Your software as a service (SaaS) business is thriving… congratulations! What you’re probably discovering is that the spreadsheets and manual effort used to track software usage and bill customers is no longer sufficient. Now you need to tackle one of the most important software purchases you’ll ever make – billing. With so many SaaS billing software solutions available, how can you be sure that you’re choosing the right one for your company? Finding the right fit can be tricky, but it doesn’t need to be. This blog serves as a guide to provide you with the information needed to help you select a SaaS billing solution that will meet your specific needs – today and into the future.
When Billing Goes Awry?
Without the right SaaS billing software, you can quickly find yourself in a bad spot. There are numerous reasons why businesses opt to replace their current billing system. Improving profitability is typically high on the list, but billing also plays a critical role in creating customer experiences, keeping your business profitable, and in helping you retain a positive reputation. Let’s take a closer look at each of these and how your SaaS billing solution can either help to deliver positive results or be a driving factor to negative consequences.
Customer experiences
Although great (or poor) customer experiences are the result of a variety of interactions, complicated or inaccurate bills can be the straw that breaks the proverbial camel’s back. Ensuring the timely delivery of error-free bills every billing cycle helps remove the risk of customers questioning bills or finding errors. Either has the very real potential of delivering customer experiences that are less than satisfactory, which can quickly result in customer churn.
Profitability
If your billing processes and/or billing software make it difficult to enter data or doesn’t have the intelligence to anticipate and prevent mistakes, you’re at risk of costly billing errors. In addition, delayed invoicing has a domino effect that can reduce your cash flow. Finally, billing systems that lack the ability to connect your critical front- and back-office systems leave you at risk of nonpayment for continued software usage. Some examples include after the customer’s freemium period ends, credit card expires, and more.
Reputation
There are many factors that form a company’s reputation such as news coverage, social media posts, online reviews, word of mouth, etc. Poor billing experiences only serve to exacerbate the situation, which can lead to a loss in revenue. Did you know that 93% of consumers read online reviews, and a separate study determined that 4 out of 5 customers won’t purchase from companies with negative reviews. What does this mean for revenue and profitability? Negative online content can cause a company to lose 80% of its sales.
Functionality and Benefits of the Best SaaS Billing Software
The best SaaS billing software needs to provide three essential components – automation, flexibility, and scalability. Without these core capabilities, you’re at risk of being unable to grow revenue and improve profitability.
From a functionality perspective, here are the seven critical features that your SaaS billing solution needs to provide.
1) Payment gateway
A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. It securely transmits transaction data to merchant banks and receives responses from issuing banks. Be sure the payment gateway provides a secure architecture that follows PCI security standards and offers DKIM protocol. In addition, it should provide for continual updates and enhancements to ensure that you’re able to meet changing functional needs and regulatory requirements.
2) Merchant accounts
You’ll need a merchant account to receive online payments from your customers. These bank accounts allow you to accept payments from debit or credit cards. Some SaaS billing solutions provide a ‘built-in’ version, while for others it’s behind the scenes.
3) Dynamic invoicing
The SaaS billing software should have the ability to automatically and dynamically generate invoices, populate PDFs, XLS or Word documents with application data, use pre-designed templates, and automate delivery.
4) Revenue recognition
Never an easy process, but when you add recurring revenue into the mix recognizing revenue becomes even more complex and difficult to manage. You need to ensure revenue is recognized as soon as possible while adhering to ASC 606 / IFRS 15 regulations. A rules-based revenue recognition engine takes the guesswork out of when revenue should be recognized. The SaaS billing software needs to provide for real-time sub-ledger transactions and seamlessly integrate with downstream enterprise resource planning (ERP) and accounting systems to ensure that critical metrics are accurately reported.
5) Business intelligence
From dashboards and reports to analytics, etc., you need a variety of business intelligence tools to get an in-depth look at real-time and historical data at a granular level. The SaaS billing software needs to provide the agility and flexibility to slice and dice billing and usage data and extract meaningful information in order to review and compare financial performance – week-to-week, month-to-month, year-to-year, as well as to understand cash flow trends, revenue leakage, deferred revenue, customer churn, retention, etc., and optimize monthly recurring revenue (MRR).
6) Dunning management
Failed payments can quickly deteriorate your profitability. Mitigating the impact requires automated dunning management so that you can quickly and easily schedule and tailor outstanding balance messages to customers, create one or many dunning reminders, as well as manage late fees, account suspensions, and notifications.
7) Subscription management
This is an optional feature depending on whether your company handles customer subscriptions – B2C or B2B. If so, you’ll want to ensure that the billing solution you select allows you to make subscription configurations for things such as invoicing cycles, pricing tiers, terms, mid-cycle changes, discounts, upgrades, downgrades, early terminations, etc.
Depending on what’s appropriate for your business, there may be additional functionality like mediation and internationalization that you should look for in a SaaS billing solution.
Eliminate SaaS Billing Software Bottlenecks
As the most frequent communication you have with your customers, your SaaS billing software must be beyond reproach. The best SaaS billing solution needs to work seamlessly and provide high levels of automation, flexibility, and scalability. Essentially you want to set it up and forget about it.
Unlike other cloud SaaS billing software, BillingPlatform was developed to help companies solve tomorrow’s billing problems, today. Our complete solution fulfills 100% of your business requirements such as mediation, rating, invoicing, collections, reporting, analytics, revenue recognition, and A/R subledger, while enabling you to launch innovative products, packages, and pricing models in hours… not days. Contact our team today to see how we can help you find the best SaaS billing solution.
