Make selling into complex organizations a cinch with Invoice Rollup
Most recurring revenue companies—well, most companies in general—scale their businesses by acquiring new customers directly. After all, selling directly to the businesses and customers that use your products or services seems like a natural and obvious choice.
This strategy comes with some major downsides, though: high customer acquisition costs and overall difficulties with scaling the overall business to meet the needs of a larger customer base. How do you grow your business without letting costs run out of control?
Adopting new business models
It’s no wonder we’ve observed more companies (and subscription companies, in particular) choose to scale their businesses by selling through different channels or adopting interesting new business models.
For example, WineDirect sells to resellers: its B2B SaaS platform helps wineries easily manage all aspects of their direct-to-consumer wine delivery business. Pipedrive, another B2B SaaS company in a totally different industry, sells both to businesses directly and through IT solution providers. Finally, Adentro (formerly known as Zenreach) sells its Wi-Fi-powered marketing solutions to retailers and restaurants, whether to a single location or to entire chains.
These subscription model companies, and others like them, all face a similar set of challenges. Because they sell to resellers or into hierarchical organizations with many subsidiaries and/or locations, they have to deal with complex billing scenarios stemming from invoice complications. These organizations also find reporting on performance exceedingly difficult (because of how complicated the parent/child relationships can be). Moreover, because of the friction added to the billing process, these companies face high processing costs.
Invoice Rollup: how it works
To make invoicing easier for subscription model companies that sell to resellers or hierarchical corporate entities, Recurly is introducing Invoice Rollup as an addition to our Account Hierarchy feature. Invoice Rollup makes it much easier for companies to consolidate line items from multiple accounts in an account hierarchy, and bill them to the parent account, in a single invoice.
It’s helpful to run through an example to understand how all of this works. Say you sell order management software on a recurring basis to a nationwide chain (McDonald’s, for instance). Some McDonald’s locations might be independent franchises, so you invoice those franchise locations directly. Other locations might be owned by McDonald’s Corporate, so you invoice McDonald’s Corporate and add line items for each location that uses your software. Yet another set of locations might be owned by a separate management company that you’d like to invoice separately from McDonald’s Corporate.
With Invoice Rollup, you have complete flexibility over how you invoice. All of the scenarios mentioned above are possible. Even for the locations owned by McDonald’s Corporate, you can choose whether or not the invoice you send to McDonald’s Corporate includes separate line items for each location or not. The choice is entirely yours—whatever makes most sense for your business and your customers.
Now that you don’t have to invoice every single location separately, the number of invoices you have to send out is reduced, meaning less paperwork for you (and your customers) to handle. Plus, fewer invoices means fewer transactions and lower processing costs. And because your hierarchical structures are clearly organized, reporting becomes a lot simpler as well.
This Account Hierarchy with Invoice Rollup functionality becomes even more interesting when you consider other complexities and elements of selling, such as coupons, discounts, credits, and taxes.
Want to apply discounts to only a certain set of customers? Easy. Continuing the earlier example, if you’re trying to gain the business of a brand new location that just joined the McDonald’s Corporate family, you could run a promotion just for that location and have the location’s reduced pricing accurately reflected on the invoice. Or, if you’d like to issue a credit to a number of child locations under the management company due to a service-related hiccup that affected those locations, you can do that. If the child bills to the parent, the credit will go to the parent and will be applied to the entire invoice.
Taxes are a complicated beast, but Invoice Rollup makes taxes easier to tame. If you want to tax one child entity (say, a location based in California) differently from another child entity based in New York, you can do that knowing that the taxes will be accurately reflected on the invoice issued to the parent.
How do you know if Invoice Rollup is right for you?
Take a look at your business model today, or where you want to take it in the future. As we mentioned earlier, using a reseller model or selling into hierarchical organizations can be a powerful way to scale your subscription business without taking on extremely high acquisition costs. With Account Hierarchy + Invoice Rollup, adopting these subscription business models is easier than ever.
Learn more about Account Hierarchy and Invoice Rollup by checking out Recurly’s docs.