We all know the beauty of the SaaS business model: great cash flow from up front payments, recurring revenue from clients that renew, ratable revenue recognition that results in smooth rather than lumpy revenue models, etc. But what if during your licensing agreement negotiations the client is pushing back and threatens some or all of these SaaS model advantages?
This is when its great to work with attorneys that have extensive SaaS legal consulting backgrounds; attorneys that not only understand ASP law or cloud computing law but can help achieve business goals during licensing agreement negotiations.
If a client does not want to pay up front, provide and incentive for them to do so. Give them 60 day payment terms and a 2% discount for paying for a 1 year subscription / license up front. That's better than receiving payment over a 13 month term, no? And if you are a start-up struggling to manage cash flow, a small discount for an up front payment is a small price to pay.
If this is a consistent issue, consider incentivizing your sales force for up front payments. Give them a bigger / better commission for clients that pay up front within 30 days.
This is when its great to work with attorneys that have extensive SaaS legal consulting backgrounds; attorneys that not only understand ASP law or cloud computing law but can help achieve business goals during licensing agreement negotiations.
If a client does not want to pay up front, provide and incentive for them to do so. Give them 60 day payment terms and a 2% discount for paying for a 1 year subscription / license up front. That's better than receiving payment over a 13 month term, no? And if you are a start-up struggling to manage cash flow, a small discount for an up front payment is a small price to pay.
If this is a consistent issue, consider incentivizing your sales force for up front payments. Give them a bigger / better commission for clients that pay up front within 30 days.
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