If SaaS business leaders were handed bundles of money to use on any aspect of their businesses, most—and potentially all—would happily spend it on growth.
Investing that same cash in a slicker fintech setup, on the other hand? Yawn.
“Why would I pay to have financial software do something that my finance team is already handling? I could be using that money to get more customers or improve my product instead,” you reason.
This line of thinking might hold up in the early days…but not for long.
As your business scales and matures, you reach a point at which managing key parts of your operations like subscriptions and your accounts receivable processes by hand is simply slowing you down and impacting your cash flow.
When this happens, it’s time to digitally transform your accounts receivable operations with automation.
Let’s take a look at seven SaaS billing processes that modern accounts receivable software can help automate for SaaS businesses like yours.
1. Customer registration.
Instead of having a sales or customer support representative delve into data entry, order management, and processing a new customer’s registration manually, automate the process. By doing so, the customer can start using your product right away. And less wait time equals quicker time to value.
Modern accounts receivable software solutions offer hosted registration pages for new customers to do all of the following themselves:
- choose an appropriate subscription plan
- configure plan quantities or add-ons
- fill in pertinent customer information, and
- provide their billing details.
But ensure the software solution you choose allows for white-labeling of your registration pages. Your customers should have a seamless experience with your brand throughout the entire signup process. They shouldn’t be getting distracted by the realization that you’re using such-and-such business’s software to register them.
2. Recurring invoicing.
To collect money from your subscription customers, you need to send them their invoices. Needless to say, the invoice will need to accurately reflect information such as the:
- customer’s billing information
- plan(s) that have been subscribed to (factoring in any plan upgrades or downgrades, or new add-ons), and
- amounts payable.
If your team has been manually typing up invoices from scratch, you’ll be glad to know modern accounts receivable software takes this load off their shoulders.
When the software detects it’s time to bill a customer, it automatically generates an invoice based on the customer’s current subscription plan and details.
This not only saves your team hours in billing and invoice prep time—to the tune of 40-80 hours a week—but also reduces the risk of making subscription billing blunders that could lead to revenue leakage and decreased customer confidence in your business.
Automation helps you avoid negative user reviews while giving you greater confidence in your entire accounts receivable process.
3. Recurring payment collections.
Want to be paid net-zero? With the right SaaS billing system, you can—automatically.
Modern accounts receivable software solutions hold credit card details on file in secure vaults—in accordance with PCI standards—and charge them as soon as payment is due.
No more waiting around to be paid or having to manually check and confirm receipt of payments. Instead, watch as your invoices are paid immediately and cash collection happens seamlessly with minimal effort on your part!
That said, a customer’s payment may not go through the first time. While situations like this call for dunning management procedures, this doesn’t mean you’ll have to manually follow up with your customers just yet.
Set up your accounts receivable software to automatically:
- notify customers to take action on their failed payment, as well as
- retry their credit cards to help them avoid having their subscriptions move into poor standing.
4. GAAP-compliant revenue recognition.
Accurate revenue recognition is an important part of running a compliant SaaS subscription business. However, keeping track of when you can recognize the cash you’ve received as revenue can be tricky.
This is especially true if your customers have different start and end dates for their subscriptions (which they likely will), varying revenue recognition periods, and are able to make one-time purchases in addition to recurring subscriptions.
When you're shopping around for your ideal accounts receivable software solution, check that it can automatically recognize your revenue based on pre-configured revenue recognition schedules.
For example, you may need to recognize:
- a piece of hardware immediately,
- a setup fee over the lifetime of a contract, or
- an annual plan on a monthly basis.
Whatever the case, the right SaaS billing software will make your revenue recognition a breeze.
5. SaaS subscription management.
From pricing updates to plan migrations, hierarchy SaaS billing, and more, there’s a lot to be done when managing customers' subscriptions.
While some processes are necessarily more high-touch in nature, such as negotiating renewals, others easily can—and should—be automated with accounts receivable software.
Here are just a handful of ideas to get you excited about the possibilities.
- Bake price uplifts into your payment schedules. Configure your price uplifts once and forget about them, while being assured they’ll happen right on time. Automating the process of farming your customer base has a huge impact on MRR growth.
- Process plan migrations effortlessly. Does a customer want to upgrade or downgrade, switch to monthly to annual billing, or change something else about a plan? Set up a self-service portal so your customers can do exactly that without having to contact support.
- Link payment methods from parent accounts to child accounts. For customers with hierarchical parent-child-type relationships with their other divisions, branches, or locations, the parent customer may want to use the same payment method for all associated child accounts. Assign these child accounts to the parent and watch as their payment methods are automatically synced. Transactions from all child accounts should also be able to be rolled up into one comprehensive invoice on the parent.
6. Subscription and revenue reporting.
Importing your data into spreadsheets to manually create reports can be downright painful.
But reports play a crucial role in helping you understand your SaaS business’s cash flow and overall financial health. Without a bird’s eye view of how your business is doing, you won’t know the success of your strategies so far, or what needs to be changed.
Reporting is an area where automated accounts receivable software solutions excel.
As your regular SaaS billing processes feed data into the software, it generates detailed sales, cash, revenue, and monthly recurring revenue reports in real-time.
These reports aren’t static, either.
If you need to change the time period, activation cohort, or other dimensions of your reports, simply adjust your report settings. Then watch as your reports are updated on the fly, ready to be re-analyzed.
7. Month-end close.
When the end of the month rolls around, it’s time to close out your books and finalize your finances. Among other processes, this means checking that all accounts have been reconciled, entering closing entries, and finally planning for the month ahead.
However, manually recording your transactions throughout the month creates a lot of room for human error. And if you discover your books are unbalanced by even just a few dollars, this could mean spending hours trying to identify and fix the rogue transaction(s).
Accounts receivable software built on a double-entry accounting core can make headaches like this a thing of the past for organizations.
Whenever your accounts receivable software logs a new transaction, it will make the appropriate debit and credit accounting entries on your behalf. And all this happens immediately in the background, without you having to worry about whether you’re posting the transaction to the right ledger.
The result is your books will be perfectly balanced, no matter how complex your transactions are, so you can sync your numbers to your ERP or accounting software and perform your month-end close with ease.
Automate SaaS billing with comprehensive accounts receivable software
As you can see, there are a lot of things the right accounts receivable software can help automate for B2C and B2B companies in the SaaS space.
Imagine all the time and money you can save by outsourcing these tasks to a digitally transformative SaaS billing solution.
And don’t let such savings sit idle, either. Reinvest your cash flow resources into scaling your business even further!
Your trusty accounts receivable software will be there to support your financial growth every step of the way, as you take your business to greater heights.