In today’s digital era, recurring billing is highly preferred by many of the businesses as well as customers. In a recurring billing process, a customer gets automatically billed or charged at a specific chosen intervals/frequency of time such as monthly, quarterly, annually etc.
From popular video streaming platforms like Netflix to game streaming on Xbox, recurring billing system are adopted by not only the leading businesses but unicorns and new entrants across various industries as well.
While we are more focused on building a robust billing system or adopting one, there are certain challenges that come with a recurring billing model, and the earlier you address these challenges, the better it is for your business and its growth.
Common Recurring Billing Challenges and How to Overcome them
Growing Billing Complexity
If you think growing your business is the toughest task at hand, then you are thinking wrong. Because with growing businesses, another major challenge is the increase in complexity of your billing system. For instance, suppose you start by offering two subscription plans – basic and premium, but as your business grows, you start to introduce more plans to accommodate variable customer demands, say a basic, silver, gold, diamond plan etc. As a result the customer billing cycles and invoicing process also become complex, for instance one customer may want to upgrade or downgrade etc. which should ideally reflect in their future invoices and billings without any ambiguities.
In order to avoid such a scenario, the simplest way out is to adopt an automated billing system from day one. Your business can be small with a simple billing process now, but eventually as it gets bigger, your billing process becomes complex. And having a sound automated billing system, will help you in handling such complex tasks effortlessly without your manual intervention.
Unscalable Billing System
One of the biggest challenges of a recurring billing system is, it is often unscalable when needed. Let’s consider a real-life scenario. Your business is currently operating in North America, but it is about to expand to Europe too. And for that, there are certain requirements from your billing system like, new ability to bill customers in local currencies like the Euro, Swedish krona, Swiss franc etc.. It should also be able to provide new language support for invoices, along with a new tax structure to determine the right price for the subscription plans etc. An unscalable billing system will need additional tools, or coding or upgradation to implement such changes. And everytime such a requirement comes up, you have to face other difficulties which altogether will slow down your business growth.
Such hurdles are easily avoidable if you adopt a scalable and flexible billing system from the very beginning. Here are some pointers to keep in mind while choosing the right billing system for your business –
- Multi-currency option
- Multilingual Invoicing and Billing
- Ability to set up differential taxes for different countries and continents
- Easy customization options, as and when needed
- Agile and Flexible in terms of any other changes
Payment Failures & Involuntary Churn
Did you know, a significant portion of subscriber churn is involuntary? And payment failure is one of the driving factors for involuntary churun? A recent study shows that 20-40% of churn is usually involuntary.
There can be multiple reasons for payment failures which often increase with the growing number of subscribers unless you take proper measures to prevent or measure it at the start. A dunning management system thus comes into play in such cases. Dunning management refers to the billing system’s ability to handle payment failures. For instance, if your payment is pending or failed while checking out on Amazon, it sends you an instant notification mentioning the payment status and the actions needed.
Another go-to solution is – always keep multiple payment gateways and payment options, so that if one fails, the other can work.
Difficulty in Revenue Recognition
Revenue recognition can be a cakewalk when your business is in the initial stage. But as it grows, reconciliation and recognition becomes more difficult. But this too you can beat by –
- Streamlining and automating all billing related activities
- Smart record keeping
- Generating analytical reports to get the insights on timely basis
These all can be achieved easily if you opt for a quality subscription billing system that offers these inbuilt or as an all-in-one solution!
Recurring billing being more complex than the normal or one-time billing, gets gradually challenging while you scale your business up or with changing times. But at the same time, most businesses nowadays are subscription based as the growth scope and possibilities are unlimited for such billing structures. And as explained above, most of the challenges related to recurring billing can be easily solved or even can be avoided by simply choosing the right subscription billing system for your business.
Muvi Billing, the enterprise-grade subscription billing software for websites and apps, not only offers flexible and automated billing solutions, but comes with the perks of smart record keeping, 40+ payment gateways, multiple monetization models, multi-language, multi-currency, differential taxes and analytics & insights. Not only this, you can easily customize these with a few clicks of button!
Take a 14-day free trial today to explore more (No credit card needed)!