Subscription Management

Key Requirements to Support Your Subscription Business Model

February 10, 2021

For software-as-a-service (SaaS) companies, a subscription business model is one of the most common billing methods of charging customers. Invoiced on a daily, monthly or annual basis, most modern billing systems can handle simple subscription billing such as flat-rate or per-user pricing. But what happens when complex subscription changes are required, or you need to accept and process a variety of payment methods? What if security enhancements are needed for emails sent through your billing system?

Although there are other complexities that can arise, we’ve highlighted three key features that every subscription billing system should provide:

  • Complex subscription updates: Handle even the most complicated subscription changes with functionality that streamlines the process, as well as tracks and monitors the updates.
  • Lockbox payment processing: A must have automation tool for SaaS businesses that accept payments other than credit cards.
  • DomainKeys Identified Mail (DKIM): The security protocol you need if you’re sending emails through your billing system.

Let’s take a look at each of these features in more detail.

Take the Complexity Out of Subscription Business Model Changes

What happens when you need to make changes to a subscription business model? Maybe you have customers with multiple subscriptions that renew on different dates, but they want all of their subscriptions to renew on the same date. Or perhaps a customer wants to make changes to their number of licensed seats during a subscription period. Conceptually these changes seem simple, however they can quickly escalate into overwhelming complexities once invoicing, audits and customer experience are considered.

Let’s take a closer look at two challenges in a subscription business model, and how a sophisticated yet easy to use billing solution alleviates the complexities.

  • Co-terms allow a customer to receive all charges from multiple subscriptions on the same date, providing them with more predictable spending. Your billing system should provide the option for subscribers to renew multiple subscriptions on the same date – regardless of the purchase date.
  • Mid-cycle quantity changes allow customers on an annual subscription to make changes to the originally provisioned quantity after the subscription has been invoiced, but before the next renewal date. For example, let’s assume that a subscriber needs to increase the number of licensed seats from 3,000 to 3,500 in the middle of the subscription term. New quantities need to be prorated to align to the original terms, and then renewed for the sum total quantity and presented as a single charge. The ability to make these changes helps to improve invoice presentment, provides the ability to scrutinize changes on accounts, and enhances the overall customer experience.

Billing features such as these allow for better tracking and monitoring of changes, as well as automatically addressing all aspects of proration. All while ensuring customers are accurately charged for the services used, and no money is left on the table.

Automate Lockbox Payments

Do you offer customers the option to pay their bill via check, bank transfer or another method that doesn’t pass through a payment gateway? To automate the processing of those payments, your billing solution needs to provide payment lockbox functionality.

What is a lockbox? A lockbox is a service offered by a bank that allows the bank to receive payments, process the payments, and deposit the money back into the company’s account for posting.

How does a lockbox work? If a company offers non-credit card forms of payment, they sign up with their bank for a lockbox service, which comes with a corporate bank account. The company includes the bank account number on their invoices, and when the customer writes a check or wires the money for payment, it goes directly to the account. The bank then processes the payment and deposits the funds into the company’s account. At this point, the bank provides a lockbox payment file to the company listing all the payments received in the name of the company. The company then processes the lockbox file, applying payments to the customer accounts in the system.

lockbox payments

This is helpful because to remain competitive, SaaS companies need to offer a variety of payment options. With a billing solution that offers an automated lockbox feature, you gain the flexibility to accept any payment method, ensure payments are received, processed and posted.

Prevent Spoofing of Outgoing Emails

Spoofing email addresses is far too easy, even for the most novice cybercriminal. To help prevent email spoofing, DomainKeys Identified Mail (DKIM) is widely supported across vendors offering email services. In other words, DKIM authenticates that an email came from the domain it claims to have come from.

This email security protocol should be a fundamental feature in the billing solution you choose. How does DKIM work? First, you should be able to implement DKIM for each email domain you use. Once enabled, all emails originating from your billing system (e.g., customer welcome email, account statements, credit card expiration notices, etc.) are automatically digitally signed. The feature allows you to send emails from multiple domains or selectively enable DKIM signing for all, some or none of your domains. Plus it protects you and your customers from SPAM, spoofing and phishing attempts.

Innovation Starts With Your Billing Solution

When you start to build out your subscription business model, it’s important to consider both your current and future needs. We believe that for our customers to quickly turn ideas into revenue, they need an agile and adaptable billing solution that can react to market trends in real-time. Built on the most agile billing platform on the market, BillingPlatform continues to extend and enhance its functionality and features to help its customers support not only today’s subscription business model requirements, but be prepared for what the future may bring. If you have any questions about BillingPlatform or would like to see the product in action, reach out today.

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