With people stepping out of their homes less often over the past year and a half, online orders have shot up.
Globally, consumers spent nearly $4.3 trillion online in 2020, which accounted for more than 20% of all retail sales. That was up from under $3.5 trillion spent in 2019 or around 16% of all retail sales.
The transportation and logistics businesses that help deliver goods to warehouses, storefronts, and doorsteps all need ways to track and optimize their vehicle fleets’ routes, fuel consumption, driver schedules, and more.
And this means there’s another industry that’s seeing growth despite the ongoing pandemic: telematics.
A report by market research firm IMARC Group valued the global commercial telematics market at $40.3 billion in 2020, and you can expect the market to further experience strong growth in the next five years.
If you’re running a telematics business that deals in internet of things (IoT) connected devices and related subscription services, you’ll be looking to grab a slice of this pie for yourself.
But is your business ready to support rapid growth—especially from an IoT billing perspective? It’s easy to underestimate the impact your billing process has on the success of your business, but the reality is any challenges and inefficiencies here can block you from scaling.
Here are four IoT billing must-haves to help your telematics business leverage the industry boom.
1. Scalable IoT billing to manage a growing base of subscription telematics customers
If your telematics business has a hundred or so customers, you may be able to get away with managing their connected devices and service subscriptions in spreadsheets, manually creating and sending out invoices. It’s not great, but it’s doable.
But as your customer base grows and their numbers of connected devices and service subscriptions swell along with them, these methods quickly start to create friction.
At a certain point of customer growth, you can no longer be generating invoices for each and every single one of them by hand. Even with a team of finance staff available, this isn’t a good use of time.
And of course, the more manual billing and subscription management work there is, the more likely errors will crop up—which isn’t a good look for your business.
Instead, you’ll need to transform your process with an automated IoT billing solution—one that can manage a large (and growing) volume of devices and subscriptions without a hitch. It needs to automate key processes, such as invoicing and automated collections on the right dates and for the right amounts so you can set it and forget it.
Read how EnVue Telematics reduced its lengthy billing process by 60% and gained greater billing automation, accuracy, and clarity, all while eliminating some revenue leakage in the process.
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2. Support for hybrid billing and flexible pricing
Telematics businesses face additional complexity when it comes to their billing because not only do they deal in subscription services, but also in physical goods.
Managing the sale of simple inventory items such as wires and connectors is easy enough. But if the sale involves unique serialized connected devices then you’ll need to be able to tag relevant serial numbers to the right customers in your billing system. You’ll also need to be able to bill for these devices and inventory items as needed in conjunction with billing for those associated connected services.
Do your customers lease your telematics devices? This could involve charging customers:
- a one-time installation fee, followed by
- a recurring monthly subscription fee for the duration of the lease, as well as
- a potential usage or overage fee as needed.
All these variables result in complicated fee arrangements that call for hybrid billing support.
In other words, your IoT billing solution must be able to bill for:
- fixed fees
- subscription fees, and
- usage-based fees.
As you run your telematics business, you may want to offer custom pricing to certain customers, limited-time discounts, or even peak period surcharges.
In this regard, your billing solution should be flexible enough to accommodate pricing model variations in a wide range of situations—without you having to create entirely new products or plans that apply to only a few customers, or for only a limited time.
3. Hyper-accurate billing to prevent revenue leakage
If you thought supporting hybrid billing was tricky enough, just wait.
A customer might acquire multiple connected devices from you on different dates, and these devices may also be running more than one subscription service at once—such as one for base monitoring and another for geolocation services. These services may all also have their own billing start and end dates.
And at times, the devices may be:
- turned off and on as needed, or
- transferred between different vehicles in a fleet, creating usage and billing changes you’ll need to account for.
Managing all these different complexities can be a huge chore if you’re manually billing customers. As a result, you may be tempted to cut corners.
For example, you might decide to let customers use your services as soon as their devices are connected, but bill for these services only at the start of the next billing period that syncs up with the dates of their other subscriptions.
This may be a more convenient way of billing customers. But such convenience comes at a cost as you’re effectively letting customers enjoy your services for free in the beginning.
Over time, forfeiting this revenue severely impacts your business’s bottom line. This is especially true if you incur expenses related to the service during that period when customers are using it without yet paying.
The better solution is to use a hyper-accurate IoT billing system that effortlessly keeps track of and prorates telematics subscriptions, no matter when they start and end. Your billing system should also be able to keep track of device usage changes and serialized device transfers in real time, and then bill customers accordingly. This ensures your customers are charged for exactly what they use.
Read more here about how an adaptive billing solution can boost your telematics business’s bottom line.
4. Accurate revenue recognition
While your telematics business may collect a substantial amount of cash up front, you may not be able to recognize this as revenue right away.
Instead, you’ll have to wait until customers start receiving value from your services, following the ASC 606 revenue recognition standard. Depending on how your services are being consumed, this could mean recognizing your revenue daily or at some other interval for the entire duration of your customers’ subscriptions.
Needless to say, doing this manually, day-in and day-out, for hundreds or thousands of customers opens up a lot of room for human error. And not only can this paint a misleading picture of your business’s financial health, but criminal liability could also result if the authorities perceive inaccurate revenue recognition as an attempt at fraud. And as your business grows, so will the scrutiny from your stakeholders and potential investors.
To ensure your financial reports continue to pass muster, automate your revenue recognition processes with an IoT billing system that can recognize earned and deferred revenue accurately, automatically, and with ease.
The telematics industry is transforming—will your IoT billing system be able to keep up?
Offering telematics services poses many unique IoT billing challenges. From being able to support hybrid pricing to correctly billing customers for multiple subscriptions on multiple connected devices, as well as ensuring accurate recognition of revenue.
The magnitudes of these challenges will only increase as your telematics business gains more customers, too. This means you can’t rely on a manual or legacy billing system if you want to grow along with the booming telematics industry.
The time is ripe for investing in a modern, scalable IoT billing solution that automates your billing and revenue recognition processes with a high degree of accuracy at scale.
The road ahead for the telematics industry is bright. Will your business be equipped with digitally transformed operations that can handle the projected market growth? Or will your competitors leave you in the dust?