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01732 759725 30 MSP Software discounts or spread payments? Smart finance delivers them both Recent announcements from various business software giants are now bringing annual and multi-year license discounts to the market 1 . At the same time, the inevitable price rises are also being widely communicated. Microsoft Windows Server prices are – for instance – rising by 10% 2 . I can see clearly why software providers may want to offer discounts for annual and multi-year license agreements when paid upfront. Everyone wants to improve their cash flow and be able to recognise sales in the current financial year. The cash flow advantages are obvious. Yet, from the customer’s point of view, it’s diametrically opposed to their own cash flow interests. The software vendor wants to collect payment as soon as possible. The software user only wants to pay ‘as they go’ or ‘as a service’. Smart finance helps to bridge that chasm. The pandemic experience has taught us all the value of cash flow – for both reseller and customer alike. A significant report from McKinsey talks about moving “from cash preservation to cash excellence.” Feedback from our annual net promoter score research has emphasized the value that a flexible, specialist finance partner has delivered to our reseller partners, supporting business continuity. But that only works if our smart finance can make sense for reseller, customer and software OEM alike. Let’s have a quick look at how it works. We want to leverage the multi-year discount offered by the software company. They want to get their sales recognised and the cash in as early as possible. The end-customer wants the opposite – monthly payments across the license period so that costs are aligned with revenues. Smart finance captures the discount and shares it between customer, reseller and financier, all the while converting the up-front cost into a monthly charge. Siemens Financial Services (SFS) pays the reseller the total cost of the licences, then provides the end-customer with a smart finance arrangement which spreads the cost. Everyone wins. In fact, there could be an additional bonus for the reseller who (in some cases) might collect full-term commission bonuses as the software sale is recognised up-front. This topical example illustrates how our finance has helped resellers and their customers to reduce costs, conserve cash and preserve precious working capital reserves which are proving so vital to commercial survival and resilience. There are range of further benefits from our smart finance. Finance fixes payments and terms – which reduces budget uncertainty for a reseller’s customers in a volatile period. They also help improve sales closure rates by removing the price/budget sensitivity associated with CapEx spend (some reseller partners have seen their revenues increase by as much as half again, thanks to the attractions offered by finance). As we have noted with the software license example above, finance ensures that the reseller is paid straight away and gets rid of the need to offer end-customers trade credit terms (which otherwise would be at least 30 days). So, as SFS takes on the credit risk this means there are no payment terms or transactional risk for the reseller. On top of all this, digitalised smart finance from SFS has helped resellers transform to the new world of remote and hybrid working, and ensure their solutions keep pace with the competition and deliver optimal service to end-customers. So if you want to get creative with finance and boost your sales – not just with the software proposition but across your whole portfolio – why not contact me at SFS to discuss how it can work for you? Siemens is a brand that says confidence, quality, empathy, expertise and innovation, stability, reliability and professionalism. Connect with Charlie on LinkedIn: www.linkedin.com/in/charlieewcooper/ SaaS: Emerging Trends In the United Kingdom, multiple lockdowns during the COVID-19 pandemic led many companies to seek business-to- business (B2B) Software-as-a-Service (SaaS) solutions to keep their remote employees connected and move business forward. In 2021, the surge in interest for B2B SaaS tech shows no signs of slowing down. The global SaaS market is expected to grow by more than 40% to an estimated £263.3 billion ($362 billion U.S.) by 2022. 3 Research from one analyst in 2021 revealed the two biggest SaaS solutions in the UK – marketing technology (martech) and workplace collaboration tools 4 . Another report shows increasing demand for vertical Saas solutions 5 . Vertical SaaS is usually designed to solve a single problem at once and is used in specific industries such as healthcare, banking, retail, hospitality, and others, They are usually complex systems that deal with business-specific requirements and offer the leverage to customize extensively to exactly fit the client organisation. Almost every report on the subject 6 mentions the attraction of flexible pricing and payment models. Contact us today: www.siemens.co.uk/technology-finance Charlie has been in the asset finance industry for over 7 years with experience across the EMEA and APAC regions. At Siemens Financial Services Charlie has expertise in the technology and the telecommunications sectors, both direct to customer and via vendors. Charlie Cooper gives his views on: