For most businesses, a digital transformation has two main goals: increase efficiency and reduce costs.
It’s about moving away from clunky manual processes and strategically adding scalable tech solutions that enhance end-to-end business operations and create new opportunities to drive business growth.
Revenue operations, or RevOps, has been a key area for digital transformation in recent years. Cloud-based SaaS solutions in marketing, sales, and customer success abound.
Despite that, the evolution of back-office financial functions like accounts receivable are often left out of the digital transformation conversation. But to fully transform and support a business’s revenue operations, a modern, agile billing engine is a crucial piece of the puzzle.
Driving leads and sales is great, but you need to have reliable cash flow to grow your business.
The adoption of a modern subscription billing platform does more than just automate your billing—it’s a holistic subscription management solution that reduces the repetitive workload on your finance team, improves your business’s customer experience and overall collections assurance, and a whole lot more.
Here are seven things that happen when you integrate a subscription billing platform with the rest of your tech stack.
1. You optimize internal processes.
The right subscription billing solution isn’t a standalone piece of software—it integrates with other solutions in your tech stack, such as your:
- CRM software
- payment gateway
- taxation software
- accounting or ERP platform
- fleet management or other IoT solution, and even
- your own software product.
Simply switching from a manual invoicing process to an automated one can provide a huge gain in efficiency, but the key to maximizing that gain is to take advantage of the integrations your billing software offers.
We’ve seen businesses reduce their time spent billing by as much as 90%.
And the reasoning is simple—the more repetitive work your billing team can pass off to technology, the more time they can spend working on strategic projects.
2. You gain access to cleaner data.
According to a report by McAfee, the average business runs approximately 464 different software applications. If none of those platforms integrate with one other, you could find yourself in a mess of inaccurate data.
Humans make errors. If you’re relying on your employees to manually transfer data from platform A to platform B and then to platforms C and D, they may:
- copy data over incorrectly, or
- forget to transfer something altogether.
This leaves you with disconnected data and no way of knowing which version of the information is accurate.
When it comes to your financial and customer data, having a central piece of software connecting your CRM, ERP, and any industry-specific solutions you use enables you to seamlessly sync customer and financial data from one platform to the others. This virtually eliminates the risk of human error.
In fact, many businesses use their subscription billing software not only as their financial system of record but also as their single source of truth (SSOT) for accounts receivable data.
3. You improve the subscription customer experience.
Working with clean data also benefits your subscription customers—when they can trust you’re charging them accurately every time, they’ll have a better experience with your business (and be more likely to say ‘yes’ around renewal time).
Integrating your recurring billing systems with the right payment gateways can help improve the customer experience, too, especially for those that are out-of-country.
- When selling to international customers, it’s simpler for you to charge them in your own currency—especially if your payment gateway doesn’t accept multiple currencies.
- But up to 50% of customers will choose not to do business with a company that charges them in a currency other than their own.
Integrating your recurring billing software with a payment gateway that allows you to accept recurring payments in other currencies helps international customers have a more localized payment experience without the added expense of conversion fees.
4. You improve your financial audit trail.
SaaS businesses can generate over 1 million journal entries in a month. So if your business handles its revenue recognition manually, it may be impossible to stay on top of it.
Even though a subscriber pays at the beginning of a billing cycle, your business can’t recognize this revenue until services have been rendered—so this payment should only be recognized as revenue incrementally for the duration of the billing period.
If you’re working with hundreds of subscribers on multiple different plans on different billing cycles, you can see how this could create a mess.
Subscription revenue recognition is complicated and the consequences of getting it wrong can result in some pretty big penalties, such as fines or worse. In fact, around 60% of businesses investigated for fraud by the SEC in the last decade had inaccurately recognized revenue.
Whether or not you take advantage of any integrations, your ledger-backed recurring billing system automates the revenue recognition process for you. But integration with your accounting software or ERP gives you the added bonus of streamlining your month-end close process because your billing platform can feed these numbers back into the ERP.
Revenue is recognized accurately every time, it doesn’t require any work from your finance team, and it puts you in a good spot in the event of a surprise audit.
5. Your recurring taxation becomes simpler.
Another difficult component of running a subscription business: taxes.
Depending on the number of tax jurisdictions you do business in—and in the U.S., each zip code could have a different taxation rate—this could easily get convoluted. Not only that, but taxes and tax rules can change over time. If you’re not staying on top of this, you may be undercharging taxes, meaning your business needs to make up the difference.
But you can integrate your subscription management platform with your favorite tax software, such as Avalara or Digital River, to automate and simplify this, too. This integration allows you to automate the correct calculation, collection, and remittance of taxes, no matter where you’re selling.
It’s another component of automation and tech stack integration that reduces errors, workload, and headaches.
6. You create consequences for unpaid invoices.
Many modern subscription billing platforms offer an API and webhooks you can use to integrate with any software you’d like—including your own.
When it’s able to ‘talk to’ your software product, your billing automation platform can trigger responses in your software based on billing activity.
- Let’s say you have a customer whose credit card expired, causing them to miss a payment. You could call or email them, hoping they respond and take action.
- Or, perhaps more effectively, you could have your billing software trigger your own software to disable that customer’s account access until they make their next payment, at which point their access is restored.
By automating these consequences, you’ve closed off one common avenue of revenue leakage, without requiring any manual work from your team.
7. You easily & accurately generate usage-based charges.
If your subscription business charges its customers based on usage and your billing process is largely manual, your finance team is probably:
- running a couple of months behind, to give themselves enough time to create the invoices (i.e., a customer may only receive its June invoice in September)
- dealing with a lot of aging accounts receivables as a result, since customers may not want to pay for charges accrued so long ago, and
- charging customers more of a usage range rather than a true per-unit cost, because the latter is tougher to stay on top of when working by hand.
But when your own software product communicates with your integrated subscription billing platform via API, the billing software can see exactly how much each customer is using and calculate charges accordingly—making the usage-based billing process simple, easy, and automated.
A subscription billing platform is vital for a more efficient tech stack and business
Simply having the ability to automate the repetitive tasks involved in subscription billing can create huge efficiencies for your business when compared to a manual billing process. But that’s just the beginning of the many efficiencies a subscription billing platform can bring.
The key to maximizing this is taking advantage of the integrations in your billing software—whether through its native integrations or by leveraging its API capabilities.
The more systems you can integrate with your recurring billing software, the more your business saves time and money, improves the customer experience, and benefits from cleaner customer and financial records. Your technology ecosystem becomes more agile and more able to support continued growth and innovation: exactly what a digital transformation should accomplish.
Now that’s efficient business.