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How do you offer monthly subscription payments without cash flow and collections issues in B2B SaaS?

Most software companies that offer a monthly payment option for their annual subscriptions charge a 10% to 30% premium. Said another way, they discount their upfront annual payment option by 10% - 30%.


Because they need to incentivize customers to pay for the entire year upfront for cash flow and to avoid the risk and hassle of collecting monthly payments. In fact, many software companies have stopped offering monthly payments altogether to avoid these 2 issues.

However, cash flow is important for customers too, and many of them need monthly payments and are willing to pay a premium for it.

So how are SaaS companies solving for cash flow and collections risk with monthly subscription payments?

Many are starting to use customer financing to offer monthly payments at the same 10% - 30% premium while getting paid upfront for the entire contract and offloading their monthly collections to their financing partner.

Here’s how it works:

A software company offers their customer a 3-year subscription contract for $150,000 with 2 payment options:

OPTION 1️⃣: $50,000 paid upfront each year

OPTION 2️⃣: $5,125 per month through their financing program

OPTION 1️⃣: The software company is responsible for collecting $50,000 each year directly from their customer.

OPTION 2️⃣:The software company receives $150,000 today from their financing partner, who is responsible for collecting the customer’s monthly payments.

✅ With OPTION 2️⃣, the software company offered financing to give their customer the monthly payments they needed while getting paid upfront for the entire contract without the future collections risk.

It's a win-win for both sides.🤝


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