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What is customer subscription


It allows software companies to offer their customers monthly payments instead of a large upfront or annual payment, while still receiving funding upfront from a lender for the entire contract.  

How does it work for subscription contracts? 

A lender will underwrite the customer, pay the software vendor upfront for the entire contract, and collect the monthly payments directly from the customer.  

Flexible Payments

Give your customers 1 monthly payment with no upfront cost


Receive funding upfront for multiple years and additional services 


Offload your collections risk for future payments

Vendor sells subscription to their customer

Lender pays the vendor upfront for entire contract

Lender collects monthly payments from the customer

What type of software companies use customer subscription financing? 

B2B SaaS companies that sell platforms with an annual subscription of at least $20,000. 

Given the risk lenders assume in prefunding multiple years of subscription revenue with no recourse, the software companies we work with have a demonstrated track record of financial performance and high customer retention. The subscription software platforms they sell are "need-to-have" and crucial to their customer's business operations.   

We work with software companies in a wide range of industries:   

  • Supply Chain

  • Manufacturing

  • Healthcare

  • ERP

  • Database Management 

  • Enterprise Applications

  • More...

Ideal Vendor Profile 

  • B2B Software Vendors

  • US Based

  • 3+ Years in Business

  • $1M+ Annual Recurring Revenue

  • $20K+ Average Annual Contract Value 

  • Overall Financially Healthy Business 

  • US Based Customers with Clean Credit

  • Low Customer Churn

How does customer subscription financing compare to Venture Debt & Revenue Based Financing?

When used for expansion capital or as a cash flow tool, there are some key differences. 

Most notably, customer financing is not vendor debt. Lenders underwrite vendors' customers and collect their monthly payments directly. Customer financing can be used on a contract-by-contract basis compared to a traditional debt solution where a loan is factored on a vendor's total ARR. These differences make customer financing an attractive alternative or compliment to Venture Debt and Revenue Based Financing.  

customer financing vs. Venture debt.png

How does customer subscription financing compare to Buy Now Pay Later?

Buy Now Pay Later (BNPL) is a form of customer financing designed for simple 12-month contracts. Typically, vendors are not able to include setup or service fees and still assume the customer non-payment risk. A true customer financing program is a more flexible and strategic approach for both annual and multiyear contracts that can be customized to meet a vendor's growth and financial goals. 

financing vs. bnpl.png
  • Is this debt?
    No. This is deferred revenue just as if a customer had paid a vendor upfront cash directly. Lenders underwrite the customer, not the vendor.
  • Does this cost equity?
    No. This is a non-dilutive form of funding.
  • What's the catch?
    This funding model is not too good to be true for 2 reasons: Vendor's customers must be credit approved and they sign an additional payment document during the sales process. As experienced operators who personally used this model to finance over $30M of subscription contracts, the Keystone team helps vendors properly position this program to their customers.
  • How quickly do vendors receive prefunding?
    Typically within 24 - 48 hours of their customer completing the payment document.
  • What happens if a customer cancels?
    All customer contracts must be binding and non-cancelable for the term. The lender assumes the customer collections risk. If a customer has missed payments, the lender will request that the vendor restrict access to their software until they are current.
  • What happens if a customer is not approved?
    Business as usual. A vendor simply sells the subscription as they normally would without financing.
  • Can I use this funding in addition to venture debt or revenue based financing?
    Yes. Customer financing does not occupy a debt position so vendors can stack this funding solution with other traditional debt resources.
  • How does Keystone make money?
    We are paid through our financing partnerships.
  • What are the rates?
    Depending on contract term length, our financing partners typically prefund 82% - 88% of the total contract value.
  • Are there any minimums?
    No. Vendors have complete flexibility to use this on a deal-by-deal basis.
  • Can vendors include implementation and setup costs?
    Yes. Vendors can roll in any additional costs that their customer would otherwise be paying upfront for and convert it to a monthly payment.
  • What happens if a customer adds additional services after the initial contract?
    These can be rolled into the existing finance agreement with coterminous payments or the vendor can bill the customer directly.
  • Do you train vendors on how to use this funding program?
    Yes. The Keystone team will help you design and implement your new customer financing strategy.
  • How does a vendor get started?
    Contact us and we will start a vendor profile.
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