7 Questions to Clarify Your Billing Requirements
“Should I build or should I buy my billing system?” is one of the predominant questions we’ve seen business’ struggle with answering. Before you can decide which billing system option is right for your business, it’s important to understand the details dictating your billing needs.
There are many aspects to consider around successful billing, from necessary integrations and industry-specific regulatory requirements to ongoing support and total ownership costs. Consultations with relevant stakeholders are also important, and it’s helpful to enter these conversations with an idea of the right questions to ask and explore.
As you consider what dictates your billing solution, here are seven questions you should ask to guide the process.
1. How many customers will be served this year and 5 years in the future?
When a business first starts out, manual billing is often easily managed. In the early days of a startup, having just a few customers can result in close relationships. Sometimes this means customized products or services that require specialized billing attention.
As a business grows, however, managing the increased number of customer accounts becomes unsustainable manually. How many customers did it take your business to realize that it may be time to implement more sophisticated billing software? How many customers will that software have to manage five years from now?
If your business is projected to keep growing, it’s important to build or buy billing software that can accommodate that growth for years to come. Knowing where you stand and where you plan to be will help inform your decision.
2. Who will use the billing software?
The answer to this question may seem obvious: the billing team, of course! But the software’s use doesn’t have to end there.
Obviously, accounting will benefit greatly from any available integration or direct usage, and executive team members can also use billing software reporting tools to gain valuable insights into the business.
We can’t forget the customer. If there’s a customer service portal, then customers will be using a portion of the software, as well.
All potential users must be taken into consideration. And you should choose a system that’s intuitive and helpful to them all.
3. Which pricing models must be supported today and in the future?
Many businesses start off with the simplest pricing model possible; perhaps a flat monthly or annual subscription fee. As business scales, however, alternate pricing models sometimes become necessary. Whether through creating tiers, add-ons, or promotional packages, a billing solution should never be a hurdle to flexibility in pricing.
Consider what the future of pricing may look like for your business as it grows, and be sure to include the agility to handle changes in your pricing and billing strategies.
4. How will invoices be generated and delivered?
Depending on your pricing model, billing period, and other factors that may be unique to your business, there are many ways invoices can be generated and delivered.
If your billing software is generating invoices, where is it gathering the data to do so? For many simple business models, flat monthly or annual fees make this an easy process. For other businesses more complex pricing is needed, such as usage-based models. The billing software will need to mediate usage information to be processed and generate an invoice.
From there, if delivery also falls to the software, what is the best method for sending to the business’ customers? For many examples, email works just fine. For others with robust apps, a notification or even automatic recurring charges may be more appropriate. Discuss what fits best for your business.
5. Which systems will the billing system need to integrate with?
In addition to the earlier question of who will be using the software, it’s also important to ask what other systems will need to integrate—and how the teams associated with those systems will use the integration.
Billing software is often integrated with CRM and downstream financial systems. This integration helps inform your internal teams about the health of accounts status, flag common issues with payment, such as expired or rejected credit cards and provide accurate financial reporting.
There are sometimes opportunities to integrate, or at least make insights available to, sales, marketing, and even product development to inform incentives, promotions, and areas of improvement. Using the data gained from billing software as a shared source of decision-enabling information across a business is an effective way to streamline and unify efforts towards growth.
6. Will revenue recognition be manual or automated?
Revenue recognition isn’t just important for your business’s operation; it’s required by various business reporting standards.
For business models where full products are received by customers upon payment, revenue recognition can often be handled manually for much of a company’s early growth. For software subscription models, however, automated billing and recognition become necessary.
Since a $30/mo. subscription’s revenue can only be recorded in daily, provisioned increments, manually tracking the $1/day of recognized revenue generated from multiple accounts is exceedingly difficult—to the point of being effectively impossible. So, automated revenue recognition is an important consideration for your billing solution requirements.
7. What languages and taxable regions need to be supported?
Finally, it’s important to take time to consider the regions and countries your business and billing software will be servicing. With various currencies, payment platforms, laws, and taxes applicable to the different places your business reaches, it’s critical to ensure that a billing solution is flexible enough to meet all requirements and needs.
Don’t just consider your business’s current reach, either: as with number of customers, also look five years into the future.
Our eBook, Should I Build or Buy My Billing Solution?, covers more details to consider when deciding on a billing solution that is right for your business. Take a look and find out what billing solution is the right fit for you.