Your accounts receivable (AR) team is hurting. Each monthly billing cycle, they work an entire week of overtime just to get all the invoices out on time for your recurring billing business. And, since you have aggressive growth plans for the next year, the invoicing process is only going to get longer if you don’t make a major change.
You know you need an automated solution to handle subscription billing—that much is obvious.
But you’re buying tech that’ll significantly change your business processes. Regardless of how faulty the current process is, major changes like this are a big deal. You’ve got a lot of questions and you want to make sure you’re heading in the right direction.
I get it—and we’ve got your back.
Here are five subscription billing FAQ and answers from our in-house billing experts.
Still not sure whether now is the time to add automation? Check out this related article: Should You Automate Your Recurring Billing? Answers to the Most Frequently Asked Questions
1. Is there a difference between recurring billing software and subscription management software?
Adolphus McKoy, an Account Executive at Stax Bill, gets straight to the point: “Yes, there’s a difference.”
Subscription management encompasses all of the touchpoints in the customer’s subscription journey. Recurring billing, meanwhile, is just one of those touchpoints.
“When we’re looking at recurring billing for subscription services, it’s basic. It’s just recurring charges. It means being able to send out invoices in some kind of scheduled fashion,” continues McKoy.
The subscription business model is one of the fastest-growing industries out there. In fact, subscription businesses achieve 5X faster growth than the S&P 500. So it’s no wonder businesses are drumming up subscription offerings left, right, and center.
And operating in such a competitive market means you need to be agile and flexible when it comes to your subscription offerings. Whether to your price point, plan configuration, or product offerings, you need to be able to make changes on the fly.
In contrast to a simple billing platform, subscription management software gives you that flexibility, enabling you to stay agile and competitive in a fast-moving, innovative market space. A full-scale subscription management solution allows you to easily:
- modify subscription types,
- onboard customers into your platform,
- connect to an accounting platform to handle reconciliations,
- set customers up on a recurring billing schedule and modify that schedule as needed, and
- get insights into your customer base, subscription popularity, and more.
Billing and invoicing are certainly important components of subscription management. But buying software that only handles subscription billing means your business will be missing out on tools and insights that foster growth.
2. Where does subscription billing automation ROI come from?
According to Griffen Courtice, another Stax Bill Account Executive, you can expect to see two different types of return on investment (ROI) from billing automation: tangible and intangible.
“Our tangible returns are recurring revenue-related. Things like preventing leakage, collections assurance, dunning automation, and so on,” he explains.
“Those tangible assets give your business the best chance of collecting its payments on time so it doesn’t have to always be stuck in a state of catching up. How can you focus on future business growth when you’re forever stuck on items from the past?”
And just how much of a tangible return can you expect?
Stax Bill has helped businesses to:
- put up to 10% of their recurring revenue back on their bottom lines,
- recover $600,000 annually in revenue that would otherwise leak, and
- ultimately scale by 3X without needing to hire additional team members.
“On the intangible side,” Courtice continues, “it’s reclaiming that time that was then allocated to reaching out to overdue customers, which has since been replaced by tech-driven automation. They can then use that to take on more valuable, more productive tasks.”
3. Do I really need software that will handle all billing models?
We’ve touched on the benefits of agility and the ability to be flexible with your subscription plans. So does that mean your business needs subscription billing software that handles all billing models out there—even those you don’t currently use?
“Just this morning, I had a prospect ask me about this,” shares McKoy. “They were talking about building out their own internal billing software. And I totally get why somebody might want to build it out in-house. But, talented though your tech team may be, you get something that cannot integrate with different platforms. You get something that can’t handle changes, that just isn’t flexible because that’s not the way it’s designed.”
If your business operates on a basic subscription billing model, outputting only flat recurring charges each month, then maybe something simple will get the job done for now.
But what happens a year from now if you need to start invoicing for one-time charges? Or if your industry starts shifting to a usage-based pricing model?
“You don’t technically need the ability to handle any and all billing models. But why would you put your business in a position where it can’t handle certain types of charges or it can’t accept funds from any possible location or integrate with any possible software?” McKoy asks.
4. What is the best way to accept recurring transactions?
We’re big believers in the power of automation. Since recurring billing, well, recurs, offloading as much of the repetitive process as possible allows your AR team to free up time and energy to focus on bigger projects—going back to that idea of seeing intangible returns.
When you’re looking at accepting monthly payments—rather than just invoicing for the charges—you should be following the same philosophy. If you’re looking for an objective best solution, it’s recurring billing software that has a built-in payment gateway.
“At the end of the day,” says Courtice, “an all-in-one tool can be an absolute business saver. When your subscription billing system has a payment gateway built into it, it sends the invoice and takes those funds automatically from your customers. It simplifies your cash flow situation—you can get much more information on where your payments stand. It improves the customer experience, too, because customers don’t have to worry about missing a payment and then having their services shut off. They know the payment will come out of their bank account.”
So a combination billing-and-payments software makes life easier for both your AR team and your customer base. Fantastic. But such a setup provides tangible returns, too.
“What people often forget when shopping for payment gateways is the processing fees that come with it,” McKoy adds. “The fee is usually a percentage of the transaction, so businesses are usually asking, ‘how much of that payment are you going to take away from me?’.”
But when you’re working with a vendor that can provide both subscription management and payment processing solutions, you get to benefit from a beautiful thing called price bundling.
“Now you have two cost effects effective pieces of software that are working for you and helping you out. And in reality, it’s going to make one of them free,” says McKoy.
5. Does automated subscription management software replace my existing fintech?
For the uninitiated, the idea of automating might be a bit intimidating. What if it creates larger-scale changes to current software or even people resources?
But Courtice notes this isn’t usually the case.
“Automation looks to complement the people and technologies already in place,” he explains. “With the flows of communication automation creates between all systems through APIs, webhooks, and built-in integrations, we streamline the flows of information so businesses are getting the most out of all their resources.”
Automation & modern fintech are must-haves for scaling subscription businesses
Daunting though it may be to make a big switch, tech that will enable your subscription billing business to scale is non-negotiable. Legacy, homegrown, or manual solutions may feel comfortable, but if your billing process is causing your AR team to work overtime, is prone to error, or is creating unhappy customers, it’s simply not scalable.
You’ll have plenty of questions as you work on identifying the right software for your business. If you’re interested in exploring Stax Bill as a solution, here’s where you can get in touch with our subscription management experts.