Does My Business Need Automated Billing Software?

So you’re running a recurring revenue business. Fantastic news—subscription businesses have been experiencing exponential growth for quite a while as consumers enjoy the convenience of “renting” things on-demand rather than buying them outright. What’s less exciting is the work that goes into managing billing and invoicing, issuing refunds, dealing with payments, and more. Particularly if you choose to do it all manually.

By implementing an automated recurring billing system, however, you can sidestep many of the issues that would crop up with a piecemeal approach.

What is automated billing software?

Automated billing software automates the routine aspects of the billing process, removing the need for time-consuming, manual intervention.

Automated billing software can help you with all things related to subscriber billing automation, including:

  • Automating invoicing and billing in every scenario, for any plan, and for any kind of customer

  • Dealing with failed payments

  • Handling upgrades, downgrades, and refunds

  • Closing the books

That is just a taste of what can be handled by automated billing software—we’ll go into more detail in a bit. But first, how do you know if auto billing software can help your company?


Signs you need automated billing software 

While automatic recurring billing makes sense for a lot of companies, here are some signs that your company could benefit from it.

You’re starting a subscription business

It’s hard enough to figure out how to start a subscription business. If you attempt to do it without automated billing management, you’ll likely find yourself way in over your head. Those early days are better spent focusing on high-level strategic considerations rather than chasing down late payments.

You’re drowning in spreadsheets

As mentioned earlier, a piecemeal approach is the alternative to an automated billing system. But what does a piecemeal approach look like?

It means that your company will be managing billing with spreadsheets. Potentially a lot of spreadsheets. There’s no way to quantify how many is too many spreadsheets, but if your finance and accounting staff is overwhelmed, that’s a sign you may need to turn to automatic customer billing which can drastically increase your operational efficiency, accuracy, and ability to have accurate books and numbers

You dread closing the books at the end of each month

Automated billing software can help you close the books faster at the end of each month, so your finance and accounting teams can spend less time on manual processes and more time on helping your business grow. If your company has several subscription plans and pricing tiers, you’re likely to notice a greater benefit from an automated billing system than a company with a simpler business model.

Plan upgrades, downgrades, and cancellations throw a wrench into your financial processes

Even if your company only offers one product and pricing tier, you’re still going to frequently contend with upgrades, downgrades, and cancellations. Again, with a manual process, it’s going to be time-consuming to accurately reflect these events in your books.

You’re wasting time manually retrying payments

Social share image - involuntary churn blog post

Determining the reasons behind failed credit and debit card transactions doesn’t seem so complicated…until you actually start doing it.

With over 2,000 different error codes associated with failed transactions, a manual approach to retrying declined payments is unrealistic for any size company in this day and age.

You aren’t aware of the trends driving your business

An automated billing system can help you measure key subscription business model metrics, presenting you with actionable insights to help spark a new era of growth for your company. If you don’t know how much it costs to acquire a new customer, for example, that’s a sign that automated billing software could be very helpful.

What to look for in automated billing software

If there are several signs that your company needs automatic recurring billing, the next step is determining what to look for in an automated billing system.

Eases the burden on your finance and accounting teams

Essentially, you want to find a system that will make life easier for your staff. Will it actually streamline your recurring billing needs and completely automate the order-to-cash process? Or will it require manual workarounds to keep it running? 

Integrates with your existing tech stack

It’s not just about the solution itself, but also how it integrates with your existing tech stack. Ask prospective vendors whether their solutions will work well with your current accounting, tax, and fraud solutions. Recurly, for example, offers a wide range of integrations.

Headless Commerce

Provides actionable insights for decision makers

A top-notch automated billing system will provide a wealth of useful analytics, giving you insight into subscriber retention, promotional campaign reporting, and financial performance. 

Let’s say you want to analyze churn, which is perhaps the most important metric for a subscription business. A proper analysis requires a number of calculations—and subscription billing software can do them for you.

After completing a churn analysis, the next step is to determine how to reduce churn. There are two types of churn: voluntary and involuntary. If your customers are voluntarily leaving, your pricing or product could be at fault, and that will require a strategic adjustment. If, on the other hand, you are experiencing high involuntary churn, your billing system—not your company—may be the culprit. Involuntary churn accounts for 53% of churn at the average company, so you don’t want to overlook it.

See how much revenue you could be recovering with a decline management strategy. Click here to calculate and get our free Success Kit along with your results!

Has revenue recovery capabilities

A first-rate automated billing system has a revenue recovery process in place to reduce involuntary churn. For example, Recurly has an Account Updater that monitors customers’ credit cards for changes (including passed expiration dates) and updates them as necessary. From there, intelligent retry logic determines the frequency and schedule of automatic retries based on when they are most likely to succeed. Dunning is often the last step in the revenue recovery process—payment reminders are sent to customers on a predetermined schedule.

Meets privacy, security, and compliance requirements

Finally, there’s privacy, security, and compliance.

Look for a vendor with a global presence and ask whether they are aware of regulations that will impact your business. While there will obviously be differences in regulations (e.g. GAAP) across countries, it’s easy to overlook potential differences within each country.

Not all regulations are created by governments, though. Payment card industry (PCI) standards are issued by credit card companies to protect the data of their customers and compliance is based on your transaction volume. An automated billing system can help prevent you from getting tripped up.

How to choose automated billing software

There is no shortage of choices for automated billing software; how do you know which one is right for your subscription company?

Start by looking at your own needs. Your accounting and finance teams are the ones in the trenches, so you want to ask them where they need the most help with billing automation. They may need help automating order-to-cash, dealing with complex tax scenarios, and fighting billing fraud, to name a few possibilities.

A key consideration for all companies, however, is the amount of time it will take to get up and running. You don’t want automated billing software that is going to take forever to implement; that will slow your business down and keep your finance and accounting teams saddled with more work than necessary.

So, how long is too long? The answer to that question will vary based on your company, your goals and your existing tech stack. But generally speaking, you’ll want a system that is ready to go in several weeks—not several months. Recurly gets its average client operational in 46 days

Once you’re up and running, you want to be confident that the automated billing system will save you money. It’s not enough for a vendor to say that they will reduce involuntary churn—ask for hard numbers. Recurly, for example, recovered more than 8x the amount we billed our merchants in 2019.

While the time to implementation and revenue recovery evaluations will be relatively straightforward, the billing model support will require deeper consideration. At first glance, it may seem simple—get an automated billing system that supports your billing model (e.g., quantity-based pricing vs. usage-based billing).

Quantity-based pricing vs. usage-based billing blog image

In reality, it’s more complicated because you have to consider your potential future billing strategy. You don’t want to have to switch automated billing systems every few years as your business and product strategy evolves. For that reason, it’s better to overestimate your potential needs, if anything.

The last two sections have provided a window into the automated billing software selection process, but check out our Evaluation Worksheet for a more comprehensive look at what it entails.

What kinds of companies use automated billing software?

If you’re still wondering whether automated billing software is right for your company, you may take comfort in the knowledge that companies in just about every industry—including SaaS, DTC, streaming, digital media and publishing, education, and many more—are reaping the benefits of automatic recurring billing.

Just look at what our customers have to say:

Now, through our dashboard, customers can view and download their invoices, upgrade, see their billing plan, and make other changes, all on their own. This is a significant benefit and something we couldn't do with our previous provider.

Paul Dumoulin, Software Developer

When I think of Recurly, I think of simplified billing. I come from the world of billing, and trust me, it’s normally a lot of manual work. Recurly just makes it easy, and in a hypergrowth business, that’s exactly what you need.

Waifa Chau, CFO

Recurly listens to our needs and works with us to optimize where we can, create efficiencies, and improve our customers' experience.

Charles Wedderburn, Financial Controller

Wrap up

It’s challenging to run a successful subscription business in a fiercely competitive global marketplace. If you’re taking a disjointed approach to billing, you’re putting unnecessary obstacles on the road to success.

An automated billing system, such as Recurly, can be a game-changer for your company—freeing up your staff’s time and helping you retain customers who don’t want to go anywhere.

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