Why Your Rapid Growth SaaS Needs Scalable, Automated Billing

Serge Frigon

Your SaaS business is scaling. Its customer base is growing, your team is developing its catalog of products and services, and perhaps you’re ready to invest in new technology for growth.

While your current billing infrastructure and operating model might not be the obvious first area for an upgrade, perhaps it should be.

Modern cloud-based automated billing systems can provide a growing business with a flexible, high-quality solution to streamlining and improving its current system—and since it’s all accomplished through an access model rather than in-house infrastructure, it can be done without a large capital investment.

The benefits of automated billing range from dramatically reducing hours spent on automatable tasks, to reclaiming leaking revenue, and performing detailed reporting to devise goals and strategies for the future with better insight and predictability. It can even ensure your business is compliant with required accounting standards, such as ASC 606—the latest standard in revenue recognition. This enables you to reduce some potential risks as you continue building your business.

However, there are still a number of misconceptions and worries surrounding the adoption of an automated billing system. The good news is the comprehensive solutions now available through automated billing providers can enable SaaS businesses to dispel these entirely—or at least achieve enough ROI that these stress-points become irrelevant.

These are seven of the most common concerns businesses have about automated billing, as well as reasons why they can put these concerns to rest.

1. Our Business and Billing are Too Complex

It’s estimated that by 2022, 53% of all software revenue will be generated from a subscription model. New entrants into the software market—as well as historical vendors—will have to start offering subscription-based billing, or risk falling behind the competition. And additional billing possibilities such as one-time fees and usage-based pricing means a lot of these businesses are also experimenting with hybrid billing.

But regardless of the structure of your SaaS’s billing model or your pricing strategy, there’s undoubtedly a solution that can handle your needs. In fact, the more complex your pricing methodology, the more necessary it may be to consider an agile automated billing system.

Intricate billing processes performed on manual and legacy billing systems can create several risks in terms of customer-facing errors, revenue leakage, and accounting compliance.

A comprehensive billing system will automate processes to ensure perfect execution of customer-facing actions such as invoicing. It will also eliminate revenue leakage by ensuring accurate, consistent billing and comprehensive dunning management. And these billing systems can help your business meet compliance requirements by properly tracking and providing reporting capabilities concerning recognized revenue—a vital necessity for subscription-based SaaS businesses.

There are also ledger-based billing solutions available that offer double-entry accounting. This is key to solving a number of recurring billing challenges faced by large and growing businesses.

2. Implementing Billing Automation will Take Too Much of Our Time and Resources

Your business’s team members have full plates already, which can make it seem overwhelming to even entertain the thought of implementing an automated billing system. But there are automated billing system providers that don’t require a dedicated resource from your team.

Your business can continue focusing on what’s important while an implementation team leads the process and puts your business on the quickest path to ROI.

While implementing an automated billing system could take some time—which will, of course, vary, depending on the factors pertaining to your particular business—there are certainly more expeditious options on the market.

In fact, some providers can have your business up and running with your new system in half the time of the competition, so it’s worth doing your research.

It comes down to weighing the relatively short amount of time required for implementation with the process efficiencies and ROI that can be achieved as a result.

For example, On The Map Internet Marketing is a Miami-based business that started out using individual spreadsheets as ledgers for its clients. But as the business scaled, this quickly became an unsustainable nightmare.

Since taking the time to implement a robust automated billing system, On The Map has reduced its time spent on billing by up to 15 hours per month. That’s 22.5 days of labor reclaimed each year.

All the working hours we have saved thanks to Stax Bill has really given us the flexibility to keep on growing.

-Kristaps Brencans, CMO, On The Map.

On The Map has also seamlessly scaled up from sending about 100 invoices a month to 600, and the revenue recovery capabilities of its new system save the business about $600,000 annually.

3. We Don’t Really Need to Automate Billing

This is a legitimate point of view. Your business may not need to move to automated billing to function right now. But consider the efficiencies and savings that could be gained if you did.

As your team works tirelessly to run your business and meet the needs of its growing customer base, they may be wasting valuable time and resources focusing on details of your subscription billing process that could be automated or eliminated all together.

Additionally, the right automated billing system will have the ability to integrate seamlessly with your current CRM, accounting technology, payment gateways, business management tools, and more. Your business will be able to offer both your staff and your customers the benefits of advanced and comprehensive recurring billing technology.

Individuals like to work with innovative, forward-thinking businesses, and those same qualities inspire a lot of trust in current and potential customers.

4. It’s Risky to Put My Billing Into Someone Else’s Hands

Your business’s billing information is essential. And so is the trust your customers have in you to safeguard their private data.

The right modern billing system will be backed by the highest industry standards of security to protect your business. So, do your research, and when you select a provider, make sure it offers PCI Level 1 certification.

This level of certification requires an annual compliance assessment by a Qualified Security Assessor (QSA). It’s also telling of the volume of business that’s been trusted with that company, as this level of certification is assigned to merchants that process more than $6M in Mastercard or Visa transactions annually.

Finally, when you’re researching automated billing providers, ensure your data will always belong to you through the lifetime of your relationship with that provider.

It’s also important to note that keeping your billing in your own hands could be the real risky move.

Under ASC 606, businesses are required to recognize their revenue only when and as its value is received by customers. It can be extremely challenging for businesses to meet these requirements if they’re processing their billing manually or using a legacy billing system, whereas the right automated billing solution will ensure your compliance with ease.

5. We Already Have a Payment Gateway

There’s a difference between a payment gateway and an automated billing system.

While most payment gateways offer some basic recurring billing capabilities—such as reminders to perform certain tasks each month for different customers—they have a lot of limitations and create challenges for growing businesses.

For example, gateways are only capable of processing specific charges that have been input by your team. But the reality of billing is that it fluctuates over time—and sometimes continually—based on several factors such as free trial periods, selected and updated price plans, added discounts and coupons, pro-rated charges, and more. Gateways don’t have the level of intelligence to handle these fluctuations in real-time. An automated billing system does.

And unlike gateways alone, automated billing systems that are integrated with payment gateways have the capability to go well beyond managing specific transactions.

These automated billing platforms have the business logic to perform dunning management tasks that can not only recover revenue that could be lost as a result of declined credit cards but can also help businesses better manage their customer relationships with regard to payment. For example, these systems can automatically detect when a recurring customer’s card is approaching its expiry and send out a notification. This can result in avoiding declined cards altogether.

6. Billing Automation is Too Costly

A lot of businesses have preconceived notions of what the expense of an automated billing system will be. But there’s a wide variety of affordable plan options available to suit your business’s size and budget—some as low as a few hundred dollars a month. And payments are predictable, which means you’ll always know the cost of smoothly running your business.

When you consider the savings that can be realized by implementing an automated billing solution, it becomes obvious that the system will quickly pay for itself as well as provide ROI.

Whether your business is processing its billing manually or working within the constraints of a legacy billing system, you have to consider how much longer your current operating model will work for your business—and at what cost?

At some point in their evolution, businesses will struggle to scale if they have to complete all billing manually. And continually injecting cash into developing legacy billing infrastructure can become an expensive game if businesses want to remain competitive.

The reality is, more than half of senior IT executives believe the digital evolution of their businesses is being held back because of legacy technology infrastructure. And often there’s a legacy mentality that goes along with it, which can stand in the way of a business reaching its potential.

Modern cloud-based billing solutions offer a level of advanced analytics, data management proficiency, and financial flexibility that can enable businesses to scale without constraint.


Written by:

Serge Frigon
Serge Frigon
Director of Product, Stax Bill

Serge Frigon is Stax Bill’s Director of Product. He is passionate about improving billing processes for SaaS companies. With 20+ years in SaaS and billing software systems, Serge has a first-hand view of how important financial insights can be to the health of a company.