So you’ve noticed your billing process is being hindered by inefficiencies. No, it’s not all in your head. There is a better way to be doing things.
Automated billing software all but eliminates the potential for human error, while speeding up processes and patching revenue leakage. Some may call it a business superpower.
Thing is, it also costs money.
If you are handling invoicing by hand, you’re probably drowning in work that could be handled more efficiently. And you’re probably well aware of that fact. Your boss probably doesn’t understand how debilitating antiquated billing processes can be, and they may feel disinclined to commit to new costs. That’s only because they haven’t heard about all the benefits of automated billing technology yet. You’re just going to have to teach them.
Find the potential ROI
Since you’re stepping into a salesperson’s shoes, it’s time to use one of their most effective tools: ROI. When a product produces a return, it not only pays for itself over time but actually has the potential to improve the overall cash flow.
No more time drains
In an average month, how many hours do you think you’re spending on billing and related tasks?
Chances are your skeptical boss isn’t aware of just how much this time adds up. But skeptical bosses love hard numbers and stats, so here’s a good one: we commonly see businesses take back 80% of the time they previously spent billing.
Here’s a great example.
Uberflip is a B2B content marketing platform. As a subscription billing-based business, this meant each customer received a handmade invoice at the end of the month. In the beginning, things weren’t so bad. With only a handful of customers, Uberflip’s manual billing processes were manageable.
Then it experienced the best problem that can happen to a business: it grew.
As Uberflip grew, its recurring billing needs grew with it. By the time Uberflip hit the 1600 account milestone, it became clear the billing processes from its startup days weren’t sustainable anymore. The business migrated to an automated billing system and instantly freed up 40 hours a month that had been lost to antiquated billing processes.
That’s an entire week’s worth of work done with the help of an effective automated billing system.
Patch up revenue leaks
You know how it is: sooner or later some people won’t pay their invoices on time. When these situations crop up, you either need to reach out and retrieve the missing revenue or just chalk it up as a loss. Most people will at least try for the former, but the more accounts you have, the harder this is to manage. Especially when you’re busy trying to make sure invoices get out on time.
A reliable automated billing solution will also actively help with revenue collection by automating many aspects of dunning management. With automated dunning management, you can:
- Update credit cards automatically when they expire. Credit cards expire every three to five years. Keep in mind that the average person has 12-17 active subscriptions going at any time. Most people won’t think to contact all the businesses they use to update their customer payment data. Automated billing systems eliminate this problem by working with credit card providers to automatically update customer data as it changes. Revenue continues getting collected without interruption, and the customer is never bothered.
- Automates credit card retries. Automated billing software retries declined payment methods at a preselected schedule. With automated retires, well-meaning customers who were simply billed before paying off their card balance won’t get kicked out. Your billing system collects the revenue and avoids embarrassing the customer.
- Automated customer communications. When all else fails, it’s time to contact the customer. Billing software handles this by automated dunning texts and emails. The customer receives clear instructions on how to reconcile the problem, and the business saves time.
Let’s say the business you work for usually starts its billing cycle on the first of every month. But sales nets a new account on the 26th.
A choice needs to be made. The business can try to calculate how much the new client will owe for the rest of the month, which costs time. Or they can eat the loss and send begin billing on the first of the next month—which costs money.
In an enterprise software or IoT environment, where customers rack up hundreds of subscriptions and invoices become dozens of pages long, manually prorating an invoice isn’t exactly a simple task. Such fast-growing businesses with manual or legacy billing systems will often opt for the latter and wait until the next billing cycle to begin charging. Hey, what’s a few dollars here and there between friends?
On an account-by-account basis, the failure to prorate may seem inconsequential. Taken at scale, it can result in annual revenue leakage of between 1-3%.
That’s a lot of money. A good automated billing system patches this leak and helps make sure that your billing processes aren’t losing you money.
Strengthen your sales catalog
Are you ready for this? Your boss may raise an eyebrow when you drift out of billing and into sales, but get them to start fantasizing about all the ways a flexible catalog can increase revenue and you may have yourself a winning argument.
Automated billing bolsters the sales process by making it easy to update the company catalog or simply offer coupons and discounts to win over potential customers.
Scenario: Your business has been working on a new feature. You know it’s a winner. Customers have been asking for it. All the market research indicates it will be a big hit. You know a competitor is working on something similar, but you’re way ahead. And then, it comes time to launch the product…
But first, it needs to be added to your inflexible legacy billing system. Call in the developers. Not only do they have to spend a significant amount of time integrating this new feature into your catalog, but they have to interrupt their more valuable work (quite possibly putting the finishing touches on the new feature) to do it.
In the meantime, your competition is given the chance to beat you to the punch.
Billing automation eliminates this problem by allowing seamless catalog updates and discount options that allow your teams to execute on their go-to-market strategies and attract new customers.
Revenue recognition compliance
Revenue recognition is a major headache for subscription businesses. In May of 2014, the announcement of ASC 606 changed the way subscription businesses recorded their earnings. It’s been nearly a decade since the standard was announced and it’s still messing up subscription businesses’ accountants.
The process is a true head-scratcher, and with penalties that include everything from fees to potential jail time, it’s important to get right.
Approximately 60% of the SEC’s fraud-related penalties have been issued to companies with revenue recognition failures.
The most common instances of failed revenue recognition involve bad timing. Businesses recognize revenue that hasn’t officially been earned yet, either by mistake or as a way to improve earnings reports for quarterly reviews.
Businesses like Marvell Technologies and Under Armour have been investigated for doing exactly this. The punishments can be significant. Not only will the ensuing fines be painful, but your brand image will also take a hit.
No one wants that. With the right automated billing system, it needn’t ever happen. Automated billing solutions eliminate the potential for manual errors making it easy to stay compliant. You’ll want that when it’s time for an audit.
Ask about your reporting scalability
Automated billing solutions generate data that can play an important role in scalability. Think about all the things you learn by looking at your customer’s subscription habits.
- Revenue forecasting. Automated billing software can generate highly accurate revenue forecasts by generating reports on your historical account activity and automating predictions for the future. This makes it considerably easier to strategize at the executive level.
- Sales intel. What features do customers opt for the most? This billing-related information makes it easier for your sales team to strategize on what product elements they want to bring to the attention of future customers.
- Marketing intelligence. Similarly, customer activity can indicate which features to emphasize in your marketing messages—or rather, who these marketing messages should be aimed at. It allows your business to develop a highly detailed ideal customer profile. By identifying common qualities amongst customers who use your product the most, marketing can learn how to better appeal to people who get the most value from what your business has to offer.
These analytic points combine to help a growing business scale effectively. The more information a business has, the easier it is for it to continue experiencing healthy, unhindered growth.
It’s what all the other kids are doing
If your employer still isn’t sold on the strengths of automated billing, ask them how they feel about all these benefits winding up in the hands of a competitor. That’s the thing: automated billing technology isn’t a luxury. It’s a tool that subscription businesses everywhere use to streamline processes and bolster growth.
If your business doesn’t use this technology, it will inevitably fall behind companies that do.