As your subscription-based business grows, the entire cycle of “invoicing-payments-revenue recognition” process turns out to be way more complicated and quite impossible to manually deal with. Not to forget that the manual billing, more at this stage than ever, gets more tedious and time-consuming. And this definitely impacts your revenue and business efficiency.
Read on to know the importance of an automated billing system towards effective SaaS revenue management and increasing revenue potential.
Offer flexible billing dates
Billing your customers on time is important. But offering them the liberty of choosing their own billing date significantly increases customer loyalty. So, if your billing engine allows you that liberty, it’s highly recommended to exploit the advantage.
Automated billing engine lets you set unique billing dates for every customer, regardless of their sign-up dates.
Some of the ways in which you can bill your customers are:
- Merging multiple billing dates into a single billing date for any customer who has multiple subscriptions
- Synchronizing all subscriptions to a fixed billing date- This would create a single payday for your customers, enabling them to have improved prediction, tracking and monitoring of revenue.
What’s in there for you here?
Well, delayed payment is a hassle and that’s what no company wants! So, reduced churn is surely a big gain here. Moreover, you get to align your billing cycle with the financial cycle of your customers. You also get a higher degree of efficiency in managing cash flows, resources and have more accurate scaling of revenue generation.
Make invoice in advance for prepayments
In most cases, customers like to have the feasibility of sending an invoice prior to the subscription renewal date. Basically, these are considered as advance payments that are made around a week or more right before the subscription renews. You can assume this as offering annual contracts to all your customers, that ultimately boosts the contracted MRR (monthly recurring revenue). This, in return, increases the subscriber lifetime value which eventually gets reflected in retention. As a business, collection of upfront payments give you better time value for your money.
Offer payment terms for outstanding payments review
It is really awkward to send and invoice to your customer when he has a different payment cycle from yours. Your customers might have many internal dependencies such as payment arrangements, review processes, approval mechanism setup or any other issue. Undergoing all these processes definitely happen to delay payments.
Avoiding such scenarios is easier when you sync both your payment cycles together.
With a flexible billing platform, you can implement the concept of Net D, a payment term that basically refers to the period (such as 10, 15, 30, 45, or 60 days) within which your customer can make payments against their outstanding invoice as per their subscriptions.
You can send out reminders to your SaaS customers through timely automated emails some days before their invoice is due.
Automate failed payments recovery
Insufficient funds, expiry of credit cards, and network downtimes are some of the reasons that can lead to non-payments. Moreover, multiple failed payment attempts could really blow off your payment gateway, giving a false sense that you have a “Not Secure” merchant account. Ultimately, your hard-earned revenue gets a hard hit!
Scenarios like this where the customer wants to pay you but cannot do so is not certainly not what you want.
To combat this, smart payment tactics like dunning (a credit control process wherein strategies are followed to chase outstanding payments for increasing the chances of payment retrieval) have to be implemented.
Offer Multiple Payment Modes and Gateways
As per research, alternative payment modes, which are referred to as non-card payment methods, comprise around 55% of global payments. Bank transfers, digital wallets, direct debit, carrier billing, e-invoices are few out of around 200 alternative payment methods that add to the convenience of customers and act as saviors when there are issues with their credit cards.
So, when you broaden the scope of convenience for customers by offering multiple payment methods, you are maximizing your conversion rates behind the scenes.
With an automated subscription billing system, you will have to choose which payment gateway fits with your billing platform for processing payments of your customers. One of the tasks of having a billing system is to provide you customers with a self-serve subscription portal that lets your users make subscription changes, manage their own subscriptions, upgrade and download their invoices. And for that to happen, your billing platform must be PCI compliant.
In other words, your subscription billing system should be able to manage everything securely before your customers make their payments. Most subscription billing solutions need to integrate with a third-party payment gateway to process payment.
To save yourself from toggling between two workflows, it is always better and time-saving to have a billing platform that gets all done, right from invoicing to payment processing through multiple payment gateways.
Saving time by maintaining a record of all subscriptions cannot be ignored when we consider optimizing efficiency in your business. When your customers update their payment details or add a new payment method, a link to a gateway account must be generated. All future payments made by the customer through this payment method are transacted through the same gateway account.
Smart Record-keeping features in your billing platform will help you in automatically selecting a gateway account as per the payment method selected by your customers and the preferred currency. An optimized billing platform will automatically assign the gateway account. This way the right currency is mapped to the preferred gateway. What follows in the course are minimized transaction errors and performance leakages associated with gateways.
When you have an automated subscription billing platform integrated for your SaaS business, your entire billing process streamlines. And you get accurate and real-time financial reports seamlessly. Right from dealing with the tedious invoicing to the payment closure, your automated billing platform gets it all done!
With Muvi Billing, you get an optimized, flexible and billing support system for the automated management of complex billing processes, varied payment schedules, tax-compliant billing, and recurring revenue streams.
To learn and explore more, Sign Up for a 14-Day Free Trial!