Subscription Business

7 Myths About Subscription Management You Should Know

Erica Cosentino | September 14, 2021

Myth (noun): a widely held but false belief or idea.

Here’s a popular one you’ve probably believed since you were a kid: you need to drink eight glasses of water every day.

Turns out, that’s not exactly true. Of course, we all need to stay hydrated, but there’s no scientific proof eight glasses is the magic daily number.

In truth, it varies from person to person and depends on factors like the person’s size and activity level, water quality, eating habits, and of course, the size of that glass!

You can find myths around just about any subject out there, from health and wellness to the best ways to run your business operations.

Take recurring billing and subscription management, for example.

These subscription business functions are two sides of the same coin.

  • Recurring billing is everything related to invoicing and collecting subscription revenue, while
  • subscription management includes all the peripheral tasks—upgrading or downgrading plans, handling communications, updating customer details, reporting, etc.

These two functions are so closely related that the terms are often used interchangeably. And many of the biggest myths around subscription management have something to do with recurring billing.

Let’s take a look at seven common myths surrounding subscription management and recurring billing and examine the truth behind them.

1. Invoicing the old-school way (manually) is always more accurate.

There’s a line of thinking that any work a real person puts into a project will be better than the work a computer could do on the same project. After all, a human can use judgment and reasoning in ways a computer just can’t.

But when it comes to repetitive tasks like invoicing for hundreds or even thousands of subscription customers, the old way is not the better way. If you want to build something scalable, your business is better off automating.

But let’s put speed aside for a moment. You’ve certainly heard the term ‘human error’. While it’s an unavoidable reality, invoicing is not the business function you want human error to show up in.

Members of your finance team can easily make mistakes that lead to:

  • overcharging for your subscription services and risk harming customer relationships, or
  • undercharging subscribers for months before anyone realizes there’s been a mistake. Hello, revenue leakage!

Handling invoicing and subscription management with automated billing software means your team only has to enter details once, and automation takes care of it from there.

In fact, they don’t necessarily need to do anything at all…

2. For data accuracy, you need to create each new customer account by hand.

Modern subscription management software solutions also offers features like hosted registration pages where new customers can sign up easily and input their details—all on their own.

The software then captures that information and uses it to generate invoicing accordingly.

In terms of accuracy, you’re getting your information directly from the source rather than second-hand. It doesn’t get more accurate than that, so why waste time doing it manually?

3. Customers always prefer working with a support team.

There’s something to be said for a friendly and personable customer service or support team. No doubt it’s an asset to your business—but that doesn’t mean customers want to contact them for every little thing.

By and large, customers actually prefer to self-solve their problems as much as possible.

According to Gartner, 62% of millennials—those currently between their late 20s and early 40s—would rather solve their own problems all or most of the time, even when they have the option to contact customer service.

So, if a customer wants to make subscription changes like updating a billing address or upgrading or downgrading a plan, empower them to manage it with a self-service portal. No more having to wait for a reply from your support department.

Helping your customers be self-sufficient can improve the overall customer experience. Your support team will also enjoy having more bandwidth for the stuff that matters most.

Consider also investing in support resources like help articles, tutorial videos, etc. that explain how to overcome common roadblocks with your product.

You can wow them with your customer service if they run into a really big issue later.

4. Excel is a perfectly acceptable subscription management solution.

Here’s the thing about using spreadsheets to handle subscription management: they’re error-prone and time-consuming to manage.

If you’re in a stage of early growth and your billing team can spare extra time to manually keep track of customer accounts and put together and review all your recurring invoices each month, it might be manageable. But it still isn’t exactly ideal.

With more people working from home now than ever before, systems and processes need to be optimized for remote collaboration—including those surrounding recurring subscription billing.

A spreadsheet saved to someone’s hard drive doesn’t fit this description. But a cloud-based subscription management software empowers your team members to work accurately and collaboratively from wherever they are.

There’s one other very important responsibility of subscription management that spreadsheets just don’t cover—data security.

Consider this…

  • since the start of the Covid-19 pandemic, the FBI has reported a 300% increase in reported cybercrimes,
  • 43% of cyberattacks target small businesses, and
  • 60% of small businesses that are victims of a cyberattack go out of business within six months.

If someone manages to hack into your system, how difficult will it be for them to find and copy data from “CC Numbers.xlsx”? Not very.

For optimal cybersecurity, your business should keep sensitive information in a credit card vault—a secure database that exists outside of any payment gateways, is harder to penetrate, and keeps data encrypted. This provides two layers of protection.

PCI Level 1-certified subscription management software solution does this job for you.

5. Involuntary churn just happens and there’s nothing you can do about it

You probably know there are two types of churn.

  1. Voluntary churn: where the customer takes action to end their subscriptions
  2. Involuntary churn: where the customer loses access to their subscriptions because of a problem with their account

The latter most commonly happens because the customer missed a payment or their credit card declined. 

Involuntary churn can be an extra-frustrating element of subscription management because you know the customer didn’t necessarily want to cancel. If that payment had gone through, they’d probably still be growing with your business and contributing to your recurring revenue.

While there are times when involuntary churn just happens and nothing you do will turn the situation around, there are steps you can take to reduce how often this happens in the first place.

Modern subscription management software comes with functionality like:

  • auto-triggered dunning notifications to let customers know when a payment issue occurs,
  • credit card auto-updating functionality, and
  • automated payment retries—which can recover up to 75% of lost revenue due to failed payments.

Not only that, but the right solution also helps you keep an eye on your aging accounts receivables. Your subscription management software should have extensive reporting capabilities that make it easy for your billing team to follow up on overdue payments to bring customers back into good standing—and collect the money you’re owed.

6. Switching subscription billing systems is too much of a hassle and not worth it.

It’s true, it can take some time and effort to switch billing and subscription management platforms. It can also involve some data cleanup.

But it’s absolutely worth it.

In debunking some of these other myths about recurring billing and subscription management, we’ve shared a lot of facts that illustrate the return on investment from making the switch to an automated system for managing it all.

You can also check out our ROI calculator here.

But if you aren’t convinced yet, the time savings alone might be enough to do just that.

  • Switching from manual invoicing or a legacy system to an automated billing system reduces your finance team’s time spent billing by 80%.
  • And it can save a lot of time for other teams members as well, from marketing and sales to customer service, accounting, and even your C-Suite.

Let that sink in for a moment. What could your entire team do to grow your business if there were more hours in the day?

7. It’s easier to just build your own automated billing and subscription management solution.

If you do choose to upgrade from a manual or legacy billing and subscription management platform, it might seem like a great idea to build your own. After all, you’ve already got a skilled team of developers on your payroll. Having them handle the development for you is essentially like getting a custom automated billing software for no extra cost, right?

Well, not quite.

For us non-developers, it’s easy to underestimate the resources that go into developing new software. Some of your team needs to be pulled off the development of your own product to:

  • design,
  • develop,
  • test,
  • deploy, and
  • take care of ongoing software updates.

All in all, for a simple homegrown recurring billing software with basic accounting and credit card functionality, you’re looking at spending up to $250k.

Plus, your developers probably aren’t too well-versed in the rules, principles, and regulations of double-entry accounting—including the very complicated revenue recognition standards for the subscription business model.

When you consider that for as little as a few hundred dollars per month you can find a more functionally robust, more secure out-of-the-box billing and subscription management software—backed by subscription billing experts dedicated to continually delivering value—it’s pretty safe to say building an in-house software is not the better option.

Subscription management doesn’t have to cause headaches

This one’s a fact.

In the end, all these myths center around the idea that billing and subscription management for SaaS businesses and other recurring revenue companies is a headache.

And just like the idea that you need to drink eight glasses of water a day, it’s not 100% true. While it’s certainly not easy, working with the right technology makes a huge difference. In fact, adopting a modern, adaptive recurring billing software can bust all these common myths and create a process that’s simplified, streamlined, and optimized for success.

So, as it turns out, maybe there’s only one myth here: recurring billing and subscription management is hard.

But as we just proved….it really doesn’t have to be.


Written by:

Erica Cosentino
Erica Cosentino
Marketing Manager, Stax Bill

Erica is Stax Bill’s marketing manager. With a background in film production and content marketing, she enjoys the challenge of bringing the SaaS world to life – and making the topic of recurring billing fun. When she’s not at Stax Bill, Erica is borderline obsessed with travel (she’s been to 20 different countries) and loves learning new languages, speaking Italian, Spanish, and French to varying degrees of fluency.