“It’s doable, but it would have been hard to scale” - Lessons from scaling SaaS globally

This is why I should have had a merchant of record like Paddle to expand and scale my sales-assisted SaaS business globally. 

In a previous life before I joined Paddle, I was a SaaS business owner. Like most when they’re first starting out, I learned very quickly the lessons that come with trying to build and expand a sales-assisted business overseas. Those lessons can be summed up in four words: manual, costly, time-consuming. All in the name of trying to get a real-time view of our revenue across territories at any given time.

When I discovered Paddle, I realised that had I used a merchant of record, I would have easily been able to test, land and expand in new territories in a much more efficient and cost effective way.

More on this later. First, let me set the scene.

By the way, if you would prefer, you can watch the video.

From Australia to Europe: an upmarket global growth trajectory

I built my own SaaS company in the tourism industry based in Australia. We sold to our customers via direct sales. This means we went out into the market, met with customers, ran demos, negotiated deals, signed contracts, and delivered invoices. In short, what we would call sales-assisted billing. We didn’t have a self-serve checkout.

We kept our headquarters as an entity in Australia but we moved to Paris. Sales-assisted billing typically relies on bank transfers and customers expect to be able to pay in their local currency. For us, it meant we need the ability to invoice and receive payments in both GBP and euros.

So, we set up a bank account in Britain to invoice and receive payments in GBP and we were able to keep that aligned to our Australian entity. Europe was less simple. In order to open a European bank account and facilitate payments and invoicing in euros, we had to open a separate entity in France. Not only was this another lengthy admin task, it was also expensive to open and maintain.

In both scenarios, maintaining a single source of revenue truth was manual and a challenge to maintain.

Maintaining a single source of revenue truth across state lines

Our British bank account was not integrated with our Australian accounting software which meant each time we were paid in GBP, we had to manually reconcile that data. In France, the banking infrastructure is very different which meant our European bank account had its own data and processes as well as its own accounting system. Of course, that meant another area of manual data transfer from the European accounting software to our Australian headquarters.

A real red flag with this web of companies was that we had no real-time visibility over our revenue across different markets. Maintaining that data visibility was a manual task that was subject to human error.

Possible, but was it scalable?

Any company selling globally needs the structure to be able to support payment across borders, in the local currency. We were able to set up that structure, but was it worth it?

The short answer is yes, but only in that it opened up a revenue stream early on in our life cycle. But there were a number of challenges we didn't anticipate that meant it would have been a hard way to scale. It’s doable. But expensive.

Because we were selling purely sales-assisted, we had to factor in the cost of reconciliation both from a people and a process standpoint. When you add that additional complexity of doing that in different entities you also have the challenge of having to bring all that disparate data together for real-time visibility.

What if I had used Paddle?

I often think back to that same scenario knowing what I do now about merchants of record (MoR) like Paddle. Paddle takes all the banking infrastructure to facilitate the invoicing and payments across territories off your hands.

If we’d used Paddle:

• We would have been able to bill in euros and GBP without having to open any additional bank accounts or entities – saving us a lot of money in bank fees and in time, people, and process
• We’d have had a single source of truth for our revenue data – giving us the chance to focus on the reason we went to France. I certainly would have spent less time on the phone with French bankers and more time selling our product.

What’s more, Paddle was built for SaaS businesses. Paddle anticipates and solves for the challenges I faced – and those I would have come up against later on.

My advice to SaaS business owners expanding globally

First of all, do your research. When we went to France, we didn't have a good understanding of what would be required to set up that payment structure – we just expected things would work. Think about the customers you have and if they are willing to pay into foreign bank accounts.

But mostly, my advice would be to use an MoR. It will make taking your sales-assisted business global that much easier, efficient and scalable without incurring the financial and people cost to maintain it.

An MoR, like Paddle, would have been a great way to test in an international market without fully investing in it. The financial infrastructure is taken care of for you so you can land, test and scale in new territories without the burden on your teams.

You don’t know what you don’t know and it’s these unknown barriers and the requisite manual workarounds that caused unnecessary distractions from your core purpose: to make a great product. It’s why we do what we do at Paddle. And it’s why I joined the team. Our collective experience puts us in the best position to remove these barriers for you.

Take a look at how Paddle helped Renderforest on their growth journey. Or if you want to hear more about how Paddle’s invoicing tool solves these challenges, click here to speak to an expert.