Disrupting the Norm: How Ratio Tech’s B2B BNPL Unlocks SaaS and Tech Growth
Buy Now, Pay Later – Disrupting the B2B Norm
As Gen Z shopping habits shift, so does the traditional way that sellers and suppliers are offering financing solutions to support the culture and expectations of new buyers. Buy now, pay later (BNPL) firms who have used technologies and methodologies serving the business to consumer (B2C) are now expanding into business to business (B2B). This move is smart for both buyers and vendors.
Ratio offers SaaS and other recurring revenue businesses the chance to access non-dilutive capital backed by their portfolio of contracts, without discounting and diluting equity, to stay in the growth game, avoid discounting, and to ultimately better serve their customers with innovative and flexible payment options.
Introduction and Benefits of BNPL for B2B
BNPL has proven extremely popular with B2C service providers with recurring revenue. Unfortunately, however, its potential is being underutilized within B2B environments.
While B2B buyers tend to purchase software with more flexible terms, their procurement processes can often be hindered by department budget limitations, lengthy approval processes, and cash flow difficulties that make closing deals quickly or expanding revenue runways difficult.
Now with BNPL for B2B, when companies sign a SaaS agreement, a lot of times it's paid multiple months up front. It's common to sign it as a 12 month, 18 month, or up to three years paid up front, and the buyers will typically have to figure out a way to pay. The selling company will do a heavy discount to enable their buyers to be able to afford their solutions, and this is where by now pay later from Ratio Tech comes in.
Sellers no longer have to do a heavy discount in order to encourage their buyers to buy. Because Ratio Tech now provides that flexible payment option, and the seller still collects the 12 month upfront payments like they have been doing all along so one benefits another. For tech companies that provide hardware, it is very hard to provide a SaaS like capability for financing, so you can look at Ratio Tech as a way to provide tech companies that have hardware as a service solutions instead of forcing the buyers to buy the hardware up front as a big chunk of investment. Now, we can provide that flexible payment option for the buyers so they don't have they don't have to put a huge amount of capital to buy the hardware. We’re transforming it in a way where it’s hardware as a service, but essentially it's a buy now pay later for B2B.
Immediate Cash Flow: no prolonged payment terms
Specialist B2B BNPL providers enable SaaS businesses to offer Buy Now, Pay Later services directly on their websites or marketplaces. Customers can purchase services without making upfront payments and experience their new product immediately – helping avoid deal delays due to temporary budget constraints or falling-throughs.
BNPL services can also be integrated seamlessly into vendors' sales workflows to optimize renewals, conversion rates and reduce churn. This can be accomplished via integrations with websites, CRM or CPQ platforms to streamline and simplify the sales process.
These services also help minimize risk by conducting credit and fraud checks on potential buyers' businesses and ID, to verify a transaction as legitimate and free from risk. This enables vendors to avoid needing to discount products or dilute equity in order to gain access to capital, so they can focus on expanding their business instead.
Flexibility and Customization: reduce negotiations
Ratio Tech was established by founders and management teams with deep expertise in SaaS and technology industries, and features founder-CEO Ashish Srimal's past roles at SAP and Medallia as an executive. Meanwhile, Cofounder-CTO Mason Blake cofounded UpCounsel before it was acquired by LinkedIn.
BNPL (buy now, pay later) and financing platform for recurring revenue businesses provides payments, predictive pricing and finance in one convenient platform that enables SaaS companies and other recurring revenue businesses to increase sales while instantly accessing contract values – no negotiating lengthy payment terms necessary, departmental budget restrictions no longer need be overcome, nor customers unwilling to exceed their credit limit become churned away from.
BNPL programs used to require significant capital to build and manage in-house, but thanks to digital credit and e-commerce companies now have access to highly personalized, risk-adjusted BNPL solutions without costly infrastructure and resources investments – with sellers who integrate Two seeing an average 60% increase in average order value (AOV).
Reduced Financial Risk: offload the burden
With B2B BNPL, businesses can close deals faster by offering instantaneous cash for the full value of contracts. This streamlines approval processes and lowers customer acquisition costs for both buyer and seller.
BNPL also helps businesses avoid missing deals due to unpredictable budget restrictions and simplifies payments by providing flexible payment terms that suit individual buyer business needs.
This can help increase both speed and accuracy when making credit decisions, often being one of the biggest obstacles to acquiring new customers.
Ratio Tech was formed to address these challenges. Their BNPL platform incorporates payments, predictive pricing and financing into one solution, designed to assist SaaS businesses overcome deferred cash flow issues such as discounting while recovering customer acquisition costs, according to an August 15 press release from Ratio.
Integration with Sales Platforms: streamline sales
Ratio uses AI to personalize sales content for each prospect by understanding their industry, buyer persona and history with the company – as well as understanding any particular needs or questions they might have about our offering. This level of customization enables sales teams to close deals faster by providing relevant material at just the right time.
Subscription economy represents a USD 1.5 trillion market, spanning industries from software to razor blades. But subscription-based businesses face unique hurdles like deferred cash flow issues, steep discounting strategies, and recovering customer acquisition costs.
In a recent interview with their Chief Marketing Officer, Victor Thu explains the approach further:
“Many people are familiar with the consumer side where you go buy stuff online for your appliances or a TV where you can use mechanisms to pay over a period of time, but this mechanism isn't as readily available from the B2B side which is where Ratio Tech comes in. If we look at larger tech companies, they typically have different financing vehicles including financing it on their own books or utilizing distributors or resellers to help financing to buyers of smaller companies. Ratio Tech helps smaller tech companies to be able to provide that financing mechanism so these smaller companies that are growing don't have to worry about the complexity of having to deal with financing of finding different options to help their buyers buy products. Instead they utilize this payment service from Ratio Tech to do BNPL and we help facilitate the transactions on behalf of the buyers and the sellers.”
Ratio Tech, established in 2021 and headquartered in the US, has emerged from stealth to offer an innovative buy now/pay later (BNPL) platform that allows SaaS companies and technology businesses to offer embedded buy now/pay later services to customers. Their solution offers payments, predictive pricing, financing options, quote-to-cash process that allow subscription-based businesses to provide personalized BNPL solutions that suit customer cashflow needs granularly.
B2B for BNPL Accelerates revenue cycles and scale
Buy now, pay later (BNPL) services are rapidly gaining ground in B2C sales but have taken longer to penetrate B2B transactions due to providers not serving vendors directly as well as many B2B businesses not viewing BNPL as an attractive option for their products.
Ratio Tech is revolutionizing this situation by making it simple for any business to offer instant, embedded financing options in their client’s sales cycles both online and offline sales channels. Utilizing cutting-edge technology, they quickly perform instant credit, fraud and buyer identification checks in less than 30 seconds for new payment terms to be established in minutes.
This week, the company made headlines when they emerged from stealth mode to announce they raised $411 million to scale their "new flavor" of buy now, pay later: an innovative fintech platform which integrates payments, predictive pricing, financing and a frictionless quote-to-cash process. Machine learning technology validates and optimizes product pricing according to churn risk, lifetime value and willingness-to-pay, according to company officials.
Buy Now, Pay Later – Disrupting the B2B Norm As Gen Z shopping habits shift, so does the traditional way that sellers and suppliers are offering financing solutions to support the culture and expectations of new buyers. Buy now, pay later (BNPL) firms who have used technologies and methodologies serving the business to consumer (B2C)…