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.<p>The last one was 9 months late in paying. Enterprise life, yay.<p>Salient point to keep in mind: the people responsible for everything that happened in that workflow after my customer passed the quote to her purchasing department are a) not my customer, b) not even on the same campus as my customer, and c) just. don't. care. A six figure check is just another piece of paper to them, which they'll see several hundred of this week.
Let define "enterprise customer" first. This is someone for whom the terms, conditions and prices of your website do not apply. Enterprise customer = Ask for quotes. So you might delay the question of how they pay you, once you have an enterprise customer ready to sign.<p>An other distinction is, that you might charge accounts of normal customers, but you always just send an invoice to an enterprise customer, and they send you the money. German customers could use the old BLZ routing, European the IBAN routing, and US will use ACH. But I don't care, as long as I get my money on my account. Big companies are slow payers. My trick of getting the money fast is to offer 2% discount, if they pay within 7 days.
My experience is that this largely depends on the procurement practices of the company and whether or not your price range is low enough to be below discretionary expense limits.<p>The greatest feature of SaaS has been the ability to take a 50k software package and make it a 500/month subscription that people who actually need it did not have to go through the official procurement process and could simply expense it.<p>From the orgs where I worked, $500 to $1000 per month seemed to be the usual limit for expense items, depending by company size and the position of the person expensing it. CTOs typically can get away with a lot more...
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.<p>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 often ignored). Money up front is key for the business.
Late. That's how :/<p>Invariably we have to spend a lot of time sending emails chasing late payments, and sometimes making phone calls. They always <i>eventually</i> pay, but it always takes a ridiculous amount of energy to get to that point.<p>Oh, and US customers (we are based in the UK) most often still pay by cheque (or 'check', if you are American :), which take weeks to clear and usually involve high processing fees. On the occasions where US customers pay by bank/wire transfer, they sometimes do so while specifying that <i>we</i> also pay <i>their</i> side of the transaction fees. Bad practice, and very irritating :/
If you're a startup selling to the enterprise, I would highly encourage billing upfront. Collecting cash upfront has huge ramifications for cash flow and how fast you can grow the business.<p>In terms of payment, it really depends on the company and size of deal. For some companies you can send an invoice and they'll send you a check back quickly, but the larger enterprises usually will need you to fill out a PO, you'll certainly go through procurement, and then you'll be able to invoice. I've typically seen Net 30 days for payment due date, but some companies may push back to Net60.<p>Credit Card usually only works for smaller transactions (<$10k) or monthly recurring charges.
There is justified pessimism here about getting enterprise checks paid on time. An early colleague taught me to make relationships inside the accounting department, address invoices and questions to one or two people specifically and personally thank them for their time. For that small effort (15 minutes per month), I get direct reminders about deadlines and payout boundaries, and consistently good paper turnaround. Doesn't work universally, but holy cow when it does.
I purchase services on behalf of a company; not a huge one but has some "enterprise-y" trappings. That said, make sure you're doing thinking and research about the companies you are targeting with your business. There's no one answer that covers all B2B transactions.<p>For me, dollar amount matters. Is your service $100/month? It can go on a credit card and get expensed; Legal might take a quick look at your online standard terms and conditions and privacy policy (which must exist if you want to sell to enterprises) but not likely to argue anything.<p>Is your service $5,000/month? Then I need a contract that is approved by the lawyers and signed and dated by human beings, and an invoice that Finance can validate against the contract for audit control, and then they will send you a check. Because all that is a pain in the butt, I prefer to do the whole thing only once per year on an annual renewal.<p>Is your service $20,000/month? All the same legal stuff above, but now I might prefer monthly or quarterly invoices for cash flow reasons. But I'm guessing since you're asking here that your SaaS business is probably is not charging $20,000/month. :-)
Some of my largest customers pay me via Paypal. I've offered to take credit cards or ACH, but apparently they like Paypal.<p>Mind you, my largest customers are paying a few thousand dollars a month, so I'm sure they're avoiding paperwork compared to the million-dollar-purchase-order payments.
I'd say it very much depends on the country and the price range.<p>In Germany for example by the far the most common method for business payments is invoice / bank transfer. Up to a certain amount (about €500) credit card payments are accepted, too though (because that's what middle managers in larger companies commonly are allowed to spend on their own account without asking for permission).<p>In the US paying with credit card is much more common even for business.<p>Then again, enterprise pricing can easily exceed the usual credit card limits.<p>Larger companies like to pay annually, smaller ones especially startups are more likely to pay monthly for obvious reasons.
Whatever the contract says. But if you have a long term deal, I would recommend quarterly, or preferably annual billing. Dealing with checks is a pain. In my experience, big co's are no more or less likely to pay on time than anyone else. But they don't tend to pay early.<p>If it's small recurring billing, just have them use a credit card. Even then, annual billing is preferred - it cuts down on the requests for invoices from their accounting departments in addition to the obvious cash flow advantages of collecting a year up front.
Seller of financial services software for large wealth managers here. Checks or wires, annually or quarterly in advance. 3 year contracts with a minimum of $10k in annual revenue.
Every customer of mine pays through a bank transfer.<p>Some pay monthly, some pay the full contract upfront. We offer a discount for those that pay upfront so it's the customer's choice.<p>Most of our customers pay within 15-30 days. Our invoice says Net15 but some customers insist on different terms. It's just another negotiation point for us. Often the company policy is something like Net60 and the people we are talking to can't change that.<p>Whatever the terms end up being, some customers are really good about sticking to them, and some aren't. Sometimes a customer doesn't pay for 2-3 months and then we get a deposit for all those payments lumped up at once.<p>In almost all cases, the people making the payments have no relation to the people who bought your product. They most likely don't even know them or even work in the same state (or country). The bigger the company the more likely this is.<p>Once you've worked with a particular customer for a while you at least have a good idea of how they pay.
In the US: Up-front, monthly or annually (for a discount), ACH. On one of my current projects, we gave a <i>MAJOR</i> discount to our first two customers for 3-year contracts paid up front. The projects were large enough that this almost (for certain definitions of 'almost') funded the product/service development.<p>If the customer wants different terms, we stick GE-Capital between us to deal with the impedance-mismatch.<p>Outside the US, similar structure (not ACH, of course), and usually with either DB or HSBC there to work out any mutual trade-finance/payment-timing issues standing between us.<p>Sticking a bank in-between works well on a number of fronts, and one is that the client doesn't owe you -- they owe the bank. It's not free, but saves a lot of hassle for international deals. Even domestic.
This will vary by contract size and type, but for us, it's a split down the middle of monthly check or wire on annual contracts. In our experience there is a line somewhere around $1000/month where credit cards aren't commonly used.
Not quite a SaaS company, but I'll chime in anyway. For SSD Nodes we've done "trials" for enterprises with an explicit expiration date where the service gets disabled if we don't receive their payment. This tightens our AR and incentivizes them to push the payment through their channels faster.<p>Sometimes a dev from a large company will test us on a smaller package with a company credit card and expand from there after we push them through the sales funnel.<p>Most of our enterprise clients pay using either ACH or check, while the remaining typically use credit cards.
I will say something that is very unusual but I hope other fellow HNers do the same...<p>They pay me in CASH inside a cool envelope.<p>And it feels great seeing real cash, the volume and smell.
High ticket ACH is the way to go. (5k or above)<p>Fee's to the merchant will be less < 1%.... The key is finding a processor who will take on that risk
We try to get as much as possible up front, with a minimum of half of the first year up front. After that it's monthly or quarterly payments, depending on what we negotiate. So far all payments have been by check.<p>For context, we're early stage with a handful of initial customers, mostly small companies. Deal sizes in the five figures per year.
Always wire payments. My consulting clients are mostly based in Europe for their HQ's, so they don't believe in checks. They also are very timely, within 5-7 days of a NET30. Like clockwork.
fwiw -<p>Worked at a startup that served only fortune 1000 companies. Always late, late, late, late.....<p>Good side:
Repeat customers. Getting in the door is hard but once you're in it is easy to stay in if you're doing a decent job.<p>Bad side:
After 6 months of doing business with them you would finally get your first check. For a startup even with millions of dollars in the bank this sets your burn rate on FIRE.
here's a related question.<p>what if you are a sole proprietor? do I start incorporating and setting up a business bank account now before they ask for the details?