The ABCs of Choosing a Billing Solution
Whether small start-up or an established enterprise, the process of invoicing customers, tracking their payments, and managing their accounts is critical to any businesses’ success. This system tracks your capital because errors can lead any company to failure. However, selecting the billing solution that fits your individual needs can feel daunting. This post offers a simple method to help you choose.
In my experience, finding the right billing solution for your business amounts to simply following the ABC’s outlined below.
- A - Adaptability and Extensibility
- B - Business Model Support
- C - Configure Not Code
These three items are terrific indicators of how well a billing system will suit your current and future needs.
Adaptability and Extensibility
Because many products in our digital economy depend on data generated by or managed within other enterprise applications, such as product-usage information from SaaS, it’s essential that your billing solution can interpret structured data from multiple complex sources (also called mediation). Integration with your ecosystem is also critical, allowing your business access to data that may influence billing processes.
An ability to adapt data allows you to calculate your customers’ outstanding balances and invoice them in a timely manner. Additionally, adaptability means your solution can handle all of the business processes around billing without relying on third-party or custom-developed extensions.
Data mediation, the process of converting data from one format to another, is not something that all systems can execute effectively. Billing solutions differ greatly in their abilities to configure usage collection and perform mediation. The most sophisticated billing solutions come with modern integration frameworks, as well as robust APIs and data manipulation language capabilities.
Basic adaptability: Less robust systems require that data is finalized before entering the billing application. These systems may offer you third-party applications to achieve the needed result.
Sophisticated adaptability: More robust billing solutions can be configured to ingest any kind of organizational data and convert it to the right structure for billing operations. This mediation is performed natively, allowing your business to run smoothly.
Additionally, you’ll want to extend data from your billing system into other downstream systems. System and application extensions drive your business forward, ensuring that billing information is shared in real time with dependent systems, such as your general ledger. Integrations and extensions connect directly with critical systems to simplify and automate complex billing scenarios, such as usage. A flexible platform can also extend the capabilities of your billing system to achieve much more throughout your financial ecosystem.
Cloud-based billing platforms can flex to any model. Allowing you to connect with tax, ERP, CRMs, and create new automated workflows. Customizable workflow engines, APIs, and Web toolkits allow you to extend automation to other systems.
Simple extensibility offers time-driven recurring invoicing cycles where regardless of when an invoice is ready it is only sent out in a specified time frame, such as weekly, monthly, or quarterly. This works well for uncomplicated pricing that doesn’t alter between cycles.
Sophisticated extensibility offer event-based cycles that can be automatically triggered by specific events, such as project acceptance , delivery of a specified number of widgets, or percent completion. Frequently, these events/milestones are defined as part of a contract and a billing system needs to access contractual data. Often, these systems help you configure your own applications within the platform in a low-code environment. These systems are ideal for enterprises with complex needs.
Business Model Support
Any billing solution you choose should enable, rather than hinder, your business model. For example, you would never attempt to run a newspaper or media business charging for only papers sold in sidewalk kiosks. But not every billing system supports subscription billing. It’s like trying to use a knife when you need a screwdriver. You may get the job done or you may lose a finger in the process.
Ensuring that your billing solution supports your business strategy requires an examination of the data model. At the core of any billing system is the data model - the logical interrelationships between different data elements in the solution. This 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 - created for a specific industry for example - it may only suit a limited number of business models. So the organization must fit its data and billing processes into the solution’s data model. These models tend to work for small start-ups in the initial stages of defining their business model or organizations willing to change their processes to fit the billing solution’s structure.
Other solution’s data models are more malleable and conform to your organization's existing business models. These sophisticated solutions, often architected as platforms rather than applications, can integrate with existing data tables and allow your business to create new hierarchies for product relationships.
Configure, Not Code
Some billing solutions are so rigidly constructed that any customization requires expensive service engagements with the vendor or a third party. Consider the future of your system carefully before implementing these types of solutions—if there’s a possibility of business model change in the future, you’ll face a hefty price tag.
Billing systems that offer easy package, product, and business model configurations are preferable for businesses that anticipate future changes. By focusing on configuration, not custom code, you eliminate your reliance on developers.
When implementing a billing system, you should be able to easily configure an intuitive interface that allows your end users to easily accomplish their tasks. Flexible billing solutions can be configured to support your business models without the need for IT intervention.
Basic: A simple rating plan, for instance, may entail automating a subscription offering for monthly access to on-demand videos or music where all customers are charged the same monthly fee for the same service offering.
Sophisticated: A more complex rating scheme example is an airport providing services for different types of air traffic with specific usage rates that vary for freight carriers versus commercial passenger jets. Freight carriers have usage data calculated by cargo weight, while passenger jets accrue charges by the number and type of passengers. Fees apply for additional offerings such as gate charges, fuel, time on runway, baggage handling, maintenance, de-icing, food replenishment and of course, government fees/taxes.
Companies with multiple product offerings, and those whose rating scheme incorporates multiple attributes in comparison, will be better suited with a more robust application. Organizations that grow through merger, acquisition, and new offerings will equally be better equipped through leveraging a more robust billing platform that can help future proof its ability to monetize offerings in separate and distinct ways if required.
Choose Improvements Over Frustrations
At a quick glance, most billing solutions look the same. They can usually calculate what is owed, create invoices, and bill customers. However, when you dig beneath the surface, you find that not every billing system can meet every customer need or company goal. There are significant differences between solutions from how they handle complex pricing models to how they support customized invoicing.
Decision makers need to know how to evaluate billing solutions for their specific SaaS products or services needs. By asking the right questions, you can identify the major differences between billing systems and determine which one best aligns with your organization’s goals.
Selecting a billing solution that supports your business needs is a challenge. Please download our the Comprehensive Guide to Automated Billing Processes for more details.