Is It Time to Add Recurring Billing Software to Your SaaS Fintech Stack?

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In 2007, two guys were struggling to pay the rent in their San Francisco apartment. They had a little extra floor space, so they started renting out an air mattress with a promise of breakfast the next morning.

Designers by trade, Brian Chesky and Joe Gebbia created a website to market their $80 air mattress rentals. Not only did they successfully fill the floor space, but they almost immediately started receiving emails asking when they’d begin offering global destinations.

Fast forward to 2020, Airbnb—now a household name and a company valued at over $30 billion—grew using some interesting strategies. For example, one of its most notable ‘growth hacks’ was developing an integration with Craigslist so its users could automatically reach a larger customer base.

Like many online businesses, Airbnb’s humble beginnings started with a novel idea backed with homegrown expertise. However, as SaaS businesses grow, continually building systems internally can start to inhibit growth. Why? Because it eats up valuable resources and takes the focus away from true core objectives.

The high costs of creating and maintaining legacy systems

SaaS businesses are constantly on the move, keeping products fresh with new features and making strategic moves to stay ahead of the competition. But if they’re continually putting a patch on cracks in their legacy systems—or even building solutions from scratch to meet their needs—this can be counterproductive, particularly when these businesses are looking to scale.

According to figures by Brainspire—a firm specializing in custom software development—the software development life cycle (SDLC) takes from 4 to 12 months. These figures assume everything runs according to plan, but things don’t always go as planned. In fact, that timeline is often extended for as many as 85% of businesses.

Imagine having your development team down for one-third to a full year creating a system to support the business end of your SaaS company? If they were freed up to focus on the products or services you sell, they could be actively addressing your customers’ needs instead.

It’s more than a time investment, though. Maintaining an outdated legacy system can erode budgets, making up as much as 80% of overall IT budgets.

It’s hard to put an actual number on how much money is lost in the business sector, but the U.S. government reported in 2019 that it planned to spend more than $90B on IT—with the majority of budgets going to operating and maintaining existing systems. These systems are as much as 51 years old.  

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Engaging cloud-based SaaS providers

Businesses are electing to pull away from on-premise software and look to cloud-based service providers to help build out their technology stacks and digitally transform. Tapping into the strengths of external providers that focus solely on one area of expertise—but that can also integrate with your entire business infrastructure—puts valuable time back into your business.

For example, if your business’s marketing department uses a recurring email campaign strategy, it might be worthwhile to research companies that help streamline the process, such as Mailchimp.

Or, consider an internal customer management system (CMS) platform. A legacy system often requires technological hand-holding to keep it up to date and chugging along—never mind running efficiently.

Other business functions that are often relegated to cloud-based SaaS providers include:

  • human resources
  • customer service
  • web content, and
  • accounting.

SaaS businesses should also be looking at billing-related fintech options to optimize their business functions. Many startups, for example, rely on basic software and spreadsheet-dependent billing systems requiring monthly manual invoice processing. However, as a business starts to scale, this solution becomes unwieldy and prone to costly human errors.

By implementing comprehensive recurring billing software, SaaS businesses can automate and streamline the entire billing process. These set-it-and-forget-it systems are a popular strategy to simplify the billing process for businesses.

After initially loading your data into the system and setting up your catalog and specific plan and subscription settings, the billing platform automatically generates and electronically sends out invoices on a recurring schedule.

Select a subscription billing platform that also has a subscription management component. This will provide a seamless bridge between your SaaS business and its customers. For example, self-service portals are a key feature that empower customers to make changes to their subscriptions without having to make time-consuming calls to a customer service department.

Because billing systems produce accurate, real-time data, they also provide key metrics such as monthly recurring revenue (MRR), customer churn rates, and earned/deferred income.

Armed with this data, businesses have a true sense of their overall health, and can use the information to make critical business decisions that impact their future.

Building out your technology stack with recurring billing software

Given the different solutions to enhance your business processes, it’s important to determine what areas of your business would benefit most from transformation from external systems. There are several elements to consider:

1. What are your areas for improvement?

Most businesses have strengths and weaknesses. Maybe your business is amazing at developing specialty software, but you struggle to come up with the right content and graphics to put in the platform. This might be an area to consider bringing in additional help.

Or maybe your SaaS business is in the Internet of Things (IoT) realm; say, you work with companies that require fleet management. If you bill for products, such as GPS devices, and also for usage, such as miles traveled, you’re looking at complex billing every month. Customers expect to be invoiced on time and with accuracy. A legacy system is unlikely to deliver since they lack recurring billing agility for IoT.

If your invoices generate customer complaints, it may be time to explore adding efficient recurring billing software to your technology stack.

2. Are you poised for growth?

Your business may be on the cusp of expanding and bringing on more customers. But are your current processes going to be able to support scaling? Or does growing your customer base mean your finance department is going to struggle to keep up? It may be time for a digital transformation around your fintech stack.

It’s critical that your processes and infrastructure are able to support growth, or you risk customer dissatisfaction, which invariably leads to churn.

3. Does your business take advantage of monetization opportunities?

Customer demands are continually changing, and SaaS businesses need to be able to respond quickly by developing and deploying solutions.

A decade ago, it wasn’t surprising if it took months to develop and launch a new product. However, the landscape has changed. Competitive businesses have the agility to launch products in a matter of weeks, or less.

In order to be poised for rapid deployment, your entire business needs to work together to support the business as a whole. This includes marketing, sales, billing, customer support, etc. Look at what areas might struggle while your business develops a monetizing strategy, such as the flexibility of your catalog and pricing strategy. And this needs to be executed without distracting the IT teams from their main areas of focus.

An adaptive billing platform can deliver on these requirements with relatively little effort.

 

Building a successful business isn't just about creating a product to fill a market need. And it’s not just about edging out the competition or growing your customer base either.

It’s about looking at your business as a whole, examining all the pieces, and making informed decisions to digitally transform and optimize your processes and build the capacity to scale with success.

What areas of your business infrastructure need strengthening?

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Tags: Subscription Billing Recurring Billing

Peter Mackie

Peter is the VP of Sales at Fusebill. He is a senior business executive with a demonstrated history of working in the information technology and services industry. Peter is skilled in negotiation, business planning, sales, contact centers, and management.

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