Every day, your company engages in numerous processes that are critical to keeping the business operating at its full potential. Regardless of whether you run a small and medium-sized business (SMB) or large enterprise, one of your daily processes is billing management. Essential to the success of your organization, billing management consists of customer invoicing, payment tracking, and account management. While some start-ups use manual processes, as the company grows and billing strategies become more complex it becomes critical that a billing management solution is introduced to the mix. Since every company is unique, selecting the best billing solution can feel overwhelming – but it doesn’t need to be.
To guide you in determining the best billing solution to meet both your current and future needs, we’ve created the following criteria for your consideration. Referred to as the ABCs of billing solution selection, each section provides key billing requirements that’ll help you select the best billing solution possible.
- A – Adaptability and Extensibility
- B – Business Model Support
- C – Configure not Code
Adaptability and Extensibility
Since data is generated by or managed within disparate enterprise applications, such as the product-usage information required by SaaS organizations, it’s essential that your billing system can interpret structured data from multiple sources. Known as mediation, this often overlooked activity is critical to normalizing data, removing unnecessary usage records, and routing the required information for rating and billing.
The ability to adapt data enables you to accurately calculate customers’ outstanding balances and provide invoices in a timely manner. In addition, a billing system that is adaptable will be able to handle all of your billing business processes. The billing solution you select should be able to do this without relying on third-party or custom-developed extensions.
It should be noted that mediation isn’t something that all billing systems provide or are even able to effectively execute. The best billing solution will provide integrated mediation capabilities, allowing you to reduce costs associated with integration and third-party solutions. In fact, more sophisticated billing solutions provide integration frameworks, as well as robust application programming interfaces (APIs) and enterprise connectors. All of which enables you to create a fully integrated financial ecosystem.
To help determine the billing solution that’ll best meet your requirements, let’s look at the differences between systems that provide basic versus sophisticated adaptability and extensibility.
Basic adaptability and extensibility:
As the word ‘basic’ implies, these billing systems are less robust. For instance, they won’t have mediation capabilities, so all required data needs to be normalized before it can be entered into the billing application. This often means manual, error-prone processes or third-party integrations are necessary.
Simple extensibility typically provides time-driven recurring invoicing cycles, where regardless of when an invoice is ready it’s only sent at a predetermined time such as weekly, monthly or quarterly. While this works well for uncomplicated pricing models, it doesn’t provide the flexibility required for more complex billing schemes.
Sophisticated adaptability and extensibility:
More robust billing solutions can typically be configured to ingest any kind of data and convert it to the desired structure. Mediation should be performed natively, enabling you to quickly and accurately process high volumes of data.
It’s essential that a billing system allows for the real-time sharing of information between itself and other systems such as your general ledger. To simplify and automate complex billing scenarios like usage-based, you need to be able to seamlessly connect with all necessary systems.
Sophisticated extensibility offers event-based cycles that are automatically triggered by specific milestones such as project acceptance, delivery of a specific number of products, or by project completion percentage. Typically, these triggers or milestones are defined within the contract. For the billing system to accurately bill and provide timely invoices, it requires access to contractual data, which only more sophisticated billing systems can provide.
Business Model Support:
Regardless of whether you choose a basic or complex system, the billing solution you select needs to enable, rather than hinder, your business model. For example, let’s assume your business sells magazines. For accurate billing and revenue recognition, you need a system that can track the magazines sold from in-store purchases, as well as through subscriptions.
To ensure that your billing solution supports your business strategy, an examination of your data model is required. The data model resides at the core of any billing system and provides the logical interrelationships between different data elements. A data model defines customer accounts, specifies account and product rating models, structures product catalogs, reflects customer contracts, houses charging events, and records customer payments and finance interactions.
If the billing system’s data model is rigid such as those created for a specific industry, it may only suit a limited number of business models. This means that the organization must fit its data and billing processes into the billing solution’s data model. Typically, these data models will work for small start-up companies in the initial stages of defining their business model, or organizations that are willing to change their processes to fit the billing solution’s data model structure.
Data models found in more sophisticated billing solutions provide the flexibility to conform to the organization’s existing business models. These billing systems are often architected as platforms rather than applications, allowing integration with existing data tables and providing the ability for the business to create new product relationship hierarchies.
Configure, Not Code
Because some billing solutions are rigidly constructed, any customization needs require expensive service engagements with the billing solution vendor or a third party. When searching for the best billing solution, be sure to consider your future needs. Billing systems that offer easy package, product, and business model configurations are preferable for businesses that anticipate future changes. Systems that offer configuration rather than requiring custom coding enable you to eliminate reliance on costly developers. Finally, a flexible billing system should allow you to easily configure an intuitive user interface – without IT intervention.
While basic billing systems can automate simple rating plans (such as when all subscribers are charged the same monthly fee for the same service), they are unable to handle more complex rating schemes. Companies with multiple product offerings, and those whose rating scheme incorporates multiple attributes, require a more robust billing system. Similarly, a sophisticated yet easy-to-use billing solution is needed by organizations that undergo mergers or acquisitions. Mergers and acquisitions typically result in new offerings for the company, and the billing solution needs to be able to monetize the offerings in separate and distinct ways.
Selecting the Best Billing Solution For Your Organization
At first glance, billing solutions can appear similar – they can calculate what is owed, create invoices, and bill customers. It’s only after you take a deep dive into the similarities and differences of the systems that it becomes obvious that not every billing solution can meet every need or company goal. As the ABCs of choosing a billing solution revealed, there are significant differences between billing systems in how they handle complex pricing models, support customized invoicing, and integrate with disparate systems.
Knowing how to evaluate billing systems is the first step in choosing one that’ll meet your current requirements, as well as future needs. With BillingPlatform you get a billing solution that supports all of your business requirements – any product, any service, any business model. Our system is built to scale, enabling you to adapt to market changes, maximize revenue and deliver superior customer experiences. Reach out to learn more.