Best Practices for SaaS Billing

The recurring nature of SaaS products is very important, not only to their structure but also to people who expect to pay for those services. The recurring payments and subscription-style services are, of course, in line with buying software. 

In a typical setting, you would walk into a tech store, find what you’re looking for, and walk out with the software to install and use as you saw fit. The subscription SaaS model revives this way of interacting with software that once you get something, you have it for life. 

All you’d have to do is upgrade and pay for the subscription when necessary, which is now easily possible electronically and in the comfort of your home. This creates an expectation from SaaS companies on how consumers will be able to have access to SaaS products in the future and solve any related problem, which includes billing.

Billing is a huge aspect of buying and selling that can impact customer retention, including how you bill, when do you bill, and what do you bill. Hence, extreme caution is required when dealing with billing for different things and how it’s billed.

Tips for SaaS Billing


1. Using a Simple SaaS Billing Model

First and foremost, you need to select an easy, logical pricing model. The complicated pricing can mislead potential customers, leading them to your competitors’ arms. Even if you convert a lead to a customer, complex billing can put additional strain on your customer service team, resulting in churn. 

It’s best to choose a simple SaaS billing model that allows your customers to link directly to the services they use and the cost they pay.

Keeping the invoicing process as simple and easy as possible is important. The goal is to get customers to pay their bills on time while also providing a positive brand experience. The billing process for SaaS billing software should be straightforward. 

Whether you want to offer a variety of payment methods or allow your customers to change their billing dates, simplifying the billing process can help in improving customer experience and encourage them to stick around for the long haul.

2. Implementing Efficient Billing Automation

Most people believe that the most valuable thing is time. Manual and inefficient recurring billing processes take hours to complete, and the task is usually complex and understandably prone to human error. 

The subscription billing automation significantly reduces manual processes like subscription activation, invoicing, renewals, payment processing, dunning management, and more. The SaaS company will see an immediate return on investment from time savings alone, allowing you to redeploy billing resources to other strategic focus areas.

3. Adapting An Automated Standard of Accounting System

Another significant advantage of using an automated billing system is that it will handle your revenue recognition entirely on its own. Revenue recognition becomes more complex and difficult to manage for a recurring revenue billing business. 

However, companies must prioritize this to comply with the Generally Accepted Accounting Principle or GAAP and ASC 606 revenue recognition standard. In addition to compliance concerns, earned and deferred revenue are essential business performance indicators and must be reported accurately and in real-time.

4. Taking Precautions to Avoid Revenue Leakage

One of the primary benefits of switching to an automated billing system is that revenue leakage is eliminated; however, you must put the guidelines to minimize the amount of revenue leakage. 

You should send regular reminders to your customers about upcoming payments, automate your invoicing/payment collection process, send automatic reminders about credit card expirations and notify customers immediately if their card is declined. 

5. Focusing on Reducing Rate of Attrition

Another essential SaaS billing solution is to focus on lowering customer churn rates. It is critical to take steps to reduce churn whenever possible. You should be able to automate payment collection with SaaS recurring billing software, and you should be able to predict customer trends using data. 

Then, update your prices or offer discounts/offers to persuade hesitant customers to renew their subscriptions. It is essential to identify customer needs/desires as soon as possible.

6. Using Billing Data to Analyze and Gain Insight

If you are in a SaaS business, the chances are that your enterprise systems are collecting a lot of information about your customers and how they use your services. One of the essential SaaS billing practices is to use this data to investigate customer trends and the impact of billing/pricing changes on these trends. 

You should be able to forecast how changes in your billing processes affect product demand over time, depending on the SaaS billing software you are using. Then, take these insights and apply them to your billing system.

7. Upselling and Cross-Selling Opportunities

When you launch a product, your existing customer base is one of the best places to look for prospects. Your current customers are more likely to buy from you again if you provide exceptional service. Try not to miss the opportunity to upsell your new products or services, especially if they are tailored to your customer’s needs. 

Monitoring your customer usage provides you with a wealth of information about them. This information can help you identify the right product at the right time for the right customer. You can also use your billing to upsell new products or services to your existing customers by marketing them on the billing screen or at the end of it. 

Creating rich upsell communications by designing and branding your invoices. Customizing your SaaS invoice template to include the essential information to your customers, such as itemized subscriptions, grouped usage charges, and so on, can also help in this regard.

8. Keeping An Eye On Quick Pricing Change

Product and service pricing can fluctuate due to various factors, including market fluctuations, periodic sales or discounts, and changing customer demand. Growing businesses tend to change their pricing strategies more frequently, and varying prices can be time-consuming and frustrating, especially when dealing with multiple currencies. 

The modern automated billing software allows you to create a new pricing catalog in one to two minutes without putting your finance team members out of commission. These platforms also allow for pricing changes at the plan and even customer levels, allowing for even more pricing flexibility.

All of these best practices for SaaS billing will keep your company on track in collecting payments for the services rendered on time. 

Benefits of SaaS billing


1. Faster Marketing

Every day that you gain by getting to market faster and starting your revenue stream is a step closer to building a long-term business. Using a ready-to-use system saves time.

2. Reduced Start-Up Costs

When starting, most start-ups cannot afford a higher start-up cost. Using a SaaS-friendly billing system is far less expensive than developing your own, and it provides many benefits that you cannot find in generic systems.

3. Flexible and Well-Documented API

A SaaS-friendly API will be flexible, well-documented, and robust – precisely the type of API SaaS providers prefer to build for their customers. This enables you to create a seamless experience that eliminates all the guesswork.

4. Improved Security

For an online payment system, security is the top priority. A SaaS-friendly billing solution will prioritize security and will be PCI compliant. The last thing a new CEO needs is the security breach and the PR nightmare that comes with it.

5. You Can Avoid PCI Compliant’s Red Tape

The payment industry requires PCI compliance for any system that transmits, stores, or processes credit card information. Getting your software PCI certified is a complicated and costly process that you should avoid if you are short on time and money.

6. Instant Access to Critical Metrics

The reporting available is one of the most significant differences between a SaaS-friendly billing system and a generic billing system. A good SaaS system will provide you with real-time access to critical metrics like the number of sign-ups, monthly and daily revenues, and outstanding accounts. 

It will also allow you to customize how the data is displayed and fully integrate it into your website. This saves you a lot of time that would otherwise be spent developing custom reporting systems and manually compiling reports.

7. Flexible Payment Gateway Choices

A SaaS social system will integrate with significant payments, giving you the flexibility to shop around for the best rates while avoiding gateway log-in. This can save you thousands of dollars in transaction fees and may easily cover the cost of the billing system itself.

SaaS Billing – It’s All About Effective Planning

You should pick the right billing management software because it is essential for the billing process of your SaaS business. It not only gets rid of the challenges that a manual process can’t but also help you focus on scaling your business. 

You can devote more time and effort to figuring out the other aspects such as operational changes, introducing new products or services, improving customer engagement, etc.