Are you still using manual methods to compile your SaaS billing process? Are you tired of the issues associated with manual billing? Manual billing processes are not only error-prone they can become roadblocks to your scaling processes, especially when dealing with complex pricing models. To position your subscription business for growth, it is important to automate your billing system. An automated billing system lets you focus on scaling your business and increasing cash flows as it eliminates the issues associated with manual billing. An automated system lets you track cash flows, identify new opportunities and predict any problem areas.
The subscription billing model provides convenience and flexibility to your customers, as they can avail of your services without paying a hefty signup fee. The recurring revenue model also helps improve your customers’ experience of transacting with you. Click here to learn more about the ways you can optimize your SaaS subscription billing process to further enhance your customer’s experience.
Apart from boosting your customer experience, switching to an automated recurring billing model has several other advantages for your business which include:
- Predictable revenues
- Increased return on customer acquisition costs
- Stronger customer relationships
- Increased customer retention
- Opportunities for upselling or cross-selling
As your business scales and grows, the burden of back-office tasks increases. You have to take care of more invoices and manage an increased number of accounts and projects. This increase in administrative tasks can cause increased errors and reduce productivity. Using recurring billing software automates the collections process and ensures regular cash flows. It’s also just the first step into streamlining all related financial activities including revenue recognition, preventing revenue leakage, and much more.
Why Billing Automation Matters?
Billing automation gives you the flexibility to experiment with new pricing and revenue models and make changes in business processes with ease. These unprecedented times has made it even more important to be able to make swift changes in your pricing and service models to ensure that your business is still driving revenue.
COVID-19 has shown businesses that challenging times require them to respond to changes and adapt quickly in order to sustain business growth. Whether it is handling a sudden increase in transaction volumes or adapting to changing business conditions, having an automated billing system lets you quickly adapt to these changes. An automated API first billing solution makes it easier to handle changes in transaction volumes and scale operations.
Watch this video case study to learn how LogiSense’s partner Garmin adapted to change and monetized their services during the COVID-19 pandemic.
How does Billing Automation streamline your business processes?
Automated recurring billing makes it easier to change service models and pricing to test new business ideas that drive growth that may ultimately lead to scaling your business. The following is how an automated billing system makes it easier for you to transact your business.
1. Improved Accuracy and Efficiency
Automated billing systems eliminate the need for human data entry which reduces the errors associated with manual data entry including incorrect credit card information, incorrect information input, etc.
Recurring automated billing makes your business more efficient and reduces operational costs as most systems are automated. A flexible billing software lets you automate invoices, charge credit cards on a scheduled basis, set up high-volume recurring billing at a flat rate, and issue refunds on time. This adoption of a familiar and consistent billing routine helps build trust amongst your customers. It also makes your billing systems leaner and allows you to focus on other aspects of your business.
2. Dunning and Churn Management
With automated billing systems, you do not have to manually charge clients at the end of every billing period. Recurring billing helps reduce churn rates by automating the collection of Monthly Recurring Revenue (MRR).
Credit card errors don't always happen due to lack of funds. There are various reasons like expired cards, reaching credit limits, frozen credit cards because of suspicious activity, etc. Sometimes, your customers may not even be aware that their credit card isn't working, which is why automated billing setup is important. With an automated billing system, you can automatically
- Notify customers of expiring credit cards
- Offer different payment methods
- Resend invoices in case of missed payments
If your billing systems are not automated, tracking down late payments can become an enormous hassle and lead to financial strain. It gets even more difficult to track as your business scales and onboards more customers. Automating late payment reminders not only makes you look professional but also helps you avoid churn on the off chance that the customers have simply forgotten to pay the bill on time.
3. Launch new products or offers faster
Automated billing is suitable for a SaaS business that is poised to grow and scale. A robust SaaS billing software allows you to launch new products or promotional opportunities without hassle, and it grows and scales alongside you. As your business scales, you also provide new product and service offerings, which necessitates trying out a different pricing model. This is where having an automated billing system comes in handy, as it makes the transition seamless.
This flexibility of automated billing platforms makes it easier for businesses that are growing and are frequently adding to their product offerings. Promotional offers or discounts can also be easily set up in an automated billing system. This makes launching new products and services easier and reduces the time spent on back end tasks.
The right billing platform will scale right alongside you and will have the ability to handle the increased volume and complexity that comes with business growth. As your business scales, you also grow a global customer base, which means your billing system should be prepared to process large volumes of transactions in multiple currencies, languages and calculate taxes based on the country you transact in. An intelligent billing system provider should be able to make this transition in a seamless manner.
4. Automated Revenue Recognition
In a SaaS business model, customers are charged upfront for services that will be delivered over time. This makes SaaS revenue recognition more complicated as customers may be charged a month or year in advance. It may seem natural to recognize the revenue as soon as the money hits your account. However, there may be cases where a customer cancels or upgrades their up-front charged subscription mid-period. So the cash cannot be considered revenue and should be treated as a liability until you have delivered the service. Therefore, it's important to have a system in place to correctly report the money you have already collected and services you have delivered.
These tasks become increasingly complicated when you scale and grow unless you have an automated system to account for revenue recognition and create an audit process to simplify payments, fees and comply with AS606 accounting standards. Automating revenue recognition lets you easily manage multiple billing models, and provides real-time updates for discounts, usage, upgrades, cancellations, etc. A flexible billing system reduces time spent on manually recognizing revenue and removes the complex process and provides you with an accurate revenue reporting
5. Business Insights
A SaaS business should have the ability to analyze billing and usage data and extract meaningful information to understand the overall business health. Automated billing systems are designed to collect key metrics like sales and revenue. These reporting capabilities help in understanding business performance and predict future trends and performance. A robust billing platform makes it easy for you to define, analyze and test metrics like customer churn, customer lifetime value, monthly recurring revenue (MRR), monthly variances, etc.
Automated SaaS billing helps businesses create flexible subscription offerings. The best billing solutions make it simpler to transact your business and are built to scale with you and take on new challenges as you grow. Before you go about automating your billing processes, you need to lay some groundwork like modeling your pricing plans, deciding on billing cycle intervals, and auto-renewal options.
LogiSense subscription billing software provides the flexibility needed to SaaS companies in their growth stage to scale. Are you keen on scaling and growing the revenue of your business? Talk to one of our billing experts to help you realize your business needs.