The Billing is Part of the Service

The Billing is Part of the Service

The Billing is Part of the Service

It doesn’t matter if you find yourself in the fortunate position of running a start-up offering the best software as a service (SaaS) product in its class that does everything it says. A surefire way to lose customers is to alienate them with inaccurate or untimely billing.

Remembering to take a holistic view of your offering and your customers’ desires is essential. If your SaaS product enables great customer service and, dare we say, billing facilities for your customers, they may well find inaccurate billing from that service provider a sufficient excuse to look elsewhere.

There’s an old expression, ‘the cobbler’s children were the worst shod’ – meaning that people and even large organizations do a very good job providing a service for others, whilst sometimes unintentionally neglecting the minutiae of that very service in terms of professionalism.

If a mobile auto mechanic fails to turn up at your home to work on your car because his truck has broken down, you might think twice before allowing him to wield his spanners under your hood!

As it’s so essential to get SaaS billing software accurate if you’re offering a SaaS facility, let’s take a quick look at some dos and don’ts of this crucial aspect of business:

What you should be doing

Monitor subscription metrics:

Keep a close eye on essential metrics such as lifetime customer value dollar amounts and map those figures against churn rates. How much does the average customer bring into your business, and how long do they stay with you?

When you fully understand these figures, management can make informed decisions to maximize revenue whilst optimizing customer longevity. Once that formula is worked out, compare it against projected monthly recurring revenue actuals to assess whether your predictions hold water.

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Transparent billing policies:

telling your customers in jargon-free language exactly what they will pay and what they’ll be getting for their money is essential for success. It’s important to include how and when customers will be charged (for example, by recurring credit card bill, PayPal, or whatever) and consider any potential extra fees, such as late payment penalties and early cancellation terms.

Providing free trials or freemium versions

Free trials or freemium versions of your SaaS platform allow potential customers to try them before they buy. The best way to do this is to offer the very basic service for free (at least for a fixed time period). Still, facilities like generating extra reports or more detailed data analysis will require a paid plan or upgrade.

Instilling disciplined subscription management policies regarding upgrades (and downgrades, if necessary) is also important. It’s surprising how complex things can get if pro-rata charges aren’t accurately and timely sent to customers. To achieve this, it’s essential to define pricing tiers and packages openly and understandably.

It’s always a good idea to provide flexible payment options by taking major credit cards, using PayPal or its equivalent, and keeping a close eye on dunning (the art of following up on missed or incomplete payments). You should offer flexible invoicing options to accommodate different customer preferences. It’s also a wise policy to allow each customer to define a rolling month instead of collecting every customer’s subscriptions on a given date – this works better for greater predictability of sales intelligence and incoming cash.

Naturally, it’s crucial to provide clear invoices that are easy to understand and include all necessary relevant information, such as your account department’s contact details, billing period, invoice number, tax point, and all such small print.

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What you should NOT be doing

Don’t overlook compliance requirements whether you offer PaaS (platform as a service) or SaaS. Data protection regulations should be followed to the letter wherever possible. Transgressing the GDPR (General Data Protection Regulations) in Europe and CPRA (California Privacy Rights Act) in the US can carry hefty fines even for first-time offenses. Local jurisdictional tax laws should be defined; this can be tricky if you’re a SaaS company based in California – but providing a service in Caracas. Just make sure that customers know which jurisdictional regulations apply to their contracts.

Avoid any hidden fees or charges.

Customers might like surprises on their birthdays or at Christmas, but not when their software provider bills them!

Keep it simple!

Avoid complex pricing structures; they can confuse customers and your sales teams. There’s nothing more irritating than asking the price of something and having to sit through a 20-minute explanation when all you want to hear is ‘$250 per month excluding taxes.’

Don’t ignore security concerns related to billing information.

Keeping CSV codes from the back of credit or debit cards is a definite no-no. Any ‘stored’ card numbers MUST be encrypted using the latest technology. Even payments taken over the phone should not be voice recorded to avoid storing data such as dates of birth, passwords, and the like. Robust security measures should be instigated and occasionally tested; you can even use the services of an ethical hacker to assess your company’s security vulnerabilities.

Avoid poor communication

When making changes to pricing plans; inform customers well in advance and explain the reasons behind any price changes. It’s probably not a good idea to justify a price increase because you fancy buying another Cadillac or a second condo in Malibu.

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In the final analysis, it’s crucial to remember that the billing process might be almost as important to your customers as the primary service that your software is intended to achieve for them. A wealthy businessperson once said:

“Dissatisfied customers don’t tend to complain; they just don’t come back’.

We might all do well to remember such wise counsel.


Featured image provided by Monstera Production; Pexels; Thanks!


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