How to allow your customers to buy now but pay later for your services

Welcome to The Did You Know Podcast by Varisource, where we interview founders, executives and experts at amazing technology companies that can help your business save a lot of time, money and grow faster. Especially bring awareness to smarter, better, faster solutions that can transform your business and give you a competitive advantage

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Welcome to The Did You Know Podcast by Varisource, where we interview founders and executives at amazing technology companies that can help your business save time and money and grow bring awareness to smarter, better, faster solutions that can transform your business. 1.3s Hello, everyone. This is Victor with Varisource. Welcome to another episode of the Digital podcast. Today is going to be a super, super entertaining episode and excited to have Philip with Tranch here with us. Philip is the CEO and founder of Tranch. Tranch essentially is a buy now, pay later platform for B to B SaaS and services enabling your business to get paid upfront by providing flexible payment terms to your customers. Welcome to the episode, Philip.

Thank you very much, Victor, for having me. Delighted to be here

here. Yeah, so obviously. 1.3s you know, being talking to you for the last couple months, you have a lot of amazing stories. If you don't mind me giving a couple of seconds background on yourself and tranch, that be great.

Awesome. Hi, everyone, I'm Philip, based in London. Right. Now start off a career in London, actually. So I started my career in banking. I worked at a bank of Rothschild, did a lot of work around financial services and carried on doing that. Became a consultant after that, a company called Bain. But I really want to get my hands dirty and actually become an operator. So I ended up doing a digital mortgage platform here in London, scaling that to a few hundred people, ending up being the CFO during a pandemic. So, some pretty interesting war stories they have from that experience. And then having spent some more time over in the US living in the West Coast, set up tranch with my cofounder beau. And we're on a super exciting journey to solve one of the pain points I had as a CFO when I was managing a 30 $50 million cost budget, and I just couldn't pay flexibly for the things that mattered in my budget, which could be anything from like my big software renewals all the way to the legal fees, marketing, you name it. I got these invoices through and I thought, hey, what if I could spread these over three, 6912 months in a super easy fashion? Why can't I have a consumer experience to paying for some of my largest invoices from software to services? And that's the journey we've been going on, a tranch and super excited to be expanding into the US 1s just as we finish our accommodate.

Yeah, again, just so many interesting questions that's going to come your way today. So, first of all, 2.3s I get to know about by now, pay later through companies on the consumer side, like a firm, and I think there's a couple of others just hearing about the news and what it was, because a lot of times even Amazon, I think, partner with a firm, or even Apple was offering buy now, pay later. Meaning on the consumer side, if you're going to buy an iPhone, you can now do buy now, pay later. And again, financing is something that everybody knows, right? You finance your car, you finance your house, right? So people are familiar with financing, but before this buy now, pay later market category came along, 1.3s obviously, even for consumer products, which I thought was amazing. It was an amazing idea. Obviously, a lot of these companies went public, so I think you're in the right category, Philip. But I haven't seen, obviously, them do that in the B to B space, which, if you can imagine, companies spent millions, like you said, right, on services and staff. And so when I heard about what you're creating, it was just mind blowing, to be honest. But to me, the first question for you is even without. But when I talk to a lot of customers, executives and just companies. 1.8s This by now, pay later concept is still new to them in general. Even on the personal side, they're not even that aware of buy now, pay later. And so kind of walk me through 1.2s what made you think of this category and how do you kind of educate the people on do you feel like it's going to be obviously, how is the market going to know more about this buy now, pay later option? 1.3s

Yeah, it's a really good question. I think we're going to find out about it the same way that they do on the consumer side. They're going to see it as an option. And so for what we do is we partner with from leading law firms to leading platforms, leading SaaS companies, that during the conversation of having the customers or at the bottom of the invoice, it now says, hey, you can spread this out flexibly over three to twelve months. And what that means is kind of really helping. What we're doing helps both sides because we're enabling these companies to get paid. Where typically people just sit on invoices, they pay them late. I think like 40% of software invoices in the US are paid late. That's a crazy

number. And that has

real ramifications. And what we do is we enable almost like this checkout experience, we create these Pay with Tranch checkouts. That means we can bring an online experience to these really kind of offline invoices that exist in the world. And that's what we're on our job to transform. And like people like you and the other software procurement platforms out there, you're trying to get people the best deal, but then the best deal is not just when you put a number on there, it's how do I pay for it? What installments can I pay for this? How easy is it for me to pay differently? And that's where Tranch is coming in. 1.1s

So what do you think is the right time to start this category? Obviously, the world has changed dramatically in the last two years with COVID, right, that the digitization digital transformation for companies has accelerated. That also means more cloud, more SAS. Is that the main reason you feel like this is the best time to start this category? I'd

say that's like one of three reasons that I think about. I think. 3s The second reason, which is like more of a macro one, is that while there are a lot of challenges during the Pandemic, there was a lot of capital out there in the world. I mean, there still is, but the central banks were literally printing money 1s and businesses were getting a huge amount of stimulus, trillions of dollars of stimulus across the world, not just in the UK, in the US as well. And that meant that for a lot of businesses, actually, capital was fairly cheap and they had large balance sheets. Whereas now, with such uncertainty in the world, again with rising costs, people are really looking at their budgets and we've been seeing that everywhere, either with kind of job losses and places, or just people kind of thinking about how they want to procure and do they want to buy a contract, do they not? And so I think that backdrop is really important because if we can help people with cash flow management liquidity, where they can pay flexibly over a period of time, rather than all their contracts renewed in September and there's a lot of cash going out the door, we can help them think about the profile of their business differently. I think the third thing is just enabling factors. So we kind of use state of the art banking transaction data. We're able to approve customers not just based on outdated credit scores, which often really are pretty useless, especially for newer businesses, but we use kind of much more complex, but also like technologically advanced ways to enable us to reach a much broader set of businesses. So I'd say backdrop plus enabling factors makes this a category that we're really going to see continue to grow. 1.1s

Yeah. And again, talking learning from you, Philip. You know, when you do financing for a large sum of money, whether that's tens of thousands or hundreds of thousands of dollars, oftentimes the traditional financing methods, maybe through banking or whatever, takes a long time. 1.6s And that's maybe one of the the reasons that people don't do it. Meaning, hey, if you need to finance $100,000 for a purchase and it takes you two weeks, two months, then it doesn't make a lot of sense. Right. And so one of the things I love about your platform and what you guys build is the speed. Right. I would say maybe that's one of the secret sauces. Can you kind of explain how that works to audience more than just the financing, but how quickly they're able to get financing and know if this is viable?

Yeah, absolutely. And you're completely right. We don't really even think about this as financing because financing has stigma. We just think about this as a different way to pay. And we think the payments b to be payments just really do kind of suck out there. And so we're trying to change that. And you know, right, right now, like, we have customers coming to our platform and we pay their suppliers by the end of that day, but we're not stopping there. We want to almost make it seamless. Even when you're doing hundreds of thousands of dollars, we want it to be even more seamless. We won't be able to say, hey, you can come to our platform, connect, and we will pay to supply within the hour, as long as it's kind of like within rough normal hours of the day. And the thought of that happening, that you can set it all up straight away is pretty exciting. So 1.8s we don't even think about it as like applying to a bank for a loan. You come onto our platform and you can use charge as much or as little as you want over a significant amount of time. And it's constantly evolving.

Yeah, obviously because of the economy and the downturn right now, there's a lot of things that startups or companies are thinking about cash flow, which I think many of the things we talked about, help them with cash flow management, 1s that's one. But then two is also savings they're trying to figure out. They need to buy software. Software runs their businesses, right? And so they still need to continue to pay for and buy and renew software. One of the other great use case that I hope you can talk about is how can procurement or people buying software leverage your platform more than financing? And like you said, cash flow to leverage to get better deals on software as well as part of the negotiation. I think that's something procurement managers are going to love. So can you kind of speak to that. 2.6s

Can you just repeat the question? Just make sure I really understood it?

Yeah. So the question is, how can procurement or companies who are sourcing soft buying software, how can they use your platform to help negotiate better rates or better deals on for software services?

Yeah, absolutely. We've got a super exciting partnership that you know about. Victor. But we can't I'm not going to share live on this podcast just yet. But we see ourselves as a way to we work with some of the largest procurement platforms because whilst they can help you with the procurement and getting them the best price. 1s We then partner with them to say. Hey. You can pay this with Tranch as well. So I won't go into details of who we're partnering with. There'll be more on that soon. But ultimately, I think when you think about software procurement, you should think about it in two stages. One, how do I get the best price for my needs? And two, how should I pay? This suits my PNL, my liquidity cash flow.

Yes. And one of the examples that I love from you was obviously companies know that if they pay upfront a year upfront, they are going to get the best rates. But oftentimes they said, well, I don't want to pay a year upfront because of cash flow or other reasons. I want to pay monthly. But then they lose that leverage or opportunity for discounts or savings. Right. So it kind of hurts both sides. It makes it hard for the customer, it makes it hard for the 1.2s SaaS provider because the SaaS provider obviously wants the cash flow too, and they want paid upfront. Right. So I feel like you're absolutely solving kind of that both sides of the coin. Exactly. And what we say is that what we actually found is that staff companies are less and less willing to offer any sort of monthly or quarterly payment terms because they're under a lot of pressure to register that arr

upfront and offering monthly quarterly payments, in their view, can at least a higher churn. So now when a customer comes in and say, hey, can I pay monthly? They could say, well, we do offer payment monthly, but through our exclusive partner Pay with Tranch, and they can go into the payment with Tranch check out and pay Flexibly. And so we're able to help both sides in

that situation. So anytime people talk about banking financing or even just fintech and all of these things, it seems like it could be a very complicated integration and process. But with you guys, it's really seamless. Can you walk through kind of what that if somebody, a company is interested in implementing a Tranch, what is the process and time frame look like? We

can get someone set up with their own checkout page within about half an hour and we go for essentially like, say, I could do it quicker, 1.7s but the. 1.2s We can set this on up with our own co branded checkout page that they can get going and offering to that customers that same day. Now, if they want to be more integrated, like integrate the invoices, in, etc, we can do that. But we can get them set up and try this out with customers and seeing that demand within half an hour, that's how quick we can go.

Wow, 1.4s that's amazing. So obviously this is still a relatively new space, but just like anything, when something makes so much sense and becomes popular, there's going to be competition that comes in different from the large companies to startups. Where do you see as a founder 1.6s how you guys will differentiate or how will you guys innovate to kind of stay ahead of the curve?

That's always a challenge. They say kind of innovate or you know, kind of fall behind, right? So I think they say something a bit harsh when I wouldn't say that. 1.9s You've got to constantly moving ahead. You've got to be saying and I think the way to do that is to always be talking to your customers and saying, hey, what actually changes us for them? Like, what do they actually want? And sometimes as a founder, you can think about what someone wants without. But until you test it, it's really kind of like an untested hypothesis. And so what we need to do is make sure that we're really proud of some of the partnerships we have and we want to continue a lot of those and expand them. And then at the same time we need to make sure that the customer journey is constantly getting better. And every time I give a demo to anyone on the platform, sometimes I'm even surprised because our team is like, improve something, change something. I'm like, oh wow, this is cool. So you're going to be doing both things. We like to always think about it as continuous improvement. So you never just there may be the big things that you ship, but like a product should never kind of stay still and it's really important to keep moving, keep testing, keep pushing ahead. 1.8s

So no, that makes sense. And the way that you guys have innovated just in the last couple of months I met you, it's amazing. So 1s obviously our audience 1.5s comes in different 1.1s places, such as it could be executives, it could be even MSPs. And I know MSP was another kind of great example use case for you guys. Do you have any kind of feedback on how, like, a company, like an MSP, a managed service provider, can benefit from your solution? Because a lot of times it's not just for the end customer. That's why I think you have such kind of a viral effect. Right? It's kind of like you have a partner that offers the payment and then the customer knows about it. So it's kind of like that just kind of goes viral on both sides. But from a partner, like a managed service provider that listens to this podcast, how could they leverage your service? Well,

they could be offering payroll charge to their customers. Wherever there's an invoice, there's a use case. I may have invented that tagline

just now, 1.4s but I need to trademark that before you do. Yeah,

get out there. 1.1s But that's how we think about this. Ultimately, transactions are happening constantly in the world. There's trillions of payments going b to b, and it doesn't matter what sector it's in, but we think MSP is another great use case for us. 1.8s

So I'm here to ask you the tough questions, right? I mean, with anything that's good, there's always some maybe limitation or downsides or just challenges. For example, one thing I asked you before was, hey, if a company is buying software, but yes, now they can buy now, pay later through your platform and improve their cash flow. But obviously there is an interest rate that they have to pay. They may look at it as an additional cost. How would you answer that? How would you counter that to a client who perhaps think about that concern?

The answer in two ways. One is for that customer, often we're very transparent, so we don't think that is an interest rate. There's a fee, it's very open from the beginning. It's spread out over the lifetime of how long you want to spread it out for, and it's pretty small versus the value of the contract. I mean, it's from around 0.8% a month. 1.4s But the benefit of it is that you are able to invest in growth up front and invest your budget elsewhere without essentially paying someone else's bills. And most of our customers don't even notice it, quite frankly. They've already negotiated such a great discount on the price, especially if they're using like a software procurement platform that actually we're just kind of a tiny bit of margin within what they've already saved. So we're kind of more thinking about like, oh, we've helped you save money, now there's tidbit coming off that, but actually now you can spread it out, and you couldn't spread it out otherwise. So that's number one, and I hope that answers that question. Victor, for you. I think the second one is that we also have a product for software companies whereby they can offer their customers essentially 0% a bit what Apple does sometimes for their iPhones, depending on the country. And what that means is that the software company can say, hey, you can pay monthly as long as your credit approved charge. And what we do is we essentially take that. Essentially the software company bears the fee. So the software company, because they got pricing flexibility and they're actually really happy to do this, but they can provide their customers with a free monthly option. 2.9s And then we just need to make sure that the customer we're comfortable collecting the money from the customer. So we're experimenting all the time. This is a new PMPL product for software. We're really excited to see how that one goes as well. So we have a number of different

models. Yeah, no, it's there are so many use cases, because every time I talk to you, I think of another use case. And I think I told you last time we spoke, I'm like, man, every company SaaS provider should do this. Obviously, when you have a product that 1.3s any and all companies could use, eventually you might become a trillionaire. Philip but we'll see how you guys continue to innovate. So maybe one of the last questions that I love asking founders is, if you were speaking to sea level executives, 1s and what advice or tips would you have for them? Maybe it's about tranch, maybe not. But just what you've seen in your career, what you've seen in the last two years, where the world is going. What tips would you have for 1s executives that are running businesses today? 3.6s

It's a really good question. Victor. I think for early stage companies, I always say to

them, and there's a bit of, YC, advice to this as well, but just get your product out there. Launch, Launch, Launch. And I think the same applies to big companies as well. I think they're often, like, like, so focused on shipping the perfect product that by the time they ship the perfect product, the opportunity might already have gone. All the products kind of already out of date. So building in a silo is always bad versus actually being on the ground, taunt your customers, whether that's your product, whether that's your services getting out there, launching early and being there with people. And iterating is much better. My biggest regret with Charge is not launching two months ago because we wanted all of the two months before we did, I should say, because we want all the I's dotted and the T's crossed, as we say.

Whereas, actually, we should just get out there. You aren't learn so much more than if you launch a product that you think is like the perfect product. So 1s my advice, other than Victor and I, we both share a love of just getting out there and hustling is get uncomfortable with your customers because you'll learn a ton more. 1.2s

Yeah, that's an amazing 1s tip. It's easier said than done, as you know, because sometimes I think when people create products or services, they want to make sure it's the best and it fits everything. But at the same time, you got to learn, right? Even when you buy Facebook ads, as Google Ads, you got to learn first. You just buy ads and suddenly this customer come in tomorrow, right? There's a testing process and a lot of people, I think, may not have the patience or just understanding that for everything there's a process. 1.6s Now, this has been great and of course, we're excited to next couple of weeks have you on for the webinar to visually show how tranch works, but excited to have you appreciate it, Philip. Have a great weekend and we'll catch up soon.

Thank you so much, Vince. Thanks for having me on here. 2.3s

That was an amazing episode of the did you know podcast with Varisource. Hope you enjoyed it and got some of great insights from it. Make sure you follow us on social media for the next episode. And if you want to get the best deals from the guests today, make sure to send us a message at sales@varisource.com

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