Background:
Our partner, a recruitment software house, needed guidance on how the costs of a system implementation, critical to the temporary recruitment side of its customer’s temp and contract agency business, could be spread over the life of the licence. The software is critical for the customer’s end-to-end contracting and temporary staffing operations.

The requirement:
Behind the multi-year licence, lay many hours of coding and R&D and our partner needed to recover these costs “up front”.

The customer, on the other hand, wanted the benefit of paying quarterly over 3 years, to match its employment contract revenues.

The solution:
We worked with the software house to agree with the customer quarterly instalments in the licence schedule - rather than cash. We then helped by re-drafting the licence terms and, in agreement with the customer, arranged for a sale of these instalments from the licence, enabling the software house to realise £381,000 of present value cash.

The benefit to the customer:
The customer did not want to pay in advance for the software, having a deferred revenue model, and insisted on a quarterly fee, thereby matching revenues with costs. It would not have been comfortable with an initial cash payment to our software partner but was happy to agree to a fixed irrevocable licence fee payment

The benefit to our software partner:
Our partner has a good relationship with the customer and the customer has trust in the software and a good understanding of its contribution to the cost management and efficiency of its temp businesses; the customer was more than happy to allow our partner to fix the minimum payments in its licence and enable receipt of a cash payment.