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Ask HN: How do your enterprise customers pay you?

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Re: Ask HN: How do your enterprise customers pay you?

#51

Post by BHSPitMonkey »

refurb wrote: post #33
toomuchtodo wrote: post #24

Earlier quoted context omitted.

Do you ever consider charging more as a premium for the delay?

I was wondering about this! Has anyone tried it? I know in my industry (pharma) we offer "prompt pay" discounts to our customers. 2% 30 net 60 for example (payment due in 60 days, get 2% off is paid in 30). Of course a huge corporate has a lot more leverage with regards to terms than a small contractor.

How does that work? Do you send out the first invoice at 98% cost, wait 30 days, and send a second 2% invoice if the payment still isn't there?

Re: Ask HN: How do your enterprise customers pay you?

#54

Post by sologoub »

smackfu wrote: post #44
sologoub wrote: post #10

My experience is that this largely depends on the procurement practices of the company and whether or not your price range is low enough to be below discretionary expense limits. The greatest feature of SaaS has been the ability to take a 50k software package and make it a 500/month subscription that people who actually need it did not have to go through the official procurement process and could simply expense it. F…

Software procurement also tends to get hung up on EULAs because someone decided they want a fancy indemnification section that that lawyers at EnterpriseCorp don't want to agree to.

That, a long with many many other things that become a matter of getting a rubber-stamp from some stakeholder that is protecting a fiefdom, but doesn't really have anything to do with why that software is being bought.

Although, legal review is always a good idea to make sure you understand what you are agreeing to.

Re: Ask HN: How do your enterprise customers pay you?

#55

Post by snowwrestler »

I purchase services on behalf of a company; not a huge one but has some "enterprise-y" trappings. That said, make sure you're doing thinking and research about the companies you are targeting with your business. There's no one answer that covers all B2B transactions.

For me, dollar amount matters. Is your service $100/month? It can go on a credit card and get expensed; Legal might take a quick look at your online standard terms and conditions and privacy policy (which must exist if you want to sell to enterprises) but not likely to argue anything.

Is your service $5,000/month? Then I need a contract that is approved by the lawyers and signed and dated by human beings, and an invoice that Finance can validate against the contract for audit control, and then they will send you a check. Because all that is a pain in the butt, I prefer to do the whole thing only once per year on an annual renewal.

Is your service $20,000/month? All the same legal stuff above, but now I might prefer monthly or quarterly invoices for cash flow reasons. But I'm guessing since you're asking here that your SaaS business is probably is not charging $20,000/month. :-)

Re: Ask HN: How do your enterprise customers pay you?

#56

Post by cperciva »

Some of my largest customers pay me via Paypal. I've offered to take credit cards or ACH, but apparently they like Paypal.

Mind you, my largest customers are paying a few thousand dollars a month, so I'm sure they're avoiding paperwork compared to the million-dollar-purchase-order payments.

Re: Ask HN: How do your enterprise customers pay you?

#57

Post by bigiain »

patio11 wrote: post #12

Overwhelmingly: Send a quote for the upcoming year, get a PO number corresponding to the quote, send an invoice referencing the PO number, wait an interminable amount of time, a check magically appears in the mail. The last one was 9 months late in paying. Enterprise life, yay. Salient point to keep in mind: the people responsible for everything that happened in that workflow after my customer passed the quote to her…

On the plus side, there's also often very little motivation for the person doing step 2 "provide a PO number" to not sign up for a dollar amount that comfortably covers your expected "interminable amount" of time you'll be providing their purchasing department with credit. You _do_ need to anticipate and factor it in up front though - you can't come back 4 months into the process and say "hey, the price just retroactively went up because you're so slow paying!".

Re: Ask HN: How do your enterprise customers pay you?

#58

Post by fludlight »

nulltype wrote: post #46
eitally wrote: post #38

Earlier quoted context omitted.

Here repping enterprises, can confirm this is how things work. But we don't pay late out of malice. Often incompetence and apathy, sure, but we don't actively set out to cheat you guys. We start our Net-X countdown clock at the very last moment, and typically that is when we start receiving the service (not when we agree to a deal). This seriously irks most vendors, but they seem to have been beaten down and conditio…

How does this trick save you money? I'm not really clear on the details of enterprise payments.

It's an interest free loan from their suppliers. They also give interest free loans to their customers, so it's a two way street.

Ultimately, they want to get more free loans from their suppliers than they give to their customers

Re: Ask HN: How do your enterprise customers pay you?

#59

Post by XERQ »

Not quite a SaaS company, but I'll chime in anyway. For SSD Nodes we've done "trials" for enterprises with an explicit expiration date where the service gets disabled if we don't receive their payment. This tightens our AR and incentivizes them to push the payment through their channels faster.

Sometimes a dev from a large company will test us on a smaller package with a company credit card and expand from there after we push them through the sales funnel.

Most of our enterprise clients pay using either ACH or check, while the remaining typically use credit cards.

Re: Ask HN: How do your enterprise customers pay you?

#60

Post by andrewem »

toomuchtodo wrote: post #24
patio11 wrote: post #22

Earlier quoted context omitted.

The customer believes that it paid NET 30 ("You received the check within 30 days of us deciding to send you a check. NET 30!") and that I can speak to Legal if I want to press the issue, which (naturally) I don't. As near as I can tell, this is just priced into everyone's expectations.

Do you ever consider charging more as a premium for the delay?

A relative of mine has a business which sells to very large companies. One of them pays so much later than even the normally egregious large companies that they get a "special" price, which takes into account the cost of not getting paid for say 120 days. (This company is large enough that it's one of the 30 companies in the Dow Jones Industrial Average [0]).

Related, how many days you have to wait to get paid after you've spent money supplying the thing is called the cash conversion cycle. For a business selling to enterprises, maybe it's 90 days from doing work or building a widget and shipping it until they get paid. Dell back in the day would charge your credit card as soon as you bought a computer, and then only pay its supplier some time later, so that they had a negative number of days, I think around -5; in effect, their suppliers were loaning them money.

[0] http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [1] http://ycharts.com/glossary/terms/cash_conversion_cycle

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