How SaaS Businesses Benefit from Buy Now, Pay Later

Buy Now, Pay Later (BNPL) offers SaaS customers an accessible and manageable way to make purchases matching their cash flow needs and budget/approval constraints. But it’s not just customers who will benefit from the BNPL option. Your SaaS business benefits in many ways as well. Here’s how:

Increase conversions, and capture more sales and revenues

Offering BNPL increases the likelihood that more customers will complete their purchases now rather than later. It also decreases the chances of them simply buying an inferior but cheaper solution, because it doesn’t meet their short-term cash flow needs. Thus, you can increase conversions and pull in more sales that you might have lost by asking for full upfront payments or meeting their cash flow needs. 

By offering BNPL as a payment option, you can help reduce the financial burden for customers so they can stay within budget and complete the purchase.

Win Faster & Amplify Growth 

 Turn both your past and future projections to turn your recurring revenue streams into upfront cash. This means funding your growth without dilution, debt, discounts, or distractions. 

When customers can pay in manageable installments, they are more likely to close faster and be open to making additional purchases. This will allow you to leverage more cross-sell or upsell opportunities and increase total contract value (TCV).

Buy Now, Pay Later (BNPL) offers SaaS customers an accessible and manageable way to make purchases matching their cash flow needs and budget/approval constraints. But it’s not just customers who will benefit from the BNPL option. Your SaaS business benefits in many ways as well. Here’s how:

Optimize Cash Flow

When it comes to optimizing cash flow, there are two critical problems that BNPL addresses. The first problem is finding a way to provide customers with personalized alternative payment options. On the flip side, SaaS businesses need a way to maximize their capital, so they can continue to grow. 

From the customer’s perspective, BNPL helps match their payments to their cash flow via flexible payments. This allows for cash flow optimization by getting your sale’s cash payment upfront. 

How BNPL Can Increase Your TCV

TCV is a particularly important metric for SaaS companies since it enables them to understand how effectively they generate revenues. TCV measures the worth of a contract after it is executed. It includes recurring revenues and any fees you collect from customers, such as onboarding fees or professional service fees.

BNPL aims to increase TCV using two powerful tools. Sales friction can often ruin the customer experience, and can easily result in lost sales. By providing a frictionless quote-to-cash process for customers, customers can easily move through their procurement  experience. 

As customers are approaching their final decision, BNPL facilitates their procurement  experience even further by providing optimized pricing. Not only can BNPL innovate on pricing and packaging, but it also means that less discounting will be necessary. Providing flexible payment options drastically increases the chances that the customer will find a payment plan that suits their budget while vendors may not have to discount as much.

Contact us to learn more about us and our SaaS-specific Buy-Now-Pay-Later offerings.

Tags:
Finance
BNPL
TBF
SaaS
published on
October 9, 2023
Author
Ashish Srimal
Co-founder & CEO at Ratio
Ashish Srimal is a SaaS entrepreneur and executive who has built SaaS startups and led large SaaS businesses.
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