Subscription Business

Here’s Why Your Subscription Management Software Should Be Your Accounts Receivable SSOT

Paul Prebinski | May 24, 2022

Having a single source of truth (SSOT) is key for managing your SaaS business’s accounts receivable (AR)-related operations.

After all, you can’t ask various departments to chase down data from multiple locations as they also manage customer relationships, maintain regulatory compliance, or engage in business development. Not only is such a workflow inefficient, but it also massively increases your margin of error.

But what platform would work as your AR SSOT?

No, it’s not your customer relationship management (CRM) software or payment gateways.

And no, it’s not even your enterprise resource planning (ERP) system.

The best AR SSOT is instead comprehensive subscription management software. Because not only does it house all your AR-related data, but can also…

1. Centralize information from your whole fintech stack

The bigger your SaaS business grows, the more AR-related data it has available—whether from sales quotes, invoices, or elsewhere.

And having such a treasure trove of data at your disposal can be a fantastic strategic advantage. That is, as long as you know how to wield that data.

Former Stax Bill CEO, Tyler Eyamie, analogizes each AR-related data point in your business’s possession as a ping pong ball. “With recurring billing, those ping pong balls often bounce back and forth, according to the demands of the customer,” Eyamie writes.

“[The subscription management process] might go from the quote, to the order and the invoice, but then a change is made, such as an upgrade or additional purchase, and the process bounces back to the quote process and starts all over again.”

If your data is scattered across different online platforms, it can quickly become hard to keep track of—much less use—as you manage customer subscriptions.

Worse still if you’re storing your data in spreadsheets or other offline files, where different staff members can easily duplicate and modify such files—and fragment the “master copy” of your data.

In contrast, sophisticated subscription management software acts as a bridge between your CRM, payment gateway, ERP system, and other platforms in your fintech stack, pulling their data into a singular, always up-to-date repository.

From there, your business is in a good position to use your hard-earned data to your advantage. For example, you can leverage such data to…

2. Level up every business operation

Comprehensive subscription management software comes packed with advanced analytics that allows subscription-based businesses to track monthly recurring revenue (MRR), customer lifetime value (CLV), customer acquisition cost (CAC), and other key subscription metrics.

And it isn’t just finance that benefits from having an abundance of subscription data at its fingertips.

“Connected, integrated [financial] reporting that leverages modern technologies can enable an organization’s finance team to produce [an SSOT], which can empower business leaders at multiple levels to use reliable data to support and improve mission-critical decisions,” writes accounting organization Deloitte for the Wall Street Journal.

For instance:

  • Marketing can create ideal customer profiles based on subscribers with the highest CLV and/or the lowest churn rates, and craft campaigns that target best-fit customers accordingly. From your business’s CACs, your marketing department will also be able to evaluate and refine existing marketing campaigns for further subscriber growth.
  • Customer success can pull up customers’ subscription data to render effective support without troubling customers to share their history with the business themselves. If customer success is also in charge of renewals, the ability to conveniently refer to customers’ subscription histories can also help it suggest relevant—and MRR-boosting—upsells.
  • Senior leadership can get a good picture of the business’s financial health and which of the business’s current strategies are (or aren’t) working. Having ready access to such intel is vital while leadership oversees day-to-day business operations and sets long-term goals for business growth.

The department needing the data simply needs to go into the subscription management solution to generate the relevant report on the spot. It can then proceed with full confidence that it is basing its decisions on the latest and most accurate data available.

3. Ensure accurate accounting and tax reporting

The ASC 606 revenue recognition standard requires businesses to recognize revenue as it’s earned—which isn’t necessarily the same time as when the cash is received. This accounting principle sounds rather manageable on paper, until you apply it to the subscription model.

That’s because midway through their subscription contracts, your customers may want to upgrade their plans, downgrade, or take up additional plans. By then, you will likely have already collected cash from your customers to activate their accounts. But with all these changes to their subscriptions, when exactly can your business recognize the associated revenue?

This is a question that can trip up even experienced accounting professionals if they need to recognize revenue manually. Likewise if they are trying to wrangle a revenue recognition workaround out of legacy systems not designed with ASC 606 in mind.

And the consequences of non-compliance can be severe if a business ends up understating its subscription revenue in its tax returns. Think unwanted scrutiny and audits from the authorities, reputational damage, and even litigation. They’re definitely not things you want to subject your business to.

Modern subscription management software is built to not just store revenue data centrally, but also effortlessly recognize such revenue in an ASC 606-compliant manner. Whether your subscription contracts require you to recognize revenue immediately, at fixed intervals, by milestone, or even manually, you’ll be able to configure your subscription management platform to meet such needs.

Tax returns submission during tax season then becomes stress-free. You’ll have peace of mind knowing that you’ve accurately recognized and reported your revenue—not a cent more or less.

4. Enhance the customer experience

Customer experience, or CX, doesn’t fall under the purview of just the customer success department. Every business department, customer-facing or otherwise, has the potential to shape CX at various touchpoints.

However, problems can arise if different departments are working off different, and unsynchronized, customer data sets.

“Poor transparency and insufficient knowledge-sharing mean that most teams lack a unified view of the customer journey,” shares Ady Meretz, President of Asia Pacific for customer engagement platform Verint.

“Without [an SSOT] to act as the beacon for all customer interactions, employees risk giving conflicting information and muddling the customer experience, holding businesses back from achieving their consistency goals.”

For example, the sales department may have convinced a paying customer to subscribe to a new add-on. But while sales happily noted the achievement in its customer records, it neglected to inform customer success of the same. As a result, customer success’s own records on that customer aren’t updated to reflect the new development.

With customer success none the wiser on what has happened, it doesn’t get in touch to assist with onboarding for the add-on. The customer is left to figure out the add-on on its own, which negatively impacts CX if sales had promised a follow-up from customer success.

Using subscription management software as an AR SSOT can bust down inter-departmental data silos, as all departments refer to a central data repository in the course of their operations.

Communication gaps are reduced, contributing to a smoother CX, even—and especially—for functions that require cross-departmental collaboration. This in turn helps to forge stronger customer relationships and can also reduce churn.

When picking an accounts receivable SSOT, subscription management software is the sole choice

Won over by how subscription management software can streamline your data, improve your business operations and compliance, and foster customer happiness? You’ll be glad to know that the four advantages discussed above are only the tip of the iceberg.

When you invest in advanced subscription management software, you also gain access to powerful features that:

  • allow for flexible billing options,
  • empower customers to take charge of their subscriptions through a self-service portal,
  • help to automate invoicing and dunning management,
  • and more.

Enjoying these benefits starts with using subscription management software as your AR SSOT. Any other platform just doesn’t make the cut.

If your current subscription management setup doesn’t have the capacity to act as your SSOT, then an upgrade might be in order.

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Written by:

Paul Prebinski
Paul Prebinski
Director of Sales, Stax Bill

Paul is the former Director of Sales at Stax Bill. He is an accomplished customer focused leader with a strong background in FinTech, SaaS, and cloud services. Paul and his team work closely with customers and partners to help improve and optimize recurring billing processes.