Automating is essential for any business looking to grow. Digital workflows and machine learning make it easier to automate in today’s connected world. They streamline business and transaction processes and allow for more productivity. Automation has been achieved in sales, supply chain management, factory assembly lines, and delivery. Many companies are not adept at automating financial processes, such as billing. Automated billing is often a requirement to optimize your business growth.
Automated billing is vital for managing cash flow. However, it is not just about generating invoices. You must ensure that your billing system can access all relevant billing data, even from different sources. This mission-critical, often overlooked activity is known as “mediation”, and it is crucial to stop revenue leakage. The process includes revenue recognition, collection, payments, agreement management, reporting, and more. Companies must integrate with other business processes to create a foundation for billing software that promote growth. Automation allows you to have the flexibility you need to create new revenue models rather than writing more code.
Billing Automation: Why It Matters
Digital growth is driven by a combination of subscriptions, one-time purchases, and usage-based consumption pricing. Without accurate, timely, and consistent automated billing that is timely and consistent and makes cash flow more predictable, you cannot support this combination of pricing models.
Automating financials makes it easier to test new pricing and business models. It’s easy to modify pricing and service models to test and fine-tune new business ideas and drive growth with the right automated systems. According to Manifesto Growth Architects, 70% believe that membership and subscription models are the way forward for further business growth.
Hosted services make it easy to automate and scale operations during the crisis, as COVID-19 has proven. Cloud platforms can handle increasing transaction volumes and adapt to changing workloads due to billing models. Cloud platforms make it easier for analysts to combine data.
Automation is the only way to solve common or usage-based pricing problems. Automating revenue recognition is the best way to manage multiple billing models such as subscriptions and usage-based billing. Automating allows you to set up rules that standardize revenue recognition. It will allow you to easily track your audit trail and simplify regulatory compliance, such as service fees and payments.
When dealing with complicated pricing models, manual processes don’t scale. Integrating business processes into a financial hub will allow you to track money flow and identify potential opportunities.
How to Automate Recurring Billing
Before automating billing can achieve, it is important to start by modeling your pricing plans. There are many recurring revenue models. Let’s take as an example the three most popular SaaS pricing models.
1. Flat-Rate Subscription Pricing is the simplest approach. It establishes one price for services. This price is often charged monthly, but it is billed annually. This pricing model is “all you can eat”, so it doesn’t require tracking usage.
2. Usage-Based Pricing is a pricing model that charges per usage or volume. This pricing model has the advantage of lowering entry barriers and not allowing heavy users to take advantage of fixed pricing.
3. Tiered, Usage-Based Pricing: This pricing strategy establishes fees at different levels depending on usage. This strategy has two advantages: it leaves less revenue and upselling.
To give your customers more options and increase revenue, you might consider a strategy that incorporates multiple pricing models. These billing models have nuances, such as pricing bundles and discounts, cost-plus pricing, and so on. You can improve your pricing models by creating them in advance always to be ahead of the rest. When creating new models, anticipate market trends and find the best pricing solution that matches those trends.
Once you have established your pricing models, it is time to address the other elements required for automated billing.
- Plan your workflow. It includes data exchanges between departments, business applications, email notifications, and calls to external service providers. You will need to set up self-managed opt-in systems and trial registration as part of your workflow.
- Provide payment options such as mobile, bank transfer and credit cards.
- Create a system to generate invoices and receive payments automatically. It includes automatic payment retries and dunning, as well as collections.
Although this description of automating billing seems very simplified, these are the key elements that you will need to change your billing processes. The billing model becomes more complex as you add new variables such as scalable pricing and third-party services. It is why it’s important to have the ability to set up your automated billing system rather than trying to create it yourself.
You can test new business models, methods, and growth strategies with the right automated billing infrastructure. Billing shouldn’t be a hindrance to your business’s success.