Invoice billing software encompasses more than just sending an invoice. It’s at the very center of your ability to maintain a healthy cash flow. If you’re still managing invoices manually or using an outdated billing solution, chances are you’re encountering payment delays.
Make Payment Delays a Thing of the Past
Your goal is to generate revenue, and a healthy business relies on a steady stream of revenue. What happens when payments are delayed due to situations beyond your control? Let’s look at a scenario that happens all too frequently.
We’ll assume that your company sold hundreds of thousands of dollars worth of your software–as-a-service (SaaS) customer relationship management (CRM) solution. Delivery and implementation went off without a hitch, and the customer was invoiced. However, just before payment was scheduled to be received the customer disputed the number of resources used during the billing period. The outcome – payment delay.
Tying revenue to a single invoice may mean waiting for your hard-earned revenue for months, quarters, or more. And for some businesses, this could be the difference between operating in the red instead of the black.
Is there a solution to this payment quandary? The answer is a resounding yes and can be found in event-based billing.
Event-Based Billing Explained
Event-based billing goes beyond the subscription billing model. Instead of billing based on flat-rate, fixed-price, etc. pricing models, customers are charged based on billable events or on the exact amount that corresponds to their consumption. If a billable event doesn’t occur during a billing cycle, the customer is not charged.
To better explain, let’s look at a real-world example. For the majority of their cloud services, AWS offers an event-based (pay-as-you-go) approach. Customers only pay for the individual services consumed. If none are used during a billing cycle, no invoice is generated. In yet another example, we’ll assume that a company sells offerings that consist of features like API calls, file storage, and analytics. Event-based billing enables organizations to associate prices to each of the features offered. If a customer makes 50 API calls, uses 10GB of storage, and runs 3 analytic reports, their monthly invoice will reflect each of the three billable events and their associated costs.
Put Yourself in Control
When invoices are based on chargeable events, companies are in control of when to generate invoices. For instance, say you need to create an invoice for software usage, but the customer’s billing cycle doesn’t coincide with when usage occurred. Instead of waiting for the next billing cycle, event-based billing software helps generate an invoice in response to specific predefined events that are based on usage or other custom fields.
Event-based billing enables you to use the event data that you already capture to define the release of an invoice. With an event-based billing cycle, you’re able to define a set of attributes at the product level that detail a natural grouping of billing events, as well as a single event that signals the “close” of an invoice. In this model, usage continually flows through the billing system to the ERP system, as well as other sources. This automatically generates invoices when the “closing” event takes place. Alternatively, you can define your billing components to accumulate charges and then “close” the invoice on a specific cycle. This creates a common time interval for invoice generation for a subset of products and services.
What’s in it for the Customer?
When your invoice billing software gives customers the option of event-based billing, they have control over how much they spend and when. To illustrate, let’s take the example of server access and data uploads. Let’s assume your customers pay a set amount for uploads each month, regardless of whether data is uploaded or not. With the option of event-based billing, customers can choose when to upload data and only pay for the services used during that billing cycle. While a significant customer advantage, customers benefit in other ways, such as:
- Customer Centricity: By aligning your pricing directly to how customers use your product(s) and services, they only pay for the value received.
- Transparency: The itemized invoices allows customers to see the correlation between usage and cost, creating a sense of transparency and trust.
- Customer Satisfaction: Given the fairness of this value-driven approach, customer satisfaction increases, fostering customer loyalty.
Invoice Billing Software Makes It Simple
With billing models and processes already in place, how can you incorporate a model that lets you take advantage of near real-time invoicing? Event-based billing is possible with the right invoice billing software, letting you get the best of both worlds. For example, you can keep using scheduled billing cycles and have them coexist with the event billing cycle for certain products, services, or customers. With this approach, rules are easily added and evaluated. Regardless of your current billing model, event-based billing takes priority over default cycles. This enables you to capture revenue faster than ever before.
Invoice automation software gives finance teams the flexibility to group like charges into discrete invoices. Plus, define events that trigger closures and invoice deliveries. Additionally, invoicing cycles can be programmed to send invoices only when specific inventory leaves designated stores for just-in-time deliveries or other scenarios. And there’s more…
Simplify With AI
Artificial intelligence (AI) can further simplify the invoicing process. Leveraging machine learning (ML) algorithms and natural language processing (NLP) helps AI transform invoice processing. Ultimately making the system more efficient, accurate and transparent. Here’s how AI adds another layer of simplicity to event-based billing.
- Invoice Capture: AI can automatically capture invoices from a variety of sources, such as emails, PDFs, and scanned documents.
- Data Extraction and Validation: After capturing invoice data, AI algorithms validate the information by cross-referencing it with purchase orders, contracts, and other relevant documents.
- Matching and Approval Workflow: AI can match invoices with corresponding purchase orders and receipts, identifying any discrepancies. If everything matches, the invoice is automatically routed for approval. In the case of discrepancies, AI can flag the issues for further review, ensuring that only valid invoices are processed.
- Payment Processing: After approval, AI can schedule and execute payments based on predefined rules and schedules to ensure timely payments.
The implementation of AI brings a host of benefits that significantly enhance invoice processing. This can include increased efficiency, enhanced accuracy, cost savings, improved compliance and fraud detection, and scalability.
Get Started with Event-Based Billing Today
When invoice billing software limits your options for automated invoice cycles, you’re forced to generate invoices based on predefined triggers. These can include project acceptance, delivery of a specific number of products, or a specific percentage of project completion. All of which can result in an excessive number of monthly invoices that are prone to charging disputes and delayed payment.
Featuring event-based billing, BillingPlatform helps you avoid payment delays and get paid faster. We give you the ability to configure your products to “close” and send separate invoices based on specific events or actions. Our billing and revenue recognition solutions reside in tandem. When an event is triggered – either from BillingPlatform or a 3rd party solution – revenue from the sale can be automatically recognized. This dramatically improves your cash flow.
Are you ready to get started with event-based billing? Contact our team today to learn more about our solution.
