This year, instead of making a resolution after the year closes, get a head start on the New Year before January arrives. Make these five resolutions part of your subscription billing process now and you’ll be able to spend year end enjoying the holiday season instead of being chained to your desk.
- Collections Push: Contact your slow paying and non-paying accounts at least 30 days before year end. A polite but firm reminder is often very effective.
Tip: It's possible that part of the problem with slow or non-paying customers rests with you. Make it as easy as possible for customers to pay you. Offer multiple payment methods such as credit card, ACH, e-checks, etc.
- Reconcile Payments: Clean up ‘deadwood’ accounts. Check for unprocessed transactions, rejected charges, and/or chargebacks. If you’re using recurring billing through gateways, look for expiring credit cards too. Compare the list of your paying accounts with the list of ‘active’ accounts.
Tip: Send a ‘last chance’ email before closing the accounts to encourage customers to engage before it’s too late.
- Calculate Revenue for Accounting Purposes: Revenue from subscriptions is recognized over the life of the subscription, so the accounting ‘earned revenue’ is distinct from ‘cash collected’.
Example: A $120 annual subscription is recognized at $10 per month, even if the $120 is paid up front. Use journal entries to clean up Revenue, Deferred Revenue, and Cash.
- Monitor Subscription Metrics: Calculate the lifetime value of customers, churn rates and ARPU (average revenue per user). Use this information to update next year’s business plan, and brainstorm ideas for improving them.
- Review Systems and Processes: Automate these steps to avoid the year-end rush next year. Moving to an automated billing system is an important decision for your business because it can make a big impact on your bottom line. Automated billing eliminates the need for billing clerks, and this reduces the possibility of errors due to manual processing. It can also help to reduce passive churn, boost new customer registrations and lower the cost of customer acquisition.
With these simple resolutions you can make a huge difference, not only to your year-end processes but to your monthly, weekly, and even daily billing pain points.