It’s easy to see billing as…well, billing. People get their invoices on time, they pay them, hopefully on time.
Rinse. Repeat.
Sure, sending out bills and collecting payments is at the essence of the billing process but there is so much more to it than that.
A person who breaks their leg doesn’t shrug and say, “Tough luck, lower extremities. That’s a ‘bottom half of the body’ problem!” Nor can a business reasonably assume that what happens in one department stays there. Billing at its best is about efficiency. It impacts time management, cash flow, and customer retention. It impacts the overall customer experience, so even if you’re looking to improve conversation rates on account upgrades, you’d better have it together on the billing side.
TLDR; what happens in recurring billing bleeds into all other aspects of your business. So, what does it look like when billing is at its best?
Billing and invoicing are automated processes
Manual billing processes are sensible enough for the subscription business still in its infancy. With only a few customers, it’s easy to get invoices out accurately and on time each month. The more customers you get, the harder this becomes.
When customer numbers grow larger than your billing department can handle there are three options:
- Keep hiring new accounts receivable (AR) personnel until the end of time (or at least until your building is bursting with them),
- Resign yourself to sloppy, error-filled invoices. Or…
- Automate.
Three guesses as to which option I recommend.
Automating billing practices can save up to forty hours of labor a month. That’s an entire working week’s worth of time your accounts receivable department can save on invoices.
For the mathematically inclined, that breaks down to 480 hours a year: time that a recurring billing business can use for more lucrative tasks, like projects that promote scale.
As Bill Gates put it, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.” Use your tech stack wisely and enjoy the way it allows you to grow and mature comfortably as a business.
You have plenty of collections assurance features in place
Subscription businesses everywhere know the pains of failed or late payments. It’s an issue that costs an estimated $145 billion dollars every year globally (or a little more than half of one Elon Musk, in case you needed context).
Here’s the tricky thing—the recurring billing model hinges on the support of repeat customers. When someone misses a payment or is late on their bills you don’t want to boot them. Particularly not when the missed payment was accidental.
Kicking out customers who accidentally missed a payment but would otherwise stick around creates involuntary churn, a phenomenon that can cost as much as 9% of your MRR. Talk about a recurring revenue killer.
Fortunately, a good recurring billing platform can help you out with that through:
- Automated credit card retries. More than half of all Americans have maxed out their credit cards at some point. With a credit card retry sequence, you check back in a couple of days and hopefully find that the problem worked itself out.
- Automated credit card updating. The average millennial has seventeen active subscriptions. While some of them might be willing to take a week off work to update their payment information any time their card expires, most probably don’t. With automated credit card updating, your payment gateway or recurring billing system works directly with the card company to keep the information current.
- Automate dunning communication. A subscription management service can also help subscription businesses collect missing payments through automated communications, sending out emails or texts that alert the customer to the situation, and tell them how to fix it.
These features can be used to automatically collect some missing payments while giving your AR department more time to pursue the other accounts that slipped through the cracks. The result? Better collections assurance on your recurring payments, and ultimately, more revenue.
Tech stack integration
I spoke earlier about how the idea of isolation amongst departments in the same business is largely imaginary. What happens in one place has ramifications in another. Tech stack integrations allow this relationship to be truly harmonious and productive.
A good automated billing platform cooperates seamlessly with your CRM, ERP, payment gateway, taxation software, and merchant of record system, making it easy to share data cleanly across departments.
By establishing a single source of truth for AR data, a good subscription management system makes it easier to share information without the fear of human error. Through this technology, the numbers can be accessed by whoever needs them, but changed only at the source, keeping the information clean and effective.
Your customers are empowered
Flexibility is at the core of the modern customer experience (CX). People want the option to be able to handle their own problems. In fact, recent surveys indicate more than 60% of consumers prefer self-service when it comes to handling simple tasks like an account adjustment or cancellation.
And why wouldn’t they, when the historical alternative has been to spend half an hour alternating between being on hold and bouncing around from agent to agent?
Self-service portals don’t mean taking a hands-off approach to customer service. When done right, it’s all about creating more options. The customer is empowered to choose their own adventure and your CX team is given significantly more time to focus on customers with real problems.
Now that small tasks are being handled through self-service portals, your team can focus on providing the customer experience that 66% of consumers say they are looking for.
A look at customer service-related stats shows a stark dichotomy between good and bad outcomes. Excellent customer service often leads to upsells, word-of-mouth recommendations, and higher retention numbers.
Even small instances of bad service, on the other hand, have a very different impact. A staggering 96% of people say they are willing to leave a business after an instance of poor service, with 30% expressing an eagerness to do so.
SaaS is a crowded marketplace. Many products, particularly from the average consumer’s perspective, are very similar in terms of qualities and features to their nearest competitor. It only takes a few clicks for a consumer to get set up with a new product and they’re happy to take that step when the situation demands it.
To that end, CX has become a key brand differentiator, and through self-service portals, your business can turn it into an art form.
Perfection at its most attainable
The beautiful thing about great recurring billing is that it’s so achievable. Good subscription management platforms automate busy work and make it much easier to focus on big-picture tasks. There’s no quest for perfection. This the Joseph Cambell’s “hero’s journey” we’re talking about here. It’s just a matter of picking the better tool.
Do that, and the benefits spread, both through your business and out toward the customers. It’s an easy choice with enormous benefits.
