When your business generates revenue on a recurring basis and carries out billing in a periodical manner, subscription management and recurring billing aren’t the only features you will need. There is a whole set of other features that are essential for a subscription-based business, which would complement your growth and revenue goals. In this post, we will be looking at three such features that your software needs to have:
- Advanced Invoicing
- Dunning Management
- Third-Party Integrations
A basic invoice would display the contact information, invoice number, line items, subtotal, total, and refund amount (if any). Other than the payments made, it would also inform them about their upcoming or missed payments. Your accounting department would want all this information updated in their preferred bookkeeping software.
In addition to this, customers would also need easy access to their past invoicing history. In terms of structure, the software should present all the information accurately with all the components that your customer would need for reference. Along with that, it should provide a host of operations, like removing payments or applying credits, that your team can act upon to provide a better user experience.
What Information Is Presented
Taxes – It should not only be able to display both price types and if the prices are inclusive of tax or exclusive of tax, but also produce tax-compliant invoices with all the required components based on the government regulations in different regions. For example, if you have customers in Europe, other than the basic information, you will need to display your company’s VAT number, the customer’s VAT registration number, the VAT (Value-Added Tax) for each of the items mentioned in the invoice, the final amount after VAT has been applied, and the currency that was used.
Proration – If the customer had upgraded or downgraded from a plan, the prorated amount should be mentioned in the invoice as well.
Notes – A customized message that can be added at the end of an invoice to remove the ambiguities around the charges for specific line-items.
Localization – The contents of the invoice should be presented in the language that customers prefer.
Actions Customers Can Take in the Invoice
Link – A URL that would allow customers to make a full or a partial payment.
PDF – An option to download the invoice in PDF format for local reference.
- Change the billing and shipping addresses for individual invoices to update addresses.
- Manually record offline payments received for invoices which are in Payment Due or Not Paid states. In the case of partial payments, the amount collected is deducted from the total amount of the due invoice.
- Apply the excess payment to future invoices or to an invoice that records unpaid or upcoming payments.
- Create a credit note to refund an amount to the customer in the form of credits. These refundable credits can be used against existing unpaid invoices or for paying new invoices.
- Issue refunds for paid or partially paid invoices.
- Write off the upcoming amount of an invoice when it couldn’t be collected after multiple retries.
- Cancel an invoice generated with wrong details like incorrect amount, customer canceling the order, or requesting a change in the invoice.
- Recreate the invoice for a subscription once again.
- Add additional notes to the invoice.
- Include an addon in the invoice.
Dunning management is the process of recovering failed credit card payments through retries. Card failures occur because of factors like expired cards, cards acquired fraudulently, insufficient funds, temporary holds, generic declines, hard declines, etc.
Card declines, when left unattended, can cause unintentional cancellations, which, better known as involuntary churn, make up a significant percentage of total customer churn. This can corrode your growth over time and ruin your customer relationships. Automating your retry process to recover revenue that would have otherwise been lost revenue, reduces the rate of involuntary churn.
Three of the most important aspects of dunning management are online and offline dunning, retry schedules, and customer communication.
- Online and Offline Dunning
A subscription billing software needs to support both online and offline dunning when it comes to recurring online payments.
Online Dunning: This is applicable for payments that are made through credit cards. When the initial payment collection attempt fails, the software should retry collecting the payment, and send emails to your customer informing them about the failed payment.
Offline Dunning: This takes place when you are accepting payments through cash or cheques. You can configure the software to send reminder emails to your customers about an upcoming payment and configure the subsequent action that has to be taken when the customer fails to make the payment.
You can even send them a notification asking them to update their billing information.
- Retry Schedules
Some billing systems come with pre-configured retry schedules. Others let you customize retry schedules by changing the number of retry attempts and the intervals you would want to keep between them, as well as the action that has to be taken when the card cannot be billed.
If a customer’s primary payment method fails, then their backup payment method can be used for retrying payment collection.
III. Customer communication
When a payment is due and a payment method is about to expire, you can notify (pre-dunning communication) your customers through emails and in-app notifications. This would also be done when a retry attempt has been carried out on a customer’s account, and if there has been a change in their subscription because of non-payment.
From there, you can send a sequence of reminders and finally send the last notification of service termination if there is still no response from the customer.
Note: If your software has a card updater feature, then your customer’s cards would be automatically updated in your system.
Integrations may not be a part of the billing system, but they are an extension of the product. Different teams would need subscription and billing information for performing their set of tasks. If the integrations are already set up with third-party tools, then you wouldn’t need to build them from scratch. And, it would save your team members the time and effort that they would have otherwise wasted on toggling between different dashboards.
Having an integration with a customer support tool ensures your customer’s subscription information is present with the matching support ticket.
This integration can push invoices, payments, transaction statements, and other relevant data from the billing software to your accounting software.
Reporting and Analytics
An integration that would automate your metrics reporting and show you real-time analytics of your subscriptions and revenue recognition.
Your marketing team would want to send out email campaigns to your subscribers with an email marketing tool of their choice. With this integration, you can avoid the trouble of manually syncing your customer information between both the systems.
A subscription billing integration with a CRM system would archive customer interactions and present their payment and transaction history to the sales team when required. This would also help to generate personalized offers for the customers.
You have to make sure that the billing solution you choose also works well with your in-house software. Billing is a part of this process, and its information needs to be passed from one team to another easily. It’s important that the integrations help your team progress better.
Your subscription billing software will have to support various recurring revenue models (like per-user or usage-based), experimenting with these revenue models, sending lifecycle emails, and having advanced reporting features to track key metrics.
Implementing these features would prepare you for the repercussions stemming from the complexities of a subscription business model. And, to keep up with your growth goals, you would want to provide your team with the necessary tools to be more productive and deliver an enhanced customer experience.
This guide will help you find other features and factors you need to check when choosing an enterprise-ready subscription billing and management software.