For SaaS companies, a reliable recurring billing system isn’t a nice-to-have; it’s an essential piece of infrastructure to run your business successfully, build stable revenue, and streamline payment collection.
When recurring billing is managed well, this boosts customer trust and satisfaction in your business and increases lifetime value. Workflows like automated invoicing, revenue recognition and seamless integration save valuable time and free up your team for more complex billing tasks, as well as providing consistent customer experiences.
In this blog, we’re going to cover the 9 areas to look for in a recurring billing system and how this impacts the success and reliability of your billing operation.
TL;DR
- A reliable recurring billing system is essential for SaaS companies to build stable revenue and streamline payment collection.
- Key areas to focus on include automation capabilities, flexibility and customization, integration with other systems, security and compliance, user experience, scalability, customer support, reporting and analytics, pricing and costs, and case studies and testimonials.
- Also ensure it integrates with core systems; doing so ensures data accuracy, and robust security standards protect customer data
Automation Capabilities
Automating routine tasks in SaaS subscription billing such as invoicing, Accounts Receivable, payment collection, and retries helps your team to streamline subscription management and free up time to focus on more strategic activities. Using automated workflows for repetitive, manual tasks also reduces the risk of human error in billing and dunning management, which can damage customer relationships and increase churn.
For example, automated invoicing ensures that customers receive invoices on time by using set schedules (i.e. weekly, monthly, quarterly) speeding up the payment process. Consistent and reliable billing promotes trust in SaaS subscription businesses and increases the likelihood of on-time payment.
Adding automation into the dunning management process also removes friction from recurring payments. Payment failures can occur for a number of reasons, such as insufficient funds or expired credit cards. An automated billing system will initiate retries while also sending notifications to customers about failed payments. This ensures subscription plans are not interrupted and customers can continue to access their service, while maintaining cash flow for the business.
Flexibility and Customization
Support for different lengths of billing cycles is essential to attract a wide range of customers, from small businesses to enterprise-level clients. Being able to offer monthly, quarterly, and annual options via your billing solution means more flexibility and choice for customers, as they can choose the cycle that best suits their financial planning and usage patterns.
Offering choice over pricing plans and tiered pricing also makes it easier to attract and retain customers. Robust recurring billing software makes it seamless to manage various pricing tiers, add-on features, and functionalities that are tailored to different industries, business models, or customer lifecycles.
Having access to these customization capabilities opens up numerous marketing and customer engagement opportunities. For example, you can offer renewal discounts to long-time customers, or launch promotions targeted specifically at eCommerce customers. This helps to lower churn and keep customers engaged, making your product an essential part of their workflows.
Integration with Other Systems
For a recurring payments system to fit in seamlessly with the rest of your tech stack, it needs to be able to integrate with a variety of core systems. This includes CRMs, ERP, and accounting software.
Data synchronization and making real-time updates to customer profiles, billing plans, and more is essential to maintain data accuracy and enable good cross-team collaboration. Well-integrated subscription billing software should offer pre-built integration with popular platforms that you’re already using, which ensures a more seamless transition and reduces the need for manual data entry.
Common integrations to look for include:
- Your accounting software (Quickbooks, Xero, etc.)
- Sales and marketing software (Salesforce, Mailchimp, HubSpot)
- Payment processor (Stax, StaxBill)
By giving your internal teams access to the most up-to-date information, you can make sure that your organization is providing the most timely customer support, account management, and billing updates to keep your operation as responsive as possible.
While a billing platform cannot offer native integrations with every system, API availability for custom integrations makes it possible for businesses to customize their recurring billing system with integrations to other tools. Whether you need to connect to a proprietary system or leverage third-party services, APIs provide the flexibility to extend the functionality of a billing system.
Security and Compliance
Payment Card Industry Data Security Standard (PCI-DSS) means that cloud-based billing systems meet stringent security requirements to protect cardholder data, reducing the risk of data breaches. This also bolsters consumer confidence, ensuring customers feel comfortable dealing with your business. This should be an absolute must-have in any billing software you’re considering.
Another important security standard is the General Data Protection Regulation (GDPR). This mandates certain guidelines on how personal data should be collected and stored within the EU, and carries heavy penalties if violated. Because GDPR gives customers ready access to their data, this also makes a recurring billing provider more trustworthy and in line with security best practices.
Aside from compliance with global standards, make sure that any billing system practices regular security updates to target vulnerabilities and maintain security. This includes automatic security patches, updates, and audits to ensure that your account is safe.
User Experience
User experience (UX) relates to how intuitive it is for administrators and users to get to grips with a SaaS product and maximize its capabilities. Strong UX is essential for a positive customer experience, which increases the retention of subscriptions.
In the context of billing management software, it should be straightforward for teams to manage different features such as setting up billing cycles, implementing payment gateways, generating invoices, and more.
From the perspective of the end customer, self-service options are an important part of a good user experience. Enabling customers to manage SaaS subscriptions directly, update payment options, and upgrade/cancel their plan frees up valuable customer service time and promotes higher customer satisfaction.
Customizable reports and dashboards are valuable to both administrators and customers when tracking performance and making data-driven decisions. Detailed billing reports allow customers to easily check transaction histories, while also helping administrators to understand transaction volume, preferred payment types, and more.
Scalability
Scalability is a key consideration for SaaS companies who are anticipating rapid growth in their customer base and transaction volume. Without a scalable billing system on side, you can’t have confidence that your business can seamlessly handle this growth without running into reliability concerns.
Good scalability means that your billing platform can accommodate higher transaction volumes, more customer support, and new features and services. This may require plan upgrades or more user seats to be added, but shouldn’t take away from usability or performance. Being able to stick with one SaaS provider for longer means less disruption for your business.
In addition to higher processing volumes, you also need to consider specific features and add-ons that enable your SaaS business to avoid growing pains. For example, being able to support international currencies and a wider selection of payment methods means expanding into new markets, as well as offering subscribers more flexibility and improve satisfaction.
Customer Support
The availability and responsiveness of customer support channels should be a key consideration when choosing a recurring billing system. After all, you don’t know when you may have to lean on them to solve problems! 24/7 support can take a lot of different forms, including email, phone, live chat, and also documentation such as help centers or webinars to assist with onboarding or troubleshooting problems independently.
The more channels that are available, the more likely it is you will have a prompt response time and resolve issues before they affect customer satisfaction. It’s a good idea to enquire what the average response time is across channels to understand how to handle problems with different levels of urgency.
Reporting and Analytics
Being able to track key metrics such as current MRR (monthly recurring revenue), revenue forecasting, churn rate, and customer lifetime value enables SaaS companies to understand which customer segments are driving the most revenue for their business and which underperforming categories to consider investing more time/resources into. A billing platform that presents this information via built-in dashboards and reporting will save you valuable time, and make it easier to surface crucial insights to take to other teams.
Moreover, an intelligent recurring billing system should offer analytics that provide insight into customer behaviors, such as usage patterns, billing history, and upgrades/downgrades in subscriptions. This helps SaaS businesses to understand which integrations and features are seeing the highest uptake or the response to different sales/marketing initiatives, so you can make informed decisions about how to plan future strategies.
Pricing and Costs
There are a variety of pricing models used for subscription billing services, such as monthly flat fees and usage-based billing. The right pricing model for your SaaS company will depend on a range of factors, such as the specific features you’re interested in, your transaction volume, and the number of user seats you need to support.
Regardless of the particular method, pricing should be transparent and devoid of hidden fees, including listing any additional charges for features like payment processing, integrations, checkout plugins, and more. This transparency allows you to budget more accurately and avoid a nasty sting at the end of the billing period.
Be sure to compare multiple platforms to understand cost-effectiveness and whether you need to adjust your budget accordingly. Functionalities to look for in recurring billing platforms include:
- Subscription Management
- Revenue Recognition
- A variety of payment methods (ACH, digital wallets, debit/credit cards)
- Payment Gateway management
- Dunning Management
Making the right investment in software is crucial to ensure a good ROI and long-term benefits, namely streamlining your billing process, reducing labor costs, and freeing up valuable time for other business initiatives. By ensuring that billing is accurate, consistent, and trustworthy, this also influences customer retention and lifetime value.
Case Studies and Testimonials
As a reliable recurring billing provider, Stax Bill has helped numerous businesses automate billing and achieve significant cost savings:
Recovering lost revenue
On The Map Marketing (OTM) faced significant billing challenges during their rapid growth phase. Initially relying on spreadsheets and outdated billing software, OTM struggled with manual invoicing, resulting in missed and late payments that affected cash flow.
After partnering with Stax Bill, OTM automated their billing process, reducing manual billing efforts by 12-15 hours a month and improving revenue recovery by $600,000 annually. Automated invoicing and dunning management enabled OTM to offer structured payment plans, and send out six times more invoices than under their previous provider.
Improving billing efficiency
The Covenant Group recognized the need to turn to a more efficient subscription billing solution. Prior to partnering with Stax Bill, the group’s manual billing process involved faxing invoices and reminders, resulting in thousands of dollars in outstanding revenue and taking up to six months to complete payment collection. Their delayed dunning management process, taking up to 10 days to identify failed payments, further hindered their ability to maintain stable cash flow.
Implementing Stax Bill automated invoicing, introduced a self-service portal for clients, and streamlined payment collections via smart dunning management. This reduced collection time from six months to as little as one day, while providing detailed revenue data for more informed business planning.
Choosing the right recurring billing system involves numerous considerations to find the right balance of features, performance, cost, and security practices to support your SaaS business as it grows. It’s a key strategic decision with long-term implications for efficiency, labor costs, customer experience, and more.
To ensure that are you choosing the right billing solution for your needs, it’s important to focus on the areas outlined in this post to ensure that all of your bases are covered. In addition to providing an advanced toolkit for recurring billing for a flat monthly fee, Stax Bill offers a wealth of information for SaaS companies on managing billing automation, revenue recognition, and more.
Check out Stax Bill to discover how to make recurring billing a breeze.
