Introduction to Monetizing Payment Terms with B2B BNPL

B2B payment terms can take many different forms, including upfront lump sums direct from buyer, installment plan financed by the vendor, invoice financing through traditional third parties (such as banks or capital providers), and B2B BNPL (buy-now-pay-later) payment partners, which allow customers to select a payment plan while the partner pays the vendor the full contract value upfront, all within a digital payment experience. Every option has pros and cons that align with a range of vendor and customer needs and goals. 

Today, we’ll explain how vendors can make money by offering flexible payment terms using a B2B BNPL payment partner and how this pricing strategy can power growth. 

What are payment terms?

Payment terms refer to how fees will be calculated, billed, and handled between the vendor and customer, including when, how much, and how payments need to be made. Terms outline the timing of when to pay, which typically ranges from 30-90 days after the invoice date, the frequency of payments–whether upfront, semi-annually, quarterly, or monthly–and the accepted payment methods, often including ACH, credit card, or wire. 

The North Star for a vendor is to receive the full contract value upfront in one lump sum so they can strategically allocate the revenue immediately. To encourage this, it is most common in SaaS to discount the annual upfront option by anywhere between 10-40%. But that is not the only lever you can pull to get paid upfront, nor is it the best option for many. 

When it comes to accepting payments, companies may:

• Utilize a digital checkout that emulates the B2C checkout experience.
• Send invoices and digital payment links through a Sales representative. 
• Send invoices generated by an accounting system. 

Growing revenue through payments

The primary revenue source for most SaaS vendors is the product itself. But with a strong pricing strategy and payments partner, software and hardware companies can actually monetize payment terms, creating another revenue stream while meeting customer demand for flexible options. 

Many buyers balk at the price tag of an annual or multi-year subscription. Presenting your price as a monthly or quarterly installment allows your customers to approach the contract with a different, more open mentality. Offering flexible payment terms upfront will enable customers to choose higher packages or plan levels with less anxiety and fewer budget constraints. 

Working with a payments partner to offer flexible payment terms gives SaaS vendors more control over the positioning and the pricing of the different term options. This way you are 1) presenting many options, not just monthly or annual, and 2) anchoring the price change based on the amount of additional time the buyer gets to hang onto their cash, decoupling it from the perceived value of your product, solution, or plan. 

‍Capchase enables payment term monetization strategies with our Multi-Offer feature, allowing a vendor’s finance team to set different price points on the different term options, and then showcase those options directly in the custom payment link for the buyer to select what works best for them. The vendor can collect additional revenue off longer payment terms and the buyer can choose to pay that premium for the added time flexibility.

Multi-Offer allows vendors to:

• Meet customer needs with flexibility
• Collect full TCV upfront to power growth
• Grow revenue through payment terms

How to monetize payment terms

In order to monetize payment terms, you must first develop a strong pricing strategy. Once your pricing strategy is finalized, it’s essential to understand how your customers are interested in paying for your services. Do most pay upfront, or prefer to pay in installments?

Capchase enables monthly, quarterly, semi-annual, and net 30, 60, and 90-day payment term options—an option for every need. With Multi-Offer, Capchase lets vendors price terms commensurate with the amount of additional time needed to complete the customer’s financial obligation. 

To efficiently monetize payment terms:

• Incentivize the buying behavior you want to see
  ‍Set your price points strategically to incentivize your customers to choose a particular payment schedule, price point, or multi-year commitment. 

• Offer multiple payment options at once
  Offering multiple payment options allows for the most flexibility, which has benefits beyond monetization. Multiple payment options can increase convenience, cut costs, reduce delays, and eliminate the risks of manual billing. It can also be a powerful scaling tool, allowing you to expand into price-sensitive market segments while improving retention. 

• Offer flexible payment terms over discounts
  Discounting doesn’t help Sales teams achieve quota, but offering flexible payment terms can. Flexible payment terms improves Net Revenue Retention, increases renewals and LTV, and sets the customer relationship up for success. 

• Work with an experienced B2B BNPL partner 
  ‍A proven B2B BNPL platform can support a range of payment terms options, custom payment options, unique fee structures, and more. Capchase is one of G2’s top B2B BNPL platforms, with a user-friendly, digital-first experience that integrates with CRM, CPQ, and checkout flows. 

Pricing considerations

When assembling your pricing and payment term monetization strategy, there are several key elements to consider. 

1. Ensure that your pricing plan meets customer needs. 
2. Iterate on your pricing markup to see what works.
3. Build on the results you see. 

Ensure that your pricing plan meets customer needs

Start small with a segment of your market to see how receptive they are to your pricing options. If most of your customers choose to pay full ACV upfront, try testing with another, more price-sensitive segment. 

Iterate on your pricing markup to see what works

As you offer flexible payment terms with a markup, observe customer behavior and responses to the options you’re presenting. Make adjustments as needed until you find the balance. 

Build on the results you see

With a financing and payment partner, vendors gain more visibility into buying behavior, customer profiles choosing flexible payment terms, and more. Gather key data points and adjust your GTM and pricing strategies as needed. 

The benefits of monetizing payment terms

Monetizing payment terms is an often-overlooked revenue stream that can make a major impact on company growth. It’s also about offering your customers a bespoke, quality payment experience that meets them on their own terms, keeps all parties comfortable financially, and strengthens customer relationships. 

Consider monetizing your payment terms to:

• Create a new revenue stream.
• Change buyer mentality from discount to flexibility by showing the value of flexible payments.
• Close faster & higher by separating payment negotiations from value-based decision-making.
• Incentivize the buying behavior you want to see in your customer base. 
• Delegate billing and collections to your B2B BNPL partner. 
• Power growth with upfront TCV from your B2B BNPL partner. 
• Invest in inventory, hardware, GTM, marketing, and more with upfront payment. 

How Capchase can help

Capchase Pay is the leading B2B BNPL platform for SaaS vendors. Built by and for software and hardware companies, Capchase offers benefits to vendors and buyers alike, providing a better buying experience for all. 

Ready to explore Capchase Pay?

• It’s easy to implement and incorporate into existing workflows. 
• Maintain control of your pricing strategy with complete flexibility.
• Enjoy greater efficiency with Capchase’s streamlined dashboard.
• Get paid upfront for every deal that chooses flexible terms. 
• Streamline your digital purchasing experience.

‍Learn more about Capchase Pay features and how companies are benefitting from it.