To grow at the scale required to rise to the top, SaaS companies around the world began offering more flexible payment options—if the price for a discounted one-time payment was not feasible, a seller could offer monthly or quarterly payments. How were they able to do this? It’s simple: leverage free cash flow (venture debt). It really was a win-win—sell more software and deal with AR tomorrow. While business boomed, collecting and reconciling payments quickly became some of the largest hurdles finance teams would have to navigate to ensure the health of their business.

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Today, incentivizing buyers with payment plans is the status quo, yet, the pain points of balance sheeting debt remain unchanged. The unfortunate reality is that finance teams have been forced to expand job responsibilities, grow the size of their teams, and grow their tech stack to simplify these workstreams. In this blog, you’ll learn the challenges of balance sheeting debt and the ways Vartana is changing the landscape of flexible payments.

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Over the years, challenges have amassed for finance teams across the enterprise space. Whether selling SaaS services, hardware products, or a mixture, one of the main challenges that finance teams face is how to manage cash flow, and according to CFO.com, 62% of executives and finance teams believe their finances will be under increased scrutiny in 2023. Unlike a one-time upfront payment model, monthly and quarterly payment options have been implemented to drive sales but they create a delay between when the service is provided, a product is utilized, and when payment is received. The result is that finance teams must be diligent in monitoring and projecting cash flow, to ensure that there is enough money to meet the company's future obligations. Last year, Richard Branson said, “never take your eyes off the cash flow because it's the lifeblood of business,” Today, this advice is more relevant than ever as finance teams, executives, and board members are keeping a closer eye on cash flow than they have since the 2008 recession.

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Another key challenge of offering internally funded (balance sheet) payment flexibility is the management of accounts receivable. Finance teams are dedicated to regularly monitoring a company's accounts receivable balance and analyzing the data to ensure that customers are paying on time and in full. This can be an arduous process, as customers miss payments, pay late, and quite often dispute charges. Finance teams must have processes in place to deal with these situations, including tracking payments, following up on overdue payments, and negotiating payment plans with customers. Today these pain points have created a few leaders in the space of AR management. Sage Intacct, YayPay, SoftLedger, and Oracle NetSuite, lead the way, but this accrual of tech (and debt) leaves the lingering question of ‘at what costs’ are companies growing? Today we’re seeing companies looking for a balance between selling longer-term contracts, offering deep discounts for shorter contracts, purchasing new AR management software, and hiring teams to manage the process.

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The impact of a growing accounts receivable balance can also have a long-term impact on a company's balance sheet and financials as a whole. As a company's accounts receivable balance grows, it can become a significant burden that can negatively impact the company's financial health. To be proactive in addressing AR growth, finance teams use a combination of techniques such as setting credit limits, implementing automatic payment systems, and offering incentives for early payment. Unfortunately for finance teams, these processes are time-consuming, depend on multiple systems, and often require large teams. Yet, companies know that providing payment flexibility is quite often the deciding factor that helps sales reps close more deals.