Although it may appear obvious, let’s agree on the most basic definition of automated billing – which is an action where the invoicing for goods and services occurs without the need to prepare an invoice by hand. While this is certainly true, some automated billing systems can handle much more. The question becomes, which automated billing system is right for my business?
Since there are many aspects to consider when selecting an automated billing system, you need to have a clear understanding of your specific requirements. To help you choose a system that’ll meet your current and future needs, we’ve listed seven criteria for you to explore and consider.
1) How many customers am I currently serving, and what is my projected 5-year growth rate?
Depending on where your company is on the maturity scale or if projections are for rapid growth, your requirements will be different than some of your competitors. For instance, if you’re a start-up business with just a few customers, manual processes such as spreadsheets and word processing applications may be all you need – at least for now.
One thing is certain, manual processes don’t easily scale. If your business plan includes growth, then you should consider a cloud-based billing platform. One specifically designed to handle expanding transaction volumes and easily adaptable to meet changing workload requirements. An investment in cloud billing automation will meet your needs today and into the foreseeable future.
2) Who will use the billing software?
The answer to this question may seem obvious: the billing team, of course! But, usage shouldn’t end there.
While your finance team will benefit from the fast and accurate information provided by an automated billing system, and executive team members will have valuable insights for better decision making, you shouldn’t forget your customers. A system that incorporates an intuitive customer portal gives customers the freedom to serve themselves. This enables you to free up resources and improve the overall customer experience.
3) Which pricing models need to be supported today and in the future?
Many businesses start off with uncomplicated pricing models such as a flat monthly or annual subscription fee. As your business scales, additional pricing models may become necessary to grow your customer base and leapfrog the competition. Whether subscription, usage-based, dynamic, hybrid or others; an automated billing solution should never be a hurdle to pricing flexibility.
Consider what your future pricing models may look like as your company grows. Chances are you’ll want to experiment with new and innovative business and pricing strategies. It’s important to keep in mind that manual processes don’t scale to handle complex pricing models. With an agile automated billing system, you’ll be able to quickly test and fine-tune new pricing models and billing strategies.
4) How will invoices be generated and delivered?
Depending on your pricing model, business strategy, billing periods, and other factors, there are many ways to generate and deliver invoices. To create and generate accurate invoices, your billing software needs to be able to gather all bill-related data, which often resides in disparate systems. While relatively straightforward for businesses with uncomplicated pricing models, it becomes much more complex when a combination of pricing schemes and/or subscription and usage-based pricing models are used. To avoid revenue leakage, companies require an automated billing system that includes robust mediation capabilities.
If delivery of invoices is also a requirement of the billing software, a decision as to the best method for sending them needs to be determined. While email works for some companies, others will require more robust applications, notifications or even automatic recurring invoice delivery.
5) Which systems should be integrated with the billing system?
Accurate invoices rely on the billing system’s ability to collect data from other systems. In addition, it’s also important to determine the data various teams need and how they will use the information. For example, insights from an integrated system should be available to sales, marketing, and even product development to keep them informed of incentives, promotions, and areas that need improvement.
To achieve the most benefits from your automated billing system, it should allow for easy integration to front- and back-office systems, including downstream financial systems, your customer relations management (CRM), enterprise resource planning (ERP), and inventory management applications. By creating a holistic financial ecosystem, your teams will have the information they need to know and understand the health of accounts, be able to flag payment issues such as expired or rejected credit cards, and provide accurate financial reporting.
6) Should revenue recognition be manual or automated?
Not only is revenue recognition important for your business’ profitability, but it must also adhere to rules like ASC 606 and IFRS 15. If you have a smaller business with few customers, and a business model where payment is received upon delivery of the product or service, revenue recognition can be handled manually.
For software subscription model companies or as the company grows and increases its customer base, an automated billing and revenue recognition system becomes essential. Let’s look at an example where automation is a necessity. Say subscribers pay a $30/month fee, however the revenue needs to be recorded in daily, provisioned increments. Manually tracking $1/day revenue recognition from all of your subscribers is extremely difficult, time consuming and prone to errors.
7) What languages and taxable regions need to be supported?
Finally, it’s important to consider the regions and countries your business is serving today (or will be serving in the future). With various currencies, laws, taxes and languages, it’s essential that your automated billing system is flexible enough to meet global requirements and needs.
Going global requires an automated billing system that can localize your solution to meet regional specific requirements, as well as customer needs. It also requires the flexibility to define currency for billing, rating and reporting.
Get Started With The Right Automated Billing Solution
In determining your billing requirements, there’s one common theme – growth requires automation. In your quest to grow your business, think about everything else that you may have already automated – sales, supply chain, delivery, etc. Unfortunately, financial processes are often overlooked in the automation race, that is until now.
With a flexible automated billing solution, you can bring innovative products and services to market up to 30% faster and reduce operational spend by as much as 50%. BillingCloud by BillingPlatform empowers companies, like yours, to run the business with greater efficiency, accuracy and control. Talk to a member of our team today to learn more about how automated billing can help.