Businesses across all sectors have learned how beneficial it is to implement subscription- and usage-based business models. Subscription billing encourages a steadier cash flow, increases customers’ perceptions of getting more for their money, and can lower churn and boost loyalty. It takes time to develop a perfect billing strategy that generates recurring income.
To produce correct invoices, sophisticated business processes, and precise consumption information are needed. Automated billing workflows that can expand with the business’s expansion are also necessary. Additionally, flexibility is needed to adapt to new items and pricing to reflect shifting market conditions.
Developing A Perfect Billing System
To fully benefit from the subscription economy, your perfect billing platform must be able to handle complex, agile billing at the appropriate volume.
The difficulty for B2B and B2C businesses is selecting the appropriate billing platform for their requirements.
The billing needs of small, medium-sized, and large operations vary. Depending on their business model and rules, some will have incredibly complicated billing requirements. Others will require billing systems that are more adaptable and scalable.
It pays to weigh the risks and benefits of choosing a system with the correct features and capabilities that can expand with your business demands when looking for a subscription- or consumption-based billing system.
The difficulty for B2B and B2C businesses are selecting the appropriate billing platform for their requirements.
The perfect billing needs of small, medium-sized, and large operations vary. Depending on their business model and rules, some will have incredibly complicated billing requirements. Others will require billing systems that are more adaptable and scalable.
It pays to weigh the risks and benefits of choosing a system with the correct features and capabilities that can expand with your business demands when looking for a subscription- or consumption-based billing system.
The Peril Of Purchasing The Incorrect Billing System
For any organization, picking the incorrect billing system can be disastrous. Smaller businesses frequently select less expensive billing options that aren’t flexible. The billing platforms that mid-size businesses select might not be able to handle increases in billing volume and have a restricted capacity. In search of the best platform, businesses frequently test out one system before moving on to another. Using enterprise-grade platforms that can’t change to meet changing business needs is a common problem for large organizations. These large companies invest millions of dollars in tailoring billing platforms to their requirements.
Businesses lose millions of dollars due to incomplete or unsuccessful implementations of perfect billing. The ongoing issue of revenue leakage because of incorrect or incomplete billing. Making sure bills are accurate and delivered on time is crucial to guaranteeing customer satisfaction because invoices are also a regular point of contact with customers. Invoices that are exact and predictable decrease client attrition.
According to independent research by Accuity, missed payments cost businesses $118.5 billion in damages in 2020. According to the same study, 60% of businesses claim that declined payments have cost them, customers. Billing errors occur because, according to more than one-third of the companies surveyed, billing and payments are manually verified.
Organizations must pick a recurring billing system with the adaptability and scalability to match their requirements if they want to minimize revenue leakage, cut down on client churn, and increase billing accuracy. To select the perfect billing system, three factors must be considered:
- The complexity of billing transactions
- Flexibility and responsiveness of the billing system.
- quantity of invoices
The Advantages Of Complicated Billing
Rapid business growth, flexibility, and customer satisfaction must all be supported by a sophisticated billing system. The system’s capacity to normalize consumption and usage data and translate units consumed into dollars billed forms the basis of complex billing. The amount billed depends on usage regardless of the billing methodology, which may be an end-of-month invoice, prepaid tiers and tapers, time-based billing, or any other subscription model.
The ability to support a flexible product catalog with a range of billing configurations is a component of invoice complexity. Automated product recommendations and pricing variations with tiers, discounts, and variables for complicated orders should also be included.
When Evaluating Complex Billing Platforms, There Are Many Factors To Consider:
The complexity of the invoices – Examine the various delivery types for invoices, such as paper, digital, EDI, etc. How much information, including suppressed data used for analytics and tracking, is currently available? Ask about any regulations that are based on characteristics like geography, product kind, client, invoice amount, and other elements. Also consider internationalization, which includes language barriers, local taxation, and currency conversion.
The complexity of payments – The billing system should be able to accept different payment types, such as e-wallets, purchase orders, ACH and bank transfers, credit cards, and more. Think about whether the system should support the general ledger, accounts receivable, and both pay-in and pay-out.
Product complexity – Can the billing system support various models, special features, special offers, interdependent components, support options, value-added features, etc. depending on the nature of your offering?
The cost of complexity – The ability to offer tiers and packages is one benefit of subscription- and usage-based pricing. Business rules, multi-tier discounts, and the flexibility to combine subscription, volume, and usage fees are a few examples of features that the billing platform must support. The billing platform should be highly configurable and simple to alter because pricing is an area where you can experiment to strengthen your competitive advantage.
Billing characteristics – What billing characteristics, such as metered pricing, volume purchasing, discounts, pre-paid, peak consumption times, etc., need to be considered?
Regulatory compliance – Your chosen invoice platform should be capable of supporting sales taxes, privacy laws, and security requirements like PCI and GDPR.
The complexity of the channel – Pricing and billing should be scalable through partners in the channel, considering partnership agreements, commissions, fees, discounts, etc.
The Demand For Perfect Billing Swiftness
Business models must adapt as consumer needs and spending patterns change. All the laws of business were suddenly altered by the COVID-19 pandemic, and businesses found themselves fighting just to stay alive, let alone trying to create expansion plans. Companies’ billing systems must keep up with new requirements as they adjust to shifting market conditions.
Legacy billing systems are a barrier to the adoption of subscription- and usage-based pricing by more businesses. Customers are eager to switch to subscription pricing for everything from razor blades to streaming entertainment. Simple billing and revenue recognition can be handled by dated ERP systems and accounting software. These systems begin to malfunction when billing becomes overly complicated. Without the flexibility to add new items and services, for instance, businesses frequently build new SKUs for each new bundle or pricing variation. The number of SKUs quickly becomes unmanageable.
Agile billing enables businesses to quickly adapt to shifting product and pricing demands. Agile billing is extremely simple to link with other business operations and technologies, increasing the effectiveness of the entire process.
A component of agile billing is automation. Business executives should be able to make strategic pricing and billing decisions independently of IT by employing automated solutions. Being flexible and using the system to test new business and pricing models are both aspects of being agile.
Three Elements Show How Agile Billing Is:
Product adaptability: Can the billing platform keep up with the rapid changes in technology? Can billing accommodate modifications to the user experience, mobile billing, quick and simple upgrades, and protection against unforeseen costs? Examine the frequency of new product and feature releases, the proportion of users of the most recent model, the breadth of the product offering, the demand for customizing pricing, the availability of integration tools, etc.
Business adaptability: Can the billing platform consider dynamic business factors? Can the system, for instance, abstract business rules and models? Can it manage discounts and tier pricing? What about the flexibility to combine usage, volume, and subscription pricing? Business decision-makers should be able to easily adjust and run what-if scenarios without the need for IT support since billing needs to drive business.
IT agility – In a perfect world, you would allow subject-matter experts to modify billing; however, IT will still be responsible for setup, integration, and customization. How challenging is it to install and maintain the platform? Can updates, testing, monitoring, and maintenance be handled by the IT department? What about the introduction of new goods or pricing?
Volume Billing Prepares The Ground For Business Development
The focus is typically on making a smaller investment for small businesses to support rapid deployment without intensive IT support. Greater agility with out-of-the-box support for ERP, financial planning, and analysis is what medium-sized or mid-market customers want.
Businesses start looking for support as billing complexity rises along with volume as you reach higher billing volumes. Instead of real-time processing, billing systems must offer “quick time” processing. Companies desire flexibility, complexity, infinite volume, and real-time (or very close to real-time) processing at hyper-scale.
Select a billing platform that will grow with your business. Your ramp-up time will be short if you use a software-as-a-service (SaaS) solution, and it should be easily scalable. Make sure the SaaS platform provides the functionality you require for billing complexity and adequate billing capacity.
Agile billing does not have a one-size-fits-all methodology. Businesses that are based on subscriptions or usage have different requirements depending on their size, so it pays to take the time to analyze your unique billing needs and look for the best billing platform. Making the wrong decision can be very expensive, both in terms of retooling and scaling efforts as well as in terms of lost clients and revenue leakage.
Don’t assume the best market seller has the best solution because there is no one method for subscription billing. Select a perfect billing system that is appropriate for your company, taking into account the volume, complexity, and agility levels that are appropriate for your operation now and in the future.
Work 365 is an automated recurring billing system for Microsoft partners to streamline recurring revenue.
