Many businesses find that their SaaS billing process grows and evolves with the company. While there are plenty of different solutions for recurring billing, most approaches land in one of three stages:
- A fully manual process. This usually consists of spreadsheets. While manageable in the early stages of growth, it becomes unsustainable once you’re dealing with more than a dozen customers.
- Automated invoicing. A billing platform can automate your invoicing process. This gets the job done and saves time for your billing team. However, that’s typically the only benefit it brings to your subscription business.
- Full-blown subscription management software. This automates not only billing but also adjacent accounts receivable (AR) processes. It also improves GAAP compliance, creates a better customer experience, and provides insights that can help you scale even further.
In theory, as your business grows, you could move through each of these solutions sequentially. Alternatively, you could just skip right to number three, and start using an enterprise-class subscription management solution from the get-go.
Your billing platform is a strategic element of your fintech stack when chosen carefully. Ultimately, the right solution enables further growth—whether you’re already an enterprise business or a start-up with big dreams.
Determined to find the right solution for your business? Here are six features you should be on the lookout for when shopping for subscription billing software.
1. A general ledger foundation
You know all about the general ledger (GL) and why every accounting department needs one. When choosing a SaaS billing platform, it’s equally important that the software is built on a GL foundation.
This is because GL backing enables your recurring billing solution to automate more than just your invoicing activities. With a GL foundation, you can also automate invoicing-adjacent AR tasks like:
- handling ASC 606-compliant revenue recognition,
- distinguishing sales from collections,
- speeding up month-end close,
- and more.
Some subscription management solutions were built on a GL system from the get-go, while others added it later. The benefit of a platform that falls under the former category is that it natively speaks the same language as your accountants—and, conveniently, the IRS and SEC.
That means these products can go further and deeper with the AR functions above. Billing software options that developed their GL functionality later can’t match this agility.
2. A flexible product catalog
There’s no such thing as a perfect pricing model. Many leaders of SaaS companies are quick to confirm the value of consistent pricing experimentation.
“When you’re small, test massive changes,” SaaS marketing expert Ryan Law suggests. “The smaller you are, the easier it is to test crazy hypotheses without alienating a ton of existing customers.”
These massive changes could come in the form of completely switching up your billing model or switching from a tiered model to usage-based pricing. If your SaaS billing solution boasts a flexible enough product catalog, you could even consider A/B testing multiple billing models at the same time.
For larger businesses, Law recommends constantly working on optimization.
“With a decent customer base, even tiny improvements to SaaS pricing strategies will have sizable returns. Something as simple as reordering your pricing packages, or changing the last digit of your price can make a real difference to MRR.”
Regardless of how big or small the changes to your pricing model, the ease with which you execute them hinges on your subscription billing system’s catalog. A flexible catalog allows you to:
- group customers into cohorts to experiment with different pricing and billing models,
- customize plans and pricing for individual customers or at the catalog level, and
- easily create discounts and coupons.
Buyer beware: not all modern SaaS billing systems come with such robust functionality in the catalog department. If pricing optimization is important to you—which it should be—don’t be afraid to ask specific questions when evaluating your software options.
3. Automated, ASC 606-compliant revenue recognition
I touched on this point earlier, but the benefit of this functionality is so important that I believe it warrants a deeper dive.
You know how complicated revenue recognition for a recurring revenue business is. You simply can’t recognize revenue manually, and doing so with a combination of piecemeal solutions isn’t a much better alternative.
However, this is where GL-backed subscription management software shines.
Just like you can easily set up a schedule to handle recurring billing, you can do the same for revenue recognition. You’ll want software that:
- allows you to set different revenue earning methods and schedules for different products within the software
- automatically recognizes your revenue according to ASC 606 guidelines.
Read more: 7 Requirements of an ASC 606-Compliant Recurring Billing System
4. Powerful integrations and API
Whether through native integrations or an API, connecting your SaaS billing platform to other systems in your tech stack helps maximize the benefits that come from automation.
“[It] is about so much more than connecting computer systems or applications together,” says Adam Hughes of business integration software platform, Cleo. “True business integration means designing ways for all the participants in your digital ecosystem to interact seamlessly and support the outcomes important to your organization.”
It’s true—SaaS companies that take advantage of subscription management integrations see data siloes crumble. As a result, departments within their organizations work together more effectively.
Take your CRM, for example. Integrating it with your SaaS billing software can:
- help your sales team get through the quote-to-cash process more efficiently,
- reduce or eliminate the need to manually copy data from one system to the other, and
- aid the sales team in identifying upsell opportunities.
“Enterprises that promote collaboration through strategy and technology are better positioned to achieve fundamental business goals and succeed. That’s precisely what an integrated platform provides,” Hughes concludes.
5. A customer portal
In the subscription business world, things can change pretty often. Maybe:
- new customers want to sign up,
- existing customers want to upgrade or downgrade their plans, or
- a customer’s billing information changes.
67% of customers say they prefer self-service over reaching out to a business’s support team. Clint Fontanella, customer support-turned-marketing professional at HubSpot, agrees.
“Even though I am a former customer support rep, when I’m the customer I actually loathe having to work with customer service teams,” he writes.
The right SaaS billing software enables your customers to take charge of their subscription management. They can sign up or make changes to their subscription and personal information as needed. These solutions offer SaaS businesses both a self-service portal and hosted registration pages.
The power to self-service when it comes to these simple matters removes a barrier to action for the customer. But it also benefits your business.
“On the opposite end, your customer service team benefits from not having to field repetitive or similar cases,” Fontanella continues. “Customers who have bigger problems and more immediate needs can now get the attention they require because your reps don’t have to spend time answering simple questions.
6. Deep reporting capabilities
“Traditionally, the driving force behind decision-making has been the experience and instincts of business leaders,” Bernard Marr, author and advisor on business, tech, and data, notes. “And unfortunately, that’s one of the primary reasons behind the unsettling statistic that 90% of small businesses and start-ups fail.”
Instead, switching to a primarily data-based, decision-making model can help SaaS businesses make decisions that are 19X more profitable.
Your business probably has no shortages of systems you can pull such data from. Your SaaS billing and subscription management software is one of them.
The data housed in your billing system can help with things such as:
- sales forecasting,
- informing product direction,
- refining marketing messaging,
- developing a deeper understanding of the customer lifecycle,
- and more.
On the importance of data-backed business decisions, Marr goes on to say that: “[I]n today’s climate of fast-paced technological change and digital transformation, it’s increasingly becoming the deciding factor in whether a company will rise to the top or get wiped out by more forward-thinking, digitally adept competitors.”
Enterprise-class recurring billing encourages faster scale
Whether your SaaS business is a start-up or closing in on enterprise status, it needs a solution for handling recurring billing.
Sure, you could go through all the stages of various SaaS billing solutions, moving from spreadsheets to subpar software, and finally to a modern subscription management system. But that means there will be multiple periods where you’re suffering from growing pains within your AR operations as a result.
Instead, skip right to the third stage with a strong, enterprise-class solution as soon as possible. It could make a huge difference in the speed at which your business scales.
The sooner you bill like an enterprise, the sooner you’ll become one.