Granted, you want a subscription billing software that can accept all the major credit cards and other payment methods that your users prefer. But focusing only on accepting payments will be oversimplifying things. More than accepting payments, your subscription billing software should manage various aspects of the transaction. Primarily, the software should have:
- Dunning management
- Unambiguous invoicing and proration
- Trial management
On the back-end, these three factors make your billing work easier. On the front–end, they help in your ultimate goals of generating revenues by addressing factors that can inhibit customer payments.
Let’s dig deeper in these three important features.
Dunning management refers to the ability of the subscription billing software to manage declines related to credit card payments. Credit card payments can be declined due to a number of factors including expired cards, cards acquired fraudulently, insufficient funds, temporary holds, generic declines, hard declines, etc.
Effectively managing credit card errors and decline rates lowers customer churn. Churn is a key metric that any SaaS company needs to watch. Two of the most important aspects of dunning management are retry schedules and customer communication.
i) Retry schedules
With dunning management capability, the billing software should be able to automatically retry to charge a user’s credit card that has been declined. Retries can be done after a few days after the payment failure.
Some billing systems come with pre-configured retry schedules. Others let you customize retry schedules by changing the number of customer notification attempts and intervals, as well as the desired end-result when the card cannot be billed.
ii) Customer communication
When an account is being dunned, the recurring billing software can send several emails to the customer to inform them of the failed payment and any changes to their subscription due to non-payment.
Typically, you should configure the software to send the user a notification of the decline payments, and asking them to update their billing information. From there, you can send a sequence of reminders and finally send a last notification of service termination if there is no response from the customer.
Apart from dunning management, the software should allow you to collect payment manually. This can usually be done on the dashboard back-end.
Unambiguous Invoicing and Proration
You need a flawless way to invoice your customers for upcoming, missed and other related payments. But more than this, you should be able to check your past invoicing history in a clear manner. Your accounting department should have an easy way of seeing upcoming invoices, pending invoices and settled invoices over custom time periods.
On the minimum, the billing software should allow you to automatically create, schedule and send invoices to customers based on various time settings. Customers should be able to settle the invoices right from their dashboards through their preferred payment modes.
Other standard invoicing features that should be available include:
- Ability to print pending and cleared invoice history
- Certified transaction details on payment settlement
- Automatic invoice reminders and confirmations on payments
- Ability to prorate charges depending on the length of time of service usage
- Discounts and coupons for special services, holidays, etc.
The billing software should be able to send text and HTML invoices. Ideally, you should be able to customize the invoice to your requirements and of course with your own branding.
If you offer a free trial for your SaaS, chances are that every single customer you will get will come from the Free Trial. On the other hand, less than 25% of free trials actually become customers.
Offering free trials is a logical way of getting a large number of users to try your app fast. Free trials help to build your brand and get traffic to your site without incurring a lot of money. However, your job is not to get free users, but paid users. Thus, you need to optimize your free trial users to weed out those that are not likely to convert and concentrate on those that show interest in your app.
You can optimize your Free Trial users using the billing subscription software. The software should enable you to have different subscription plans, with a Free Trial option. During the Free Trial period, user follow-up via email or phone calls will be important to increase conversions. And another option, should be to have both credit card trials and no credit card trials. This is vital to do an A/B test, to find which one works for your business.
When looking for automated recurring billing, make sure the solution you go for has the above three features. A recurring billing software should improve efficiency by making it easy for you to collect online payments.