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By Björn Schlingmann on November 02, 2021
 

Are you unable to retain customers? Find it difficult to identify upselling or cross selling opportunities? Is expanding your business to new geographies a struggle?

You are not alone. These are common issues faced by B2B subscription businesses owing to inefficient billing operations. Especially as your company scales and experiments with pricing, discounts, and add-ons, navigating billing intricacies becomes overwhelming.

And such complications are the enemy of execution. It leads to invoicing errors, lack of foresight and poor user experience that, in turn, generates high churn and low acquisition rates.

To understand the subscription billing complexities better, think of it as a leak in your roof that starts small. Ignore it and the leak increases in size, doing a lot more damage. And, by such time, the issue/hole is harder to fix.

So, as entrepreneur and author Jason Fried puts it, it's best not to allow it (the leak and complexity) to continue in the first place. To easily and quickly plug such metaphorical leaks, you need a holistic subscription hub -  a single source of truth for all your SaaS business needs.

But, first, let us explore the common pain points faced by your recurring revenue business:

  1. Inability to catch-up with our evolving business
  2. Disconnect between usage and billing
  3. Lack of operational efficiency
  4. Lack of actionable insights to maximize revenue
  5. Teething issues with international expansion
  6. No single source of truth

6 billing challenges faced by recurring revenue businesses

Within a recurring revenue model, billing changes are the only constant. Either customers are adding users, pausing a subscription, choosing a new feature upgrade, or your business is trying out something new in terms of product or pricing.

There are just so many moving pieces.

This explains why businesses struggle to track customer product usage and payment schedules, increase revenue forecast accuracy, improve billing efficiency, and reduce errors in bill runs.

We asked a few SaaS businesses what gets their goat when it comes to recurring billing and here is what they said:

1.   Inability to catch-up with our evolving business

Homegrown or old billing systems don't have the capacity to enable your business to respond to changes and different scenarios quickly. They are just not designed to handle complex recurring billing scenarios such as servicing more customers, prorated billing, or adapting to time-sensitive new pricing, discounts, trials etc.

This results in missed invoicing, missed renewals, and missed revenue growth opportunities.

Especially for businesses that have a wide range of products, subscription billing terms and packages, and launch new product options regularly, scalability is non-negotiable.

This is why it's important to build a billing and accounting tech stack that automates repetitive processes, removes developer dependencies, reduces manual errors, and accommodates unique customer and region-specific billing requirements.

2.   Disconnect between usage and billing

As of 2021, 39% of SaaS businesses follow a usage-based pricing and billing system. While the popularity of this model is growing amongst customers, keeping track of fluctuations in usage, for billing purposes, can be a tiresome and error-prone process.

Aggregating, organizing, and rating usage data for advanced B2B SaaS businesses is even more complex. After all, they have hundreds of customer accounts, each with several users, and different pricing/product variants.

A subscription management hub can help. It automatically identifies and alerts customers exceeding usage limits and bills them accordingly. Thus, the technology does away with freeloading users and reduces the time your accounting team spends on tracking usage metrics.

3.   Lack of operational efficiency

On one hand, SaaS subscription businesses enjoy a constant and reliable flow of revenue. But, on the other hand, your accounts team must be tired of creating, revising, and sending innumerable invoices and following up on payments month-on-month.

To ensure that these mundane processes continue without disruptions, many businesses end up growing the size of their finance team. This can hit your business bottom-line hard.To ensure man-power expenses don't increase unnecessarily, choose a subscription hub that eliminates manual billing functions. So, you can bill better and faster as your company grows. 

It can also help you automate reconciliation, harness built-in reports to recognize revenue, and fix issues of inaccurate collections by automatically identifying and fixing the source of error.

4.   Lack of actionable insights to maximize revenue

Many billing tools offer access to subscription metrics such as average revenue per user, CMRR, churn, recurring profit margins, etc.

But, it typically does not come with enough context to turn it into actionable insights. It doesn't answer questions like:

  1. Which product bundle is delivering maximum new customers?
  2. Are delayed payments caused due to customer confusion, business handicaps or some other issue?
  3. What happens if you increase prices by 10%?

So, what you need is a subscription management platform, featuring a customizable dashboard, that offers end-to-end business visibility. It should also deliver need-specific metric analysis and reports to help identify revenue blindspots and maximizing opportunities.

5.   Teething issues with international expansion

As your business expands to new geographies, there is a struggle to bill clients in different currencies, using different payment methods. At the same time, you need to meet local tax requirements and comply with international accounting standards.

Hence, choose a recurring billing software that offers multi-currency support, handles multiple payment gateways, and automates country-specific tax computations. To this end, Younium provides a wide range of integrations -  TaxJar for automating tax calculations and aiia’s open banking interface that enables secure payments to 2600+ European banks.

6.   No single source of truth

In most SaaS businesses, the finance, sales, reporting and analytics, marketing, and customer support teams have scores of billing-related spreadsheets to manage. For example, there will be one document that tracks accounts receivables, another for aging payments or subscriber information, and yet another for revenue recognition.

Imagine, you add a new product, or a few customers decide to downgrade to the basic solution, edits will have to be painstakingly made in so many of these excel sheets. That’s inefficient!

Also, in siloed systems, because information sharing doesn't happen freely, you face issues such as data redundancies, inconsistencies, access risks, and lack of version control.

To avoid the resultant spreadsheet nightmare, integrate your billing and ERP solutions with Younium. This helps keep subscription and invoicing master data (updated in real-time) in the same system to save business time and efforts, and reduce risk of errors.

 Ultimately, whether it is creating a bill run or billing report, you won't have to manually extract data from multiple sources.

If your goal is to “make more money, more consistently” with the recurring revenue model, it is advisable to invest in one tool that empowers you to manage the full subscription lifecycle.

Younium supports all your billing requirements, generates accurate reports & insights, and automates financial processes for advanced subscription models.

See Younium in action in our light demo video and take a deeper look how to harmonize your subscription processes.

 

Published by Björn Schlingmann November 2, 2021

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