Billing Best Practices /

The best billing process possible

You want the best billing process possible. Simple. Error-free. Easy for the customer to understand yet sophisticated enough to personalize offers and customize messaging. One that reduces churn and yields the kind of insights that can help you forecast industry trends. Read our recommended best practices and start building a billing process that’s manageable, flexible, and reliable.

Why should I integrate my billing and Quote to Cash system?

Everything that happens in the quote-to-cash process impacts a business’s bottom line. To streamline and automate payment, and ensure consistent efficiency and data capture, you need tight integration between your CRM and billing systems.

This integration should ideally be bidirectional and allow your billing system to automatically send information about your customers, their purchases, and billing updates to your CRM. This is important to ensure the sales, marketing, and finance teams are in sync.

The right integration between CPQ and the ERP translates to real-time data updating from the ERP system into the CPQ at the click of a button, improving all aspects of a sales executive’s job. With real-time integration between CPQ and ERP systems, sales teams can use CPQ to obtain order data, forecast based on previous orders, and forecast future revenue based on previous orders.

What are the different types of billing models?

There are several billing models to choose from depending on your business, product features, and use cases. The ideal pricing strategy is one in which your customers know exactly what they're paying for. Following are the different types of billing models:

Usage Based:
Usage-based pricing is a dynamic pricing model that is configured based on how much usage is consumed. This is an excellent tool for businesses whose customers' needs and usage levels fluctuate.

Flat Rate:
With a flat-rate billing model you only pay a single price for all features and levels of access on a monthly, quarterly, or annual basis depending on the subscription package. It is a good option for users who plan on using the product on a regularly.

The tiered pricing model gives companies the flexibility to choose different billing options, with each tier employing a usage cap. This model offers multiple tiers to choose from and works for both small businesses and startups and enterprise-level accounts.

Per User:
The per-user pricing model charges businesses based on the total number of users that are registered to use the software. This model works best for businesses where customers are focused on the number of people with access to the product or platform.

A freemium model is a common pricing strategy for SaaS businesses that let customers use certain features of the product for free. It's a great way to bring in leads. The freemium structure is used to entice potential customers to try the product for free before upgrading to the paid version.

What are some billing best practices?

Billing is an important part of your business. You must have a system in place which simplifies the billing process for both your customers and you. If you want to keep your customers satisfied, provide excellent customer service, and ensure invoices are sent on time, follow the below mentioned SaaS billing best practices:

  1. Choose an easy-to-understand, simple pricing model. Showcase your product features and functionality and pricing for each plan clearly on your pricing page
  2. Upsell and cross-sell opportunities to existing customers with personalized offers
  3. Customize your invoice template to communicate the items that are most important to your customers like itemized subscriptions, grouped usage charges, and related services and products
  4. Reduce customer churn by analyzing customer usage trends, offering customized discounts and options to upgrade or downgrade product plans, and sending timely reminders for renewals
  5. Limit revenue leakage by sending reminders for upcoming payments, notifying customers about expired cards, and automating the process of invoicing, payment collection, and card updates
  6. Use billing insights to track payments, forecast revenue, and make informed decisions
What is revenue leakage and how do you avoid it?

Revenue leakage is the unintentional loss of money due to underbilling or inaccurate billing, often as a result of manual or outdated billing systems. When you're leaking recurring revenue, it's hard to grow because you do not have the cash available to reinvest in your business.

Ensure that you are not leaving money on the table by following these best practices:

  1. Automate billing and eliminate losses due to manual data entry errors like misplaced decimals, copy-paste errors, etc.
  2. Ensure that you bill accurately throughout the customer lifecycle and accurately account for contract changes, including new licenses or any upgrade in plans, and remove any unearned discounts during invoicing
  3. Automate contract renewals and automatically update credit cards with recovery tools to eliminate involuntary churn
  4. Leverage usage data to offer personalized pricing to customers so that no money is left on the table
  5. Use real-time reporting provided by a modern enterprise billing system to gain visibility over potential revenue leaks and identify ways to plug them
  6. Support a dynamic pricing strategy that integrates into your internal database and calculates product pricing. Dynamic pricing will allow you to adjust prices, launch new monetization strategies and maximize revenue
How to automate your billing?

In order to scale your subscription business, it is important to automate your billing system. An automated subscription billing software eliminates the issues associated with manual billing and allows you to focus on scaling and increasing cash flows. Use the following steps to start with automating your billing:

  1. Research the existing billing software in the market to determine which ones meet your requirements. Ask questions related to your specific billing needs to check which provider has the most industry experience relating to your billing needs
  2. Ensure the billing software of your choice integrates with your existing accounting, taxation, and other necessary software and tools
  3. Import your customer payment information to the new billing system to ensure a seamless migration
  4. Give your customers a heads up about the new billing software and changes they may expect, if any
  5. Set your new payment terms and inform your customers to avoid surprising them and to ensure you get paid on time
  6. Set up recurring billing schedules and automate billing reminder notifications
How do you collect payments?

As a subscription-based service, you accept recurring payments from customers periodically on an agreed schedule. It is convenient for both customers and businesses as it saves time, improves cash flow, and helps improve the customer experience. You will want to follow a few best practices for accepting recurring payments to sustain your subscription business:

  1. Automate and optimize recurring billing to retry failed payments to avoid involuntary churn
  2. Allow customers to choose their billing frequency to avoid payment failures due to insufficient funds. Provide them the flexibility to choose their billing schedule
  3. Familiarize yourself with local payment methods and accept the commonly used payment methods in your customer’s location to improve customer satisfaction
  4. Use an automatic account updater feature to ensure customer information is up to date and payments are not declined due to expired credit cards
  5. Store sensitive customer payment information in a secure manner according to the PCI regulations
How do you integrate billing into the rest of your back office?

Your customers count on you to deliver a continuous, smooth experience and provide the right information at the right time. Connecting your enterprise billing system with the back office improves the experience you provide to your customers. An API-first billing platform plays a key role in integrating your back office with other necessary applications and departments and supports your company’s growth.

An API-first platform allows multiple distinct systems to work together to solve business challenges without having too much overhead. When data is still small, it's easy to fetch all of it and sort through it manually in your code. However, as you scale and generate large volumes you would need to filter the data on the server to improve integration performance.

Will your billing system scale with your business?

As your business scales and grows, you have to coordinate back-office tasks like managing an increased number of invoices, new accounts, and projects. This can result in an increase in errors and reduce productivity.

An automated billing system eliminates the issues associated with manual billing as you can focus on scaling your business and increasing cash flows. It's also the first step into streamlining all related financial activities, including revenue recognition, preventing revenue leakage, and much more.

Automated recurring billing makes it easier to change your service models and pricing to test new business ideas that drive growth. The best billing solutions aren't just easy to use, they're also built to scale with your company and take on new challenges as you grow.

If you offer it,
you can bill for it.

No matter what you sell, LogiSense can help you measure it and bill it.

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