The biggest cost isn’t losing deals, but how long they take to close

Ask most SaaS CEOs where they expect to find the next improvement in EBITDA and you’ll usually hear familiar answers: reduce cloud costs, streamline engineering, automate support or improve customer retention. But according to Phil Machin of BridgePro Procurement, rarely does anyone point to the sales cycle – and for many enterprise software businesses, that has quietly become one of the largest drags on profitability.

It’s easy to see why. If an enterprise opportunity is eventually won, it’s often viewed as a success regardless of whether it took six months or twelve. Revenue has been secured, the customer is happy, and everyone moves on to the next opportunity.

But the financial reality is very different.

Every additional month spent moving a deal through procurement, legal and internal governance carries a cost. Sales teams remain tied up on opportunities that should already be generating revenue. Pre-sales consultants continue supporting evaluations. Lawyers negotiate the same clauses. Product specialists attend more demonstrations. Customer success teams delay implementation planning. Finance waits longer to recognise revenue. Meanwhile, the business continues to fund the cost of acquiring a customer that has already decided they want the product.

The opportunity cost is significant.

When "yes" still takes another four months

One of the biggest misconceptions in enterprise software is that procurement is where deals are won or lost. In reality, many deals are effectively won long before procurement becomes involved. The customer has selected a preferred solution. Executive sponsors are aligned. The commercial proposition is accepted.

The delay comes afterwards.

The business case hasn’t been fully developed. The CFO wants greater confidence in the return on investment. Procurement asks for additional commercial justification. Legal teams begin negotiating liability, data protection and service levels. Security teams raise technical questions. Commercial approvals pass through multiple governance forums.

None of these activities necessarily change the buying decision. They simply extend the time between commitment and contract signature. For a software vendor, those months have a direct impact on EBITDA.

Consider a software company with £25 million in annual recurring revenue, an average enterprise contract value of £250,000 and an average sales cycle of nine months. Reducing that sales cycle by just three months does far more than improve cash flow. Revenue begins earlier; Implementation starts sooner. Customer references are generated more quickly.

Sales capacity increases because account executives spend less time shepherding existing opportunities through governance and more time creating new pipeline. Customer acquisition costs fall because fewer internal hours are consumed per opportunity.

Working capital improves because invoices are issued earlier. Even without increasing headcount or marketing investment, the business effectively creates additional selling capacity. That’s one reason private equity investors pay close attention to sales efficiency metrics rather than simply annual revenue growth.

EBITDA is influenced by time as much as cost

Improving EBITDA is often associated with cost reduction programmes. However, reducing unnecessary delay can have an equally powerful effect. Imagine two software businesses with identical products, identical pricing and identical win rates.

The only difference is that one consistently closes enterprise opportunities in six months while the other takes nine. The first organisation turns pipeline into recurring revenue faster. Sales teams recycle their time into new opportunities sooner. Professional services become billable earlier. Deferred revenue reduces. Forecast accuracy improves.

The second organisation employs more people to achieve the same revenue outcome. That’s not because the team is less capable. It’s because time itself has become an operational cost.

Why business cases matter more than product demonstrations

Technology vendors have become exceptionally good at demonstrating features. Customers, however, buy outcomes. One of the recurring themes across enterprise technology procurement is that organisations struggle to quantify the value of modernisation.

An outdated order management platform, CRM or HR system may be creating inefficiencies every day, but unless someone translates those operational improvements into financial outcomes, investment decisions become harder to approve.

The most successful enterprise vendors increasingly help customers answer questions such as:

• What is the five-year total cost of ownership?
• How quickly does the investment pay back?
• What operating costs are removed?
• What productivity improvements can realistically be achieved?
• What strategic capabilities become possible once legacy systems are retired?

These are finance questions, not technology questions. When answered well, they shorten decision making because executives are no longer buying software—they are approving an investment.

Procurement isn’t the obstacle many vendors believe it is

Procurement is often portrayed as the final hurdle that slows enterprise deals. In practice, procurement is usually attempting to reduce uncertainty. Unclear commercial terms, inconsistent contract positions, incomplete security responses and poorly articulated business benefits all increase procurement activity.

Conversely, organisations that arrive with well-prepared commercial documentation, clearly defined governance, benchmarked contract terms and a robust financial justification often experience significantly smoother procurement journeys.

Procurement rarely objects to clarity. It objects to ambiguity.

The organisations making the biggest gains are not necessarily hiring more salespeople. Instead, they are investing in commercial readiness.

They equip account executives with financial models, board-level business cases and procurement-ready documentation. They standardise contracting positions before negotiations begin. They prepare executive sponsors to defend investment decisions internally rather than relying solely on product demonstrations. The result is a business that is easier to buy from. That distinction matters.

In increasingly competitive software markets, reducing friction can be as valuable as adding functionality.

As software categories mature, feature differences narrow. Commercial execution becomes the differentiator.

The vendors that consistently outperform are often those that remove barriers between customer intent and contract signature. They recognise that every unnecessary week in the sales cycle consumes cash, delays recurring revenue and suppresses EBITDA.

Reducing those delays isn’t simply about improving operational efficiency. It’s about unlocking value that already exists within the sales pipeline. For many enterprise software businesses, the next improvement in profitability may not come from selling more. It may come from helping customers buy faster.