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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?

#111

Post by beagle3 »

swombat wrote: post #90
FooBarWidget wrote: post #85

Earlier quoted context omitted.

Really? And here I always thought enterprises pay at the last minute (or late) in order benefit from inflation. If you have lots of money, then even benefiting from a 0.0001% inflation is worth it.

It's a combo of all those things: inflation, improving the cash flow cycle, and even internal rate of return (i.e. for those 60 days the money is hopefully being used in a capital efficient manner).

I'd say it's mostly because "that's how it's always been", and because they can.

That's how it's always been, because before computers, it typically took 7-10 days to process through company procedures and banks.

And the cash flow cycle / rate of return is laughable in today's ZIRP environment. Especially if you are bigcorp, you can pay at Net+0 and take a loan at ~0% (+/- 0.1%) yearly, which translates to ~0.02% over 2 months, if you so wanted -- and no one would notice.

When I did contracting, I would happily give a 5% discount to get Net+0 -- in fact, a couple of times I raised my rate 10% a-priori and offered a 10% discount if they paid Net+0 instead of Net+30 (the latest I was willing to accept). None eventually accepted; One tried to get it through their bean counters and couldn't - the Net+X for X>30 is so deeply ingrained into most accounting departments that it can be considered an axiom, regardless of how little financial sense it might make in a given case.

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

#112

Post by beagle3 »

sswaner wrote: post #62
toomuchtodo wrote: post #24

Earlier quoted context omitted.

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

We (enterprise buyers) would never agree to that. In all contracts I work on, there is a lengthy back and forth between lawyers working out the terms. Something like a premium fee if we are late on a net 30 payment would be a deal-killer. We know it takes a long time to process payments. I don't intentionally delay, nor am I encourage to delay - it is just that the wheels of SAP turn really slow.

This is one of the things where mathematics gives way to linguistic manipulations.

If you add a "late fee", it's a no go. But if you get an "early payment credit that will appear on your next invoice", it is ok.

Don't know if this is still the case, but for a long time, merchants couldn't add a "credit card fee" (even though they pay it at 2-3%). However, they could give a "cash discount".

Mathematically (and financially) equivalent. Yet somehow different.

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

#113

Post by eitally »

smackfu wrote: post #109
outworlder wrote: post #108

Earlier quoted context omitted.

> and then pay a guy to go do the needful I've seen that sentence several times in different contexts. Is it in current US usage?

Only among people who deal with Indian software engineers, in my experience.

Right, and I meant it as such. Quite a few of our support staff are based in India.

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

#114

Post by [deleted] »

mobiplayer wrote: post #107
yitchelle wrote: post #103

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. This one really makes me laugh. Can I use the same excuse when I am late in delivering your order?

Yes, you can but they're still the big fish and we are the small one. Chances are you'll get hurt and they won't. Pick your battles wisely.

[deleted]

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

#115

Post by eitally »

FooBarWidget wrote: post #85
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…

Really? And here I always thought enterprises pay at the last minute (or late) in order benefit from inflation. If you have lots of money, then even benefiting from a 0.0001% inflation is worth it.

swombat is right, and to add one small bit: when we pay late, it is nearly always due to an unforeseen lapse or issue with payment, and that's it. To give you an idea, we have over 8,000 suppliers, where our spend ranges from 1,000,000,000/yr. That's a lot of terms and payments to keep track of, and things occasionally break (on our end or the supplier's). For big customers with whom we use standard B2B EDI transactions, we have multiple internal instances of different B2B platforms and work heavily with those suppliers to test an ensure stability, and we coordinate with their engineering teams on upgrades, outages and configuration changes. Ditto that on the bank interfaces.

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

#116

Post by eitally »

uptownJimmy wrote: post #96
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…

I cannot bring myself to upvote this wonderfully informative post.

You don't have to upvote it, but if you ever want to chat about this kind of stuff, shoot me an email. I'm happy to answer questions and offer advice.

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

#117

Post by eitally »

zura wrote: post #93
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…

Another interesting question: Who decides in the Enterprise that the given price makes sense? And how it is done... You mentioned six-figures - it can be low, mid or high six.. So does anybody thinks about this there? :)

It depends who's asking, whose budget it hits, what the capex forecast looks like (if it's capex at all), whether the street is currently favorable toward opex (typically reported as "SG&A cost" or "administrative overhead") at the corporation, and how badly the company needs what you're selling. Internal politics weighs heavily, especially in prioritizing spend. Some things that are really important get ignored just because the stakeholder can't sell it to their exec sponsor. Some things that are complete wastes of money are bought because of the opposite. Sales is freaking hard and the only consistently successful way to work with large companies is to bend over backwards to get to know them as well as they know themselves... almost to the point that you're consulting for them.

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

#118

Post by eitally »

mikeryan wrote: post #64
linuxfault wrote: post #17

Earlier quoted context omitted.

NET 30 baby

I've found very few Enterprise customers comfortable with NET 30 terms. We're an interactive agency any deal we do is worth a considerable percentage of our annual income so we don't get too hung up on payment terms unless we're in a cash crunch. NET 30 is "nice" but if you can't do a deal because the terms are NET 60 instead of 30 then you need to figure out why cash is so low... I've had 45/75 and once 90 day terms…

Agreed. Net75 and Net90 usually only happen when there is something else in the deal that's favorable to the supplier (like a down payment, or a consulting engagement, or co-marketing, or similar). They get something, we get something.

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

#119

Post by mixmastamyk »

yitchelle wrote: post #104
mixmastamyk wrote: post #34

Earlier quoted context omitted.

I liked the system in New Zealand, in the US it's still the 1970's for payments.

Can you elaborate the New Zealand's system?

Everyone has a bank account number for deposit that can be public, just like a telephone number.

To send money, you log in, paste the number and amount, and hit the send button. If both parties use the same bank, the transfer is immediate, otherwise, it happens at 10pm that night.

There are no "~$25 Wire fees" or delays or other nonsense, which makes tiny bank transactions possible, like here's $1.25 for a cookie, as well as paying rent a breeze. Just like it should be.

When I came back to the US and had to write a paper check again (that wouldn't clear for a week) I was quite disgusted.

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

#120

Post by hunvreus »

lanstein wrote: post #2

As always, I'm happy to meet for coffee in SF with any founders who want to talk about SaaS sales in detail. I was the first sales hire at PagerDuty. Email in profile. To start to answer, do annual deals whenever possible. Large companies want to pay once a year via ACH/check/wire rather than dealing with credit card payments and expensing, etc. Often times credit card payments are prohibited (though that rule is oft…

I'm most likely gonna take you up on that offer.
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