitive edge and new customers

Offering a BNPL option as a vendor can be an effective strategy to gain a competitive edge in the market and attract more customers.

By providing a BNPL option, you’re able to offer your clients a more flexible payment method, which can be an attractive feature to those who may not be able to afford the full cost of your software annual plan upfront. This can help you reach a wider audience, and potentially convert more leads into sales.

Furthermore, the convenience of BNPL can encourage customers to make larger purchases, as they’re able to spread the cost over a longer period of time. This can result in increased revenue for your business.

In addition to the financial benefits, offering BNPL as a payment option can also help you to stand out in a competitive market. Customers are often drawn to businesses that offer innovative and flexible payment options, and BNPL can be a great way to differentiate yourself from competitors.

Customer retention

Integrating BNPL can be a powerful tool to improve customer retention and scale your cash flow.

By offering BNPL software financing, you’re able to provide your clients with customer financing and flexible repayment terms that fit their financial needs. This can create a positive customer experience, leading to increased loyalty and repeat business. When customers know that they can access your services with a convenient payment option, they’re more likely to return for future purchases.

Risk-free

Additionally, BNPL can help to reduce the risk of non-payment or delinquent accounts. By partnering with a third-party BNPL provider, you can receive the full payment upfront and transfer the risk of non-payment to the provider. This can help to protect your cash flow and reduce the need for costly collections efforts. By reducing the risk of non-payment, offering BNPL can have a significant impact on your cash flow. 

Conclusion 

Overall, financing is a critical aspect of any business, and choosing the right financing option can have a significant impact on its growth and success. For B2B SaaS companies, BNPL financing can considerably increase cash flow, through improved customer retention, a competitive edge in the market and an instant cash boost.

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Amal Abdullaev

Co-founder at Comfi

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Alisher Akbarov

Alisher Akbarov

Co-founder, COO

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