Bill Lodes, executive vice president of business development & strategy at First American Payment Systems sat down with ISVinsights to discuss what software companies need to know about recurring revenue, evaluating residuals from different payment processors, increasing payment residuals, and what kind of investments ISVs are making with these increased revenues.
Recurring revenue can mean a more profitable exit when it comes time to sell your software company. Payment processing residuals offer another stream of recurring revenue for ISVs.
What kind of impact can payment residuals have on an ISVs bottom line, both in terms of revenue and customer retention?
Bill: When an ISV partners with a payment company, there are many components they should evaluate to ensure they have the right partner. One key benefit of working with a payment partner is the opportunity to earn residuals or recurring revenue on the payment processing program. ISVs don’t think or realize the importance of partnering with a payment provider, and what the additional revenue could mean to their business in terms of growth and possibilities.
Payment residuals can be a very important component of the bottom line for an ISV. As an added revenue stream, it can help ISVs reinvest in the business and provide even more functionality and features to the end user. Residuals are also attractive if the ISV is looking into a potential sale, as this kind of recurring revenue stream will increase the profitability of the business. It also can allow them to expand their sales force and increase marketing efforts.