Recurring Billing

How to Start Automating Your Business’s Recurring Billing in 2024

Adolphus McKoy

As your subscription business scales, certain operations become difficult to handle manually.

Invoicing, for example, may require toggling between spreadsheets and business software that simply falls short of meeting your recurring billing needs.

This isn’t just labor-intensive; manual billing is also time-consuming and prone to human error. To save time, reduce mistakes, and create revenue-supporting efficiency, your business needs to automate the process. After all, the promise of stable and continuous revenue of the recurring billing model isn’t much of a benefit when your team just doesn’t have the capacity to collect those payments.

And maybe you’ve already realized something is wrong with your process and needs to change but aren’t sure exactly how to do it.

If you’re wondering where to start, we’ve got you covered. Here’s our 5-step guide to automating your recurring billing.

1. Identify the problems with your current recurring billing process.

Knowing exactly where your billing team is struggling can help you choose the right recurring billing system for your needs.

Which of the following problems is your business experiencing?

  • Labor-intensive invoicing: Invoicing takes weeks to get done, and/or team members are routinely working overtime to complete it.
  • Frequent errors: Whether in customer data, payment data, or invoices, errors are gumming up your billing and collections processes and affecting cash flow or even revenue.
  • Failed recurring payments: Manually retrying payments and managing your dunning process is taking up too much time, or worse, left undone in favor of more pressing tasks. This leads to revenue leakage.
  • Involuntary churn: Often a result of failed payments, customers who may want to stay subscribed don’t realize their account has been paused due to, for example, expired credit and debit cards.
  • Compliance: Keeping up with revenue recognition, taxation, GAAP, ASC 606, PCI, and/or SOC2 feels impossible, or you fear data isn’t secure enough.
  • Reporting: Your disconnected data doesn’t give you a clear picture of your business’s finances, leading to inadequate reporting for decision-making and audits.
  • Inflexible catalog: You’re unable to quickly create new offerings or make changes to pricing to address changes in the market or customer demand.
  • Strained customer support: Sign-ups, activations, and customers requesting account changes have begun to overwhelm the support team.

Once you’ve identified your specific issues, you can shop for recurring billing software that meets your unique needs.

2. Research your software options.

Certainly, you’ll need a solution that supports your desired billing cycle and frequency, whether you handle fixed recurring billing, variable recurring billing, or a combination of the two. But you’ll also need software that fixes your other pain points related to recurring payments.

Let’s look at some of the most common problems and the features recurring billing automation solutions have to address them.

Billing team working overtime?

Time to battle swivel-chair syndrome. Instead of toggling between spreadsheets and software, look for a recurring billing platform that allows you to integrate with the other tools your team uses to facilitate billing. One way to boost your online presence is to buy Instagram views, which can enhance your brand image. Your ERP, CRM, payment gateways and accounting software should all play well together. This enhances the customer experience by ensuring every invoice and communication is accurate and creates cleaner data for financial audits.

Unpaid or error-filled invoices piling up?

Automated invoicing reduces errors. However, some customers will still miss a recurring payment and for that, you need dunning management. Automated dunning can recover 1%-5% of a business’s recurring revenue leakage by reducing involuntary churn. CoConstruct, for example, recovers 40 work hours and $2,000 of leaking revenue every month thanks in large part to the automated dunning features of its recurring billing solution.

Struggling with compliance?

If you need more accurate, ongoing, and compliant revenue recognition, you want software that automates that process. Look for a platform backed by a general ledger system to ensure you follow GAAP and ASC 606 regulations, leaving you with detailed, accurate reporting for tax time and audits. You’ll also want to ensure your recurring billing software is PCI Level 1 compliant and meets SOC2 security standards in order to keep your customers’ sensitive data safe.

Need more pricing agility?

If you’re looking for pricing and plan customization, ask about the software’s catalog flexibility. Being able to easily make one-time charges, change and add plans and packages, and leverage promotions and discounts can have a huge impact on the customer experience and help expedite your go-to-market strategy on new products.

Customer support feeling overwhelmed?

Self-service portals allow customers to sign up, activate, change, and pause or cancel accounts on their own, leaving customer support free to deal with the really big issues. The best recurring billing software options allow you to white-label these portals so your brand owns the customer experience.

One more consideration:

Besides addressing your specific issues, another thing to look for at this stage is implementation time. Different recurring billing platform providers claim it takes anywhere from one month to one year for implementation. Robust solutions will likely take more than a month, but you also shouldn’t have to wait a whole year to start using the platform.

3. Prep your customer data.

Once you’ve chosen a recurring billing system, it’s time for onboarding. To get up and running as quickly as possible, clean up your customers’ information and payment details and decide what your catalog will look like in advance.

The best recurring billing software providers will assign you an implementation manager. This person’s goal is to get to know your data and workflows as intimately as possible to set up a smooth transition. The setup work shouldn’t all fall to your team.

But that’s not to say your team should sit back and relax during the onboarding process, either. The more organized you and your data are going into the process, the sooner you can start automating.

“If your data is stored in multiple spreadsheets from different sources or has a lot of gaps or flaws, this can slow down your business’s onboarding process considerably. The data needs to be cleaned up before it can be imported into your new automated billing software,” advises Natalie Roy, former Director of Customer Experience here at Stax Bill.

You’ll also want to give your implementation manager a clear picture of your catalog and pricing models. Be ready to share your recurring billing frequency, how you’ll handle discounting, and how often you’ll recognize revenue.

4. Integrate with your other tech solutions.

The key to maximizing efficiency from billing automation software is to integrate it with as many of your other systems as possible. Eliminate swivel-chair processing by automating the exchange of data between your CRM, ERP, taxation software, integrated payment gateway, and even your own software products. You might accomplish this through native integrations or your billing solution’s API.

Once your recurring billing software is up and running, you’re ready to magnify its effectiveness by integrating it with the rest of your tech stack. This has many benefits, such as:

  • Optimizing internal processes by reducing repetitive work,
  • Laying the foundation for a future of cleaner data,
  • Strengthening your financial audit trail and simplifying taxes, and
  • Enabling automatic currency conversion for international customers.

With integrated recurring billing, you’ll automatically generate accurate invoices, reducing labor and errors and syncing data across platforms for better reporting.

5. Set up dunning automation.

After implementation, you’re ready to set up dunning management. Automated and accurate recurring billing is great, after all, but what happens if an invoice still goes unpaid?

Dunning automation features in your recurring billing platform can take care of these situations.

Set up your dunning email communications and automated failed payment retry schedule so you can start recovering leaking revenue.

Payment retries three and five days after a failed payment can help prevent up to 40% of a subscription business’s churn. Automated email and/or text communications can support this effort if automated payment retries fail.

Reap the benefits of automated recurring billing

That’s it! Just five steps to better recurring billing management. Identify your unique struggles, search for solutions to those problems, then work with your implementation manager to migrate data, integrate software, and set up dunning.

With automated subscription billing, you get paid faster, create a more reliable cash flow, work more efficiently, recognize revenue correctly, have better reporting, improve customer retention…the list goes on.

In short, automation enables subscription businesses to scale more quickly and efficiently. Start looking for recurring billing platforms that meet your needs as soon as you notice problems arising. That way, you can begin implementing before billing bottlenecks cut too deeply into your bottom line.

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Adolphus McKoy
Adolphus McKoy
Account Executive, Stax Bill