Software-as-a-Service (SaaS), although highly beneficial for providers and customers alike, is also one of the most challenging businesses. Since customers can choose from a diverse set of features and services – based on their needs – SaaS companies have a tough time managing billing cycles, taxation policies, invoices, etc. for a customer base that only keeps growing with each passing day. Companies, therefore, are always on the lookout for solutions that can help overcome the many challenges – especially with billing – so that they can deliver timely, accurate, and exceptional customer experiences.
Top Billing Challenges
SaaS business solutions come in various types, that can be customized to suit the needs of different customers. However, SaaS companies often have a tough time billing their customers: since almost every service offered to customers is customized, with each new customer, the magnitude and complexity of the solution increase exponentially – often resulting in inconsistency and error with respect to billing.
Listed below are top 10 billing challenges and how companies can overcome them:
- Understanding Subscription and Usage Data: SaaS companies that use a billing solution that only supports a simple per-user or per-month billing model fail miserably at capturing usage-driven and consumption-based billing. That’s where a recurring billing solution can help; it can effectively track the constant changes to subscription and usage data for every customer, and offer granular-level insight for better understanding of consumption.
- Managing the Growing Number of Customers: Given the growing number of customers that are opting for SaaS solutions today, manually keeping track of each customer that signs up for the service is tough, to say the least. Managing service activation, upgrades, downgrades, payments, etc. is a big challenge. However, a recurring billing solution can streamline this process; by offering an effective way of managing service activations, it helps you in effectively managing customers – as and when they sign up for a service – and improve the efficiency of operations.
- Keeping Track of Fluctuating Service Needs: Most SaaS customers have the power to start or end a given service as per their need. Hence, there is a high chance of services being added, removed or temporarily suspended – several times in a single billing cycle. A recurring billing solution can keep track of fluctuating service needs, without causing any inconvenience to you or your customers. With the capability to register or unregister new devices and track consumption, the solution can ensure precise and accurate billing at the end of every cycle.
- Enabling Flexible Billing: No two customers have identical needs; since each customer signs up for a different service bundle for a different duration, by choosing a different payment option and billing cycle, enabling flexible billing for each bundle is no easy feat. Add to it the need to present billing information in a simple, easy-to-understand format. A recurring billing solution can reconcile and manage recurring payments and offer the flexibility you need in receiving payments on a monthly, quarterly, semi-annual or annual basis.
- Managing payment Method Changes: In a recurring service model, payments are never one-time, nor are they uniform with respect to payment methods: your customers might attempt to pay for your services using a credit card, wire transfer or any other online payment method. For accurate billing, you need a system in place that can bill customers repeatedly and respond appropriately if the payment does not go through due to credit card expiration, upgrades or downgrades. A recurring billing solution can proactively detect card expiration and alert you so that you can take appropriate action, ensure subscription renewals are timely for your customers and restrict revenue leakage for your business.
- Complying with Complex Taxation Rules: In SaaS business models, taxation rules and policies tax are different for different communication services, different states, and with different exemptions and inclusions. Changing a subscription’s renewal billing amount and/or frequency requires timely consent, failing which you can incur substantial losses. Ensure that your billing solution has the capability to keep track of the numerous changes to tax rates, jurisdictional boundaries, and regulations. Using the real-time tax calculation feature, you should be able to simplify the taxation process, eliminate stress for the customer, and help your business keep up – while always ensuring 100% compliance.
- Effectively Managing the Billing Life Cycle: For most SaaS customers, upgrading or downgrading their subscription or changing the number of users at some point is common. This makes managing the billing life cycle complex for SaaS companies: while usage-based subscriptions require you to bill unique amounts with each renewal, manually-renewed subscriptions require advance customer notifications in order to limit churn and keep cash flowing. A recurring billing solution with life cycle management functionality can help you in deciding how these changes should be made available to customers; you can either enable your internal support team to make changes or let customers manage their subscriptions directly.
- Enabling Self-service Capabilities: Subscription-based businesses are often very complex, not just for SaaS companies, but also for customers who often lose their way in the maze of services. Driving better customer experiences is a critical aspect of any subscription-based business, but if they fail to reach out to your customer care executive and fail to get the information they need or get a solution to a problem they face, it goes without saying that the experience will be lackluster. A modern billing solution, with top-notch self-service capabilities, can not only offer customers access to important information, but also allow them to make the right purchase decisions, and troubleshoot problems on their own. A good self-service model can empower your customers, reduce dependency on staff, improve their satisfaction, and drive better efficiency.
- Efficiently Recognizing Revenue: Unlike in traditional business models, where recognizing revenue and accounting for it is rather straightforward, in a SaaS business model, each quarter’s performance is an amalgamation of activity from that quarter as well as the quarters preceding it. Recognizing revenue over time, while accounting for multiple contracts, billing methods, and subscription changes is not easy. You billing solution should be able to accurately identify the various contracts, effective dates and methods of payment, and group and aggregate data into a common revenue contract – allowing your business to grow and scale without impediments.
- Driving Accurate Analytics: Given the fact that you need to manage multiple subscription types, billing intervals, and quantities for customers spread across the world, tracking subscriber metrics is extremely important to meet their needs with more agility. A billing solution, with its built-in analytics engine, can provide the insights you need about new sign-ups, upgrades, and downgrades, cancellations, missed payments, failed subscribe attempts, etc. This can enable you to always be updated about the challenges and opportunities to better run your SaaS business.
Ensure Accurate Billing:
Running a subscription billing business comes with its own set of unique billing challenges. Since there are a lot of moving parts in a subscription business, what is required is the ability to handle the various aspects that come with subscription billing. A modern, tech-savvy recurring billing solution can efficiently manage multiple customers with multiple billing models, preferences, cycles, and currencies – and ensure on-time billing through precise billing methods.
A range of flexible billing methods can drive better customer satisfaction across the billing life cycle, and a single invoice for all products and services can drive better efficiency. You can select the billing frequency you need and bill customers when you want and how you want. And alerts and notifications about failed transactions can restrict revenue leakage. So, get a robust recurring billing solution on board and never worry about inaccurate billing, ever again!