Larger companies, especially enterprise companies, have a more formal process where billing is concerned. There are many reasons behind this, from wanting to be transparent around their purchasing procedures, to wanting to keep track of their outgoings, to needing to verify the supplier as genuine and ensure they are correctly taxed for compliance reasons.
When dealing with a larger business’ procurement team, you can expect the following. However, there are 2 important things for you to take into consideration before the process begins:
For your consideration
1. Your customer, or potential customer, may ask for a quote. Depending on the business, they may also ask for a contract so that they have an official exchange of your Terms and Conditions for their records and a written agreement with regards to auto-renewal.
2. You may need to be added to your customer or potential customer’s approved supplier list before procurement takes place. This is often the case when selling to enterprise businesses. You’ll be asked to provide your business address, registration number, and your tax residency certificate (your W9 form if you’re based in the US). Once your company is an approved vendor in their system, the process can properly begin.
STEP 1 The process starts with the raising of a purchase order (PO). Your customer will send this to you to indicate their intent to purchase your product. At this stage, no money will have changed hands. The customer has set the procurement process into motion.
STEP 2 In return, your customer will expect an invoice from you. They’ll want to tie their PO to the invoice, so ensure you reference their PO number on the invoice.
STEP 3 It’s now your turn to stipulate payment terms. Companies typically specify that they require payment within 30 days. Larger companies will have an Accounts Receivable team to chase unpaid invoices or an automated dunning system to get in touch with customers whose payments are overdue. Now that you’re selling to larger companies you can expect to chase invoices on a pretty regular basis. Cash flow could become an issue if your biggest clients are delayed in paying, so be prepared!
Be ready to accept both card payment and payment via wire transfer. In our unique position of overseeing the checkouts of thousands of SaaS companies, we’ve noticed that orders to the value of $3000 or over will most commonly be paid via wire transfer.
Dealing with resellers
A lot of enterprise companies procure software through a reseller like SHI or SoftwareONE. A reseller procures and deals with invoices for big companies and can be a step in the process if you sell to a company like Amazon. It’s important to bear in mind that, in this instance, you’ll have to bill the reseller and fulfil the order to your customer.