Recurring Billing

Can Billing Automation Solve Decision Fatigue in Your Finance Department?

Chelsea Stirling

Some time ago, I worked at a startup called App8. The company was in its infancy at the time, with fewer than 80 logos on its customer list. And despite my role not being CFO, accountant, or even AR Specialist, I was handling billing—manually.

I used a color-coded spreadsheet to keep track of which customers were paying implementation fees, which were on their first or last month of recurring billing, which got a discount, and so forth. The color coding—and the details it was keeping track of—quickly got out of hand, resulting in a technicolor spreadsheet.

“Collecting the revenue we were owed was obviously a priority,” said App8’s CEO, Elias Hage. “We wanted to be certain we were invoicing each customer for the correct amount every month, so we had multiple people run various manual checks. In those days, our billing accuracy and timeliness came at the expense of a lot of unnecessary extra work from key team members whose energy would have been better spent elsewhere.”

At the end of each month, I would update this spreadsheet and run it by the CFO and the CTO, who would then soft-run the billing before it came back to me for a final sign-off. This entire process took, at a conservative estimate, three days every month.

To bill less than 80 customers.

During those three days each month, I descended into a special place I called billing hell. I started working on billing first thing in the morning when I was at peak freshness and cognition levels. I’d silence all my notifications and issue strict instructions to my officemates not to talk to me; I was in the zone.

Well before the end of the day, decision fatigue set in—especially if I had to also perform number-heavy tasks pertaining to my actual role in the business which, I remind you, wasn’t finance-related.

I quickly burnt out and started making more mistakes as the day went on, which wasn’t hard to do when I was collating multiple data points from multiple data sources. This meant I’d have to spend additional mornings of peak brainpower on double- and triple-checking my work.

By the end of the billing run, my browser tabs and desktop were out of control.

To put it simply, this manual billing system burned through my bandwidth at an unsustainable rate and became a business growth bottleneck. I’d have to step away from my customer success role to handle AR, and, since billing 80 customers took three days, imagine how long billing 800 customers would have taken—the entire month and then some! Growth potential was limited by the fact that it took so long to simply send invoices out and left no space for my customer success work.

The whole process caused me a lot of anxiety because, even after all the manual number-crunching and checks and balances, errors still happened on a regular basis.

So, how did I drag myself from the depths of subscription billing hell?

By transitioning to a modern, full-scale, automated billing system. Funnily enough, App8 signed on with Stax Bill, where I now work. It dramatically reduced decision fatigue and turned my three days of billing hell into a casual afternoon’s work.

What is decision fatigue?

Psychiatrist Dr. Lisa MacLean describes decision fatigue as a state of mental overload where “after many decisions, your ability to make more and more decisions over the course of a day becomes worse.” She notes that in a single day, the average person makes over 35,000 decisions, each of which is cognitively taxing and incrementally depletes their time and energy.

But how can automated billing solutions help mitigate this condition?

How decision fatigue can manifest in business (and specifically finance and billing processes)

A recent study examined the cost of decision fatigue and how it affected decisions in finance specifically. Researchers Tobias Baer and Simone Schnall mentioned that decision fatigue “typically involves a tendency to revert to the ‘default’ option, namely whatever choice involves relatively little mental effort.”

For many business leaders in charge of making AR and billing process decisions, the default option is to stick with whatever manual process you have in place. In some ways, this feels easier than expending the mental effort necessary to make the switch to an automated process—no matter how painful or inefficient that manual billing process is.

Exhibit A: my technicolor spreadsheet, anxiety, and three days of hard work to bill just 80 customers each month.

Baer and Schnall went one step further in their study in an effort to quantify just how much decision fatigue affects financial decision-making throughout the course of the day. They collected data from credit officers of a major bank as they approved or rejected credit loan applications, finding a clear tendency toward the riskier-but-higher-payoff decision (approval) first thing in the morning and towards the safer default decision (rejection) later in the day.

The bottom line: if all decisions had been made with early-morning levels of approval (read: before decision fatigue kicked in), the bank would have made over $500,000 more in revenue in a single month.

Of course, as a SaaS subscription business leader, you almost certainly are not tasked with approving or rejecting credit loan applications all day long. However, these findings still translate to automated billing systems.

By choosing the default option of continuing to use a tedious manual billing solution (and subjecting your team to monthly billing hell), how much revenue are you missing out on? (Hint: probably a significant amount.)

Are you hesitant to scale your business because your existing accounting software relies on manual AR processes that would swamp your finance team?

Here’s where to start.

Create a billing automation index

Assess how much decision-making brainpower you’re currently spending on your billing processes. It may be helpful to meet with your finance team and ask for their honest opinions on questions such as:

  • What percentage of the monthly billing requires manual review?
  • What percentage of the monthly billing is on credit card or EFT/ACH versus check?
  • Does the billing process automatically retry credit cards that fail?
  • How easily can you see how successful the last billing run was?

If the answers to those questions aren’t where you would like them to be, it’s time to lift yourself out of the decision fatigue cycle by implementing a modern billing automation solution.

After all, you likely use many other tools to automate other portions of your business and your life. For instance, your calendar automates your schedule, Siri or Alexa automates your reminders, Hootsuite automates your social media posts, and so forth.

Some notable people even cut down on the number of decisions they have to make on a daily basis by automating their wardrobes—Barack Obama almost exclusively wears gray and blue suits while Steve Jobs was known for his trademark black turtlenecks.

As the realities of decision fatigue have come into clearer focus in recent years, many emerging technologies have heavily focused on AI and decision automation.

The same goes for automated billing software solutions—the goal is to reduce the number of decisions that have to be made which in turn reduces manual errors and helps eliminate revenue leaks. Plus, it saves your finance team a big headache each month.

And yet, as with many new things, some people understandably have trouble trusting that automated solutions can actually perform better than the human brain, which leads us to…

Trust the automation of modern billing solutions

Change can be uncomfortable, especially when the change involves how your revenue is handled.

Some business leaders even go so far as to invest in an effective automated billing system, only to have the finance team manually check the numbers anyway because they’re more comfortable with the default decision of using the old accounting system. In that scenario, they’re paying for a service they aren’t fully reaping the rewards of.

The point of automating tedious billing processes is to free up everyone’s time—remember how the CFO and CTO were also working on that manual billing process I described? With automation reducing three days of work into an hour, everyone involved was able to focus on bigger-picture objectives that led to successfully scaling the business. Plus, the possibility of human error was virtually eliminated, which can dramatically reduce revenue leakage.

“Automated billing with Stax Bill was a game changer,” said Hage. “Our billing process became more efficient, more accurate, and took a lot of the burden off our team’s shoulders.”

Written by:

Chelsea Stirling
Chelsea Stirling
Director of Customer Success, Stax Bill

Chelsea Stirling is the Director of Customer Success at Stax Bill. She boasts over nine years of experience refining customer relationships in various industries. Committed to elevating client satisfaction and loyalty, she has a strong background in customer success, with impactful roles at App8 and Solink. Chelsea, a University of Ottawa BA Honours graduate, also dedicates time to community service with Food Sharing Ottawa.