One of the biggest administrative challenges for growing SaaS companies is invoicing. Ensuring that billing cycles are correct, payments are being made on time, that issues are being addressed swiftly, and delinquent accounts are identified can take a lot of time and energy.
Even in the simplest system, you still need to make sure that that all accounts/subscriptions that should be invoiced are, in fact, invoiced, and that you have the correct invoice data, one time fees, recurring fees and usage fees. Especially for lean startups, handling all these activities can be difficult, and when there perhaps is not a budget for an accounting team, or executive's attention is spread across other growth opportunities, it can feel like a burden.
But, for subscription model businesses, invoicing is crucial. It's how you ensure liquidity, count recurring revenue, and secure future sales. That's why it's so important to make sure you're doing your invoicing right.
Get your systems in order
In establishing your business and offerings, you often set a baseline for your packaging and pricing. Over time it's natural that you may change this baseline, as well as have different negotiated customer terms in some cases. With different terms for different customers, different lengths of contracts, or different billing cycles, you may wind up with disorganized chaos. This can lead to you missing renewals, and a lack of control over your invoicing. It's therefore crucial to ensure that the subscription data is structured with the detailed subscription, product and charge data available.
When you have established what your terms and contracts will be, and structured your subscription master data, you want to make sure your invoicing systems are managed properly. You should enforce systems so that billing can happen automatically, and that alerts and notifications are in place for delinquent accounts, or other important data points.
Too often, SaaS businesses do not have these systems in place, or they have systems for reporting and invoicing but they are unable to talk to each other. This leads to missed opportunities and when you are in a growth phase, it is crucial that you don't let any customers slip through the cracks.
Automate as much as possible
Billing should not be something that you spend a lot of manual time on, and should be automated as soon as possible. This also means that you should have corresponding reporting to go along with billing to understand data regarding customer usage and customer lifecycle stages.
Including invoicing in your automated workflows will enable you to have a more agile business. You should set up triggers for certain automations to happen, such as reminder emails sent for renewal periods or late payments, or customer service notifications when renewals don't occur.
By automating these practices, you can spend a lot more time on ensuring quality customer service and product management. These are the activities that will generate better relationships with your customers and can ensure that they will continue to renew contracts and be loyal customers.
When you ensure that you set up your invoicing to be done correctly, you can manage your subscription portfolio better. From the beginning you should be establishing your business model and what your terms and contracts will be to simplify your overall offerings and thus your invoicing system. By automating your invoicing, you can save time and resources that may be better used for growth activities, and ensuring that your customers are getting the quality service they need.
Want to learn more in depth tips about invoicing that are crucial for efficient subscription operations? Get access to our E-Book, The Five Steps of SaaS Success.