3 Billing Challenges SaaS Companies Face and How to Overcome Them
On the surface, billing seems like an easy and repetitive process. For SaaS companies, however, it is anything but. With numerous pricing models, product combinations, and subscriptions to balance, finding a way to simplify billing can seem challenging. 73% of businesses plan to switch all services to SaaS systems in the near future, which will make revenue management significantly more complex.
This also increases the pressure on financial teams to improve customer service by ensuring that payment and billing processes remain convenient and efficient. Specialized software will become increasingly important for SaaS businesses to meet this need. Here are some of the challenges faced by SaaS companies during billing and how software can help overcome them.
The 3 Most Common Billing Challenges SaaS Companies Face
1. Multicurrency Billing Becomes More Complex as Businesses Expand to New Markets
More businesses are using SaaS products to conduct daily business activities. This increase in demand has created a highly saturated and competitive marketplace. As a result, software companies are constantly looking for new markets to expand into. However, expanding into new markets can be challenging without systems created to handle multiple currencies, differing payment preferences, and unique financial infrastructures.
SaaS businesses already have to deal with multiple payment modes and customer billing preferences, and multicurrency billing adds a significant layer of complexity. Finance teams must learn to navigate numerous regulatory practices while still delivering cohesive and comprehensive reports to management as required.
2. Each Customer May Have Unique and Vastly Different Billing Needs
SaaS businesses often have customers with highly specialized needs. These customers are often spread across multiple industries and follow unique processes to manage billing and payments. This complexity is compounded by the pricing models used by SaaS businesses. A survey of SaaS product pricing models found that 38% of businesses charge based on usage, 40% charge based on value, and half of all SaaS companies charge based on a number of users.
Each of these pricing models represents a significant proportion of the SaaS market and cannot be ignored by finance teams in the industry. Revenue operations teams must build and maintain processes for each of these pricing models without sacrificing efficiency.
3. Billing Processes Can Be Time-Consuming and Prone to Human Error
Finance teams have evolved significantly in recent years. They are expected to manage all the tasks that finance teams are traditionally responsible for while playing a larger role in collecting, organizing, and distributing financial information to business leaders. These new responsibilities can often be as demanding as their original tasks. Finance teams must be more efficient than ever.
When finance teams were mainly responsible for managing critical financial processes such as billing, time-consuming manual processes were a minor inconvenience. As their responsibilities evolve, these inefficient processes can hinder them from functioning at their full potential. These processes are also prone to human error, which can go undetected for long periods and can be cumbersome to resolve.
How Modern Software Can Help Solve These Challenges
Improve Cross-Border Compliance With Improved Financial Reporting
Software has made it easier for businesses to access new markets and expand their operations quickly. However, that expansion also brings more complexity to financial processes. Revenue operations teams must comply with financial and data management regulations in every market in which they operate. This can be simplified by creating comprehensive financial reporting processes that deliver all the relevant information to stakeholders while enabling them to highlight the most important metrics. This also allows critical financial information to be accessed across borders for quick and easy delivery to regulators when needed.
Centralized Financial Processes Provide Visibility Across Pricing Models, Product Combinations, and Subscriptions
In addition to delivering financial information to regulators, businesses can also benefit from consolidating data across multiple pricing models, product combinations, and subscriptions. Upper management often receives financial reports containing data that boils the entire operation down to a single line of numbers. However, organizing and collecting billing information more effectively allows business leaders to understand the impact of their decisions and plan strategies accordingly.
For early-stage SaaS businesses, this information can be extremely valuable. Software companies often offer multiple variations of their product to better understand the needs of their customers before finalizing their product lines, pricing models, and marketing strategy. This visibility empowers business leaders to understand how each decision will impact the bottom line, and then can be used as the basis for effective financial forecasting.
An Automated Billing Process Eliminates Human Error and Improves Operational Efficiency
Modern finance teams are under significant pressure to consistently deliver actionable insight to management teams. Billing data, when paired with other financial information, can help them achieve this. Before finance teams can collect and report this data, they must eliminate human error and ensure that the resulting information is accurate, complete, and reliable.
Despite the importance of these processes, managing financial information and conducting billing are time-consuming and generate little value for the business if done manually. Automation can empower finance teams to spend more time generating insight and contributing to strategic planning processes instead of limiting them to highly repetitive but operationally critical tasks.
Billing is a critical process for any successful SaaS company. Finance teams must manage different subscriptions, pricing models, and product offerings. Software companies are expanding into new markets and serving an increasingly diverse customer base. Finance teams are becoming important strategic partners for business leaders. This makes it exceedingly important for them to ensure that financial processes remain efficient. Place’s modern solution helps businesses simplify and automate billing processes such as invoicing, approvals, and collections.
To find out how Place can help you create a more efficient and effective billing process, schedule a demo with us today.
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