Billing Software: What You Need to Know
Posted on 6th May 2021
At its most basic description: billing software allows you to track the products and services your customers use, generate and send invoices with, and receive payments. However, some billing platforms are capable of much more. They can automate the repetitive tasks your finance team struggles with on a daily basis. For example, some billing applications provide time tracking so that you can monitor how much time you’re spending on a client’s work – which is critical if you bill by the hour. In addition, billing software may also offer a variety of reports, track debt, manage collections and connect to key solutions to manage things such as taxation and payment processing. And, this is just the tip of the iceberg.
If you manage a software as a service (SaaS) company you’ll need additional billing functionality depending on the products you sell, your pricing models and customer preferences. You’ll need a billing solution that lets you bill based on various payment schedules – monthly, semi-annually, annually or custom. When coupons, discounts and promotions are offered, your billing system needs to automatically account for them against the applicable products for the duration of the offer. And finally, the added complexity inherent to SaaS-based companies requires more robust reporting capabilities to measure metrics such as annual recurring revenue (ARR), monthly recurring revenue (MRR), churn percentages, reactivation rates, profitability and projected future revenue.
Since billing software requirements vary depending on your company size as well as your industry – we’ve provided a comprehensive guide to help you choose the billing software solution that will keep your company running at peak performance.
Get the Right Billing Software Solution
Your unique requirements play a key role in determining the billing software that will drive operational efficiency and profitability. At the very least, all businesses require the core functionality that a basic billing system can offer.
Regardless of the size of your business, there’s a billing software solution that’s right for you. To start, let’s take a look at the size of your company and the functionality your billing solution should offer.
Billing Software for SMBs
If you’re a SMB you may still be using spreadsheets, word processing applications and other manual processes to develop quotes, track products sold or services rendered, create invoices, calculate basic tax, follow-up on unpaid invoices, and recognize revenue. The downside to handling your quote-to-cash (QTC) processes manually are considerable. However, at the top of the list is the time and effort involved, the likelihood of human error, delayed delivery of products and services, and revenue leakage.
While most SMBs typically don’t require an overly complex or sophisticated billing system, the following provides the key functionality needed for more efficient, effective and error-free billing.
Core Billing Functionality: To take the manual effort out of quote-to-cash processes you need to fully automate core billing functions like pricing and rating, packages and bundles, revenue management, taxation, and revenue recognition.
Pricing Models: The ability to quickly and accurately design and deploy creative pricing models will help you grow your customer base and maximize your revenue potential.
Document Creation and Generation: With the ability to create custom documents, you are able to give your business a more professional look by creating:
Welcome letters for new customers
Supporting documentation for invoices
Reporting and Dashboards: With ready-to-use reports and up-to-the minute dashboards you are able to keep your finger on the pulse of your company’s performance.
As you weigh your billing software options, be sure to take into consideration future needs. As your company increases its offerings, gains new customers, and adapts to changing requirements, you’ll want to ensure that your billing platform has the functionality to take you to the next level.
Billing Software for Enterprises
It goes without saying, as your company grows you’ll require more advanced billing software capabilities to streamline your QTC processes, eliminate manual effort, and keep your cash flow flowing. Let’s take a look at some of the billing functionality larger organizations require.
Billing Management: Quickly launch and monetize innovative billing models.
Products and Pricing: Move beyond offering just simple subscriptions and compliment with usage-based products to gain a competitive advantage.
Mediation: Collect and convert raw usage data from multiple sources, leverage that data to diversify your product offerings and transform into billable information.
Account Management: Exceed customer expectations and increase customer retention with a 360-degree view of customer accounts.
Revenue Management: Take the complexity out of revenue management, adhere to compliance standards, and expedite your financial close processes.
Revenue Recognition: Automate the entire QTC process and align revenue recognition with your business strategy.
Collections: Manage outstanding balances with ease, and put a stop to revenue leakage.
Business Intelligence: Use actionable insights for better decision making.
Customer Portal: Decrease churn by empowering customers to serve themselves.
Integration: Connect front- and back-office systems such as customer relationship management (CRM), enterprise resource planning (ERP), payment gateways or taxation software with your billing platform to achieve a complete financial ecosystem.
Extensibility: Extend the solution to support unique business requirements.
Internationalization: Grow your business across borders with multi-currency, multilingual and localization functionality that meets regional specifications.
Security and Compliance: Keep your customers’ information safe and secure and adhere to global regulatory standards.
Although the above billing functionality provides a good baseline for all industries, there may be other considerations depending on your industry.
Billing Software That Meets Industry-Specific Needs
Let’s take a look at four prevalent industries, their specific billing issues, and how they can overcome key challenges.
Communications Service Providers
In this sector, many companies are stuck with outdated billing systems that can’t integrate usage data with rating and invoicing, a significant inhibitor to deploying new pricing plans. On top of that, these companies are constantly wrestling with how to stem the revenue loss from traditional services. Complicating it all, compliance, taxation, and government regulations are constantly changing, forcing companies to modify core business processes.
Utilizing a complete order-to-cash process in a single solution, communications service providers can:
Reduce OPEX & CAPEX with a cloud-based solution vs. legacy on-premises
Increase revenue and drive operational efficiency with core functions like mediation, billing and revenue recognition in a single solution
Launch new services and promotions faster with a configuration-driven product catalog and deploy the creative pricing that fits your business
The traditional finance industry is rapidly evolving with technological innovation despite having to rely on legacy systems. Meanwhile, FinTech start-ups are disrupting the industry and bringing solutions that offer better customer service and greater convenience at a lower price. To combat these disruptors, financial institutions are exploring ways to serve customers more effectively through analytics and additional digital banking technologies. As a result, supporting the finance industry will only grow more complex over time.
Using a secure, cloud-based solution capable of flexing to any business model and adapting to global, regional, and local compliance standards, financial services and fintechs can:.
Simplify revenue management with a rule-based revenue recognition engine
Speed integration with the critical front and back office applications to connect directly with the billing system
Execute predictive analytics on any data element to derive insights that drive business success
Media and Entertainment
Historically, the media and entertainment industry has been dominated by recurring and one-time revenue models. While still relevant, the space is expanding to offer new types of pricing packages that keep consumers engaged in an age where they are inundated with content. Now, enterprises must be able to handle massive volumes of transactions and manage complex scenarios involving usage, bundled, and subscription pricing for all kinds of streaming platforms, from movies and music to educational content.
With a solution to support endless configurations for media products and entertainment platforms, they can easily:
Convert manual billing into automated workflows that scale with your customer base
Package, charge, invoice, and provision products exactly how you want it to
Enhance your subscription models with native mediation to gather data from any source for innovative metered and usage-based pricing
In the travel, transportation, and logistics industry, businesses must streamline operations with flexible and sophisticated systems. Airports have to manage revenue collection for many activities, including flight movements, aircraft parking, ground power, retail, and more. Logistics companies need to manage vast inventory and shipping databases, as well as leverage data, such as distance traveled and weight or speed of delivery, to accurately account for services.
Utilizing a complete solution to rate, invoice, and collect in an automated fashion, companies in transportation services can:
Easily transition from simple one-time and subscription-based pricing models to creative metered and usage-based plans
Standardize operations on a single platform to consolidate billing and automate bill cycle processing, saving cost using fewer resources
Lower cost and speed time to market with no-code, point & click configurability to easily extend the solution to meet your exact needs
By: Billing Platform