Greater volumes of recurring customers mean that manual billing processes get tedious and time-consuming. The processes become highly susceptible to inaccuracies caused by manual errors. As a subscription-based business scales up, the processes around invoicing, payments, and revenue recognition are nearly impossible to sustain manually.
It’s at this point most subscription-based businesses need to start exploring recurring billing platforms to streamline and automate their billing systems.
In my former role as a Senior Sales Engineer, I provided technical information about the Stax Bill subscription management and automated billing platform to both the sales team and customers, while answering any questions they may have.
During these calls, customers frequently asked me how their current billing process would work in the Stax Bill platform. I’m also asked what kind of changes can be expected when switching to an automated recurring billing platform.
Typically, what these customers actually wanted to hear about are the challenges they might experience, versus the positive changes that come with automated billing.
While it makes sense to manage risks, it’s important to understand how any minor challenges are outweighed by all the advantages of moving away from a manual billing system and switching over to automation.
Here are 7 of the top benefits of an automated recurring billing platform on business growth and the customer experience (CX):
1. Save 40 hours a month
Invoicing customers can be a time-consuming process if you have to manually look up every customer and determine their subscription plan and bill out accordingly.
The process is only further complicated when customers want to make changes to their plans, requiring you to manually track every new add-on, product removal, and customer update.
With over 1,600 regular recurring customers and several different pricing packages, one of our clients, Uberflip, figured out pretty quickly that its manual billing system was not working anymore.
Uberflip decided to start using Stax Bill to automate and streamline its recurring billing process. Before Stax Bill, Uberflip’s monthly invoicing took up to 5 days to complete. The process has now been reduced to just one day, and the billing team is extremely pleased that this frees up 40 hours every month.
A recurring billing platform saves you time spent on sending out invoices and collecting payments on a recurring basis because these tasks are all automated. This will allow you to just ‘set it and forget it,’ which can save your billing team several hours every week.
A self-serve portal also gives customers the freedom to change their own preferences, see their invoices and make payments, which saves your team even more time and effort.
2. Improve accuracy and eliminate errors
Recurring manual billing processes increase the risk of human error and can lead to several mistakes and inaccuracies in customer invoices. In fact, the average human makes between three and six errors per hour. This in turn can cause your business to lose significant amounts of money.
As the repetitive, manual activity increases, so does the risk of inaccuracies. Apart from the errors being expensive, there are also long-term costs associated with decreased customer satisfaction.
With automation, customer information or subscription plans only need to be entered into the system once. This means that any time you add a new subscription, the information will always be accurate every time a customer is invoiced, whether you have 5 customers or 1,000 customers.
Automation means that you can drive and scale your business with confidence.
3. Better insight into key subscription metrics
Every company wants to know what’s happening with their business behind the scenes and what the data points to. For SaaS (Software as a Service) and other subscription-based companies, access to relevant reports is a critical element of monitoring the health of the business.
Through reporting features, you will gain important business insights that will allow you to project future revenues. Easily accessible reports allow you to see what’s working and what isn’t. This will help you make informed and strategic decisions going forward.
The reporting function of a modern recurring billing platform will allow you to get a better look at four key reporting pillars:
- Sales. It’s important to keep track of your sales in case there are any payment issues, like an expired credit card or a lack of funds. In the case of problematic customer payments, it’s important to have a record of what each customer owes your business. A recurring billing platform allows you to segment and analyze the data in several ways, which will give you a good overview of our business.
- Cash. The reporting function of your billing software provides visibility on not only the payments from customers but also lets you look at the data, so you can see where exactly these payments are coming from and how your customers are paying for their services.
- Revenue. With subscription-based businesses, revenue can only be recognized as the customer receives the value of the goods or services they paid for. So, if your customer is signed up for a monthly subscription plan and pays $10 a month, you can only recognize $0.33 as revenue every day until the end of that 30-day period.
Tracking revenue in a subscription business is difficult to do manually and without errors. The revenue must also be calculated according to the new GAAP (Generally Accepted Accounting Principle) standard, ASC 606.
A recurring billing platform, however, handles revenue recognition automatically. For a number of Stax Bill users that are moving their Stax Bill information into an accounting system, looking at the Revenue report by GL (General Ledger) code makes their jobs so much easier because all the numbers are already broken down. That functionality alone has been a huge benefit to our customers. - Monthly Recurring Revenue (MRR). Monitoring the monthly revenue from all your active recurring subscriptions can be used to track the performance and growth of your business. Tracking this value sheds light on how well your business is growing or contracting and by what percentage.
4. Automated billing simplifies payment collection
One of our clients, a SaaS company, recently made an acquisition that expanded its customer base from a few hundred to several thousand. It was using basic accounting software, making it a challenge to collect payments and stay on top of its large volume of newly-acquired customers. On top of all of that, the business was unable to process credit card payments.
The Stax Bill system not only helped it to set up three different payment gateways, allowing it to accept card payments and manage its customers more efficiently, which simplified the collections period significantly.
The reason a modern recurring billing platform makes collecting payments so much easier is that it automates the invoicing and collections process. It also flags customers that haven’t paid and automatically sends out past-due notices. By automating these processes, you’ll know immediately when customers’ payments have not gone through, so you can pinpoint which clients you need to focus your attention on.
5. Better customer relationships
For B2B SaaS company Instream, Stax Bill’s tracking capability helped improve customer satisfaction and mitigate churn. Having easy access to clients’ accounts gave Instream important insight into its customers’ behavior that helped to identify any risks of churn.
A recurring billing platform also allows customers to receive automated email notifications once payments are received, which is another great way to enhance your customer relationships.
Regardless of how much money an invoice is for, customers always appreciate receiving that small thank you from your business. In fact, just that simple ‘thank you’ alone can increase your chances of getting paid by 5%.
6. Enhanced security
An advanced recurring billing platform like Stax Bill is beneficial to any business from a security standpoint because it is PCI 1 compliant, which means all credit card data is always secure.
Adding an extra level of security is the ability to change your settings to only allow certain people within your organization to carry out different functions. This feature of a robust automated billing system gives you total control over who can do what on your billing platform.
For a lot of businesses, a high level of security is a huge priority when selecting a recurring billing platform. When Expedia Cruise Ship Centers first signed on with Stax Bill, PCI 1 compliance was a huge factor in its purchase process. Ensuring the safety of customer data is an increasingly vital aspect of any technology solution.
7. Seamless integration with core business technologies
A subscription management and recurring billing platform like Stax Bill will allow you to integrate your recurring billing system with your CRM (customer relationship management), revenue recognition, accounting, business management tools, and payment gateways.
Our Salesforce integration is one of the most popular options. A big advantage of the Salesforce integration with a recurring billing platform is that anyone within their organization can see what a customer is subscribed to. And because your data is automatically pushed into Salesforce, anybody can log into Salesforce and see details of the record, which creates more transparency across the organization. This facilitates collaboration across departments to foster growth.
For the SaaS company mentioned earlier, the fact that Stax Bill was able to integrate with Salesforce and push all its data into the CRM was a huge benefit for its sales team. Having its recurring billing system in sync with Salesforce gave its sales team access to subscription and product information from Stax Bill in Salesforce that could be used to build contracts, tying the billing information directly to the sale and contract that is entered.
Automated billing software is the best investment a scaling business could make
The risks from continuing to use inefficient manual billing processes are too great for a majority of businesses we speak to. Manual billing processes slow you down and hold you back from scaling your subscription business.
Automation not only streamlines your invoicing process, but it eliminates errors resulting from manual billing and helps you derive important business insights that you can leverage to help you grow.
FAQs about Automated Billing
Q: What are the top benefits of an automated billing system for businesses?
As a business scales, manual billing processes become increasingly inefficient, both in terms of time and accuracy. Automated billing platforms offer several advantages:
- Time-Saving: Automated invoicing and collection processes significantly reduce the time required to manage recurring billing.
- Minimization of Errors: The risk of inaccuracies caused by manual errors is mitigated.
- Enhanced Customer Experience: Customers can self-serve, checking their invoices and making payments at their convenience.
- Accurate Billing: Proper record keeping ensures invoices are accurate regardless of the scale of operations.
- Consolidated Reporting: Necessary business insights obtained from reports facilitate strategic decisions.
- Improved Collection Process: Automated billing platforms manage collections efficiently and are quicker to flag unpaid invoices.
- High-Level Security: Automated billing platforms are usually highly secure, enhancing the safety of transaction data.
Q: What is the impact of an automated billing system on the Customer Experience (CX)?
An automated billing system can significantly enhance the Customer Experience (CX) by allowing subscribers to make changes to their own plans, view their invoices, and make payments. Automated email notifications once their payments are received are seen as a value-add. Additionally, proper tracking of client activities on the platform can provide valuable insights into customer behavior that can be leveraged to improve CX.
Q: How does automated billing help with revenue recognition in subscription-based businesses?
Revenue recognition involves recognizing revenue only as the customer receives the value of the goods or services they paid for. Tracking this in a subscription business can be challenging. However, a recurring billing platform handles revenue recognition automatically, ensuring accuracy.
Q: How does automated billing contribute to business growth?
Automated billing facilitates business growth by providing business insights from easily accessible reports, allowing for the projection of future revenues. It also enables businesses to monitor their monthly recurring revenue (MRR), indicating how well the business is growing or contracting. Lastly, the time saved and the reduction in errors further aid in the growth of a business.
Q: Can automated billing systems integrate with other business management tools?
Yes, platforms like Stax Bill allow for integration with various business management tools like CRMs (Customer Relationship Management), revenue recognition tools, accounting systems, and payment gateways. This creates more transparency across the organization and facilitates collaboration across departments.
