Behind the question of whether a billing system can help your SaaS business grow is the question of what it means for a SaaS business to grow. This guide tackles both — it creates a model you can use to approach SaaS growth and a 360-degree view of how your billing system fits into it. Read More >
Unless your business is supported entirely by advertising, you will need a billing system to take payments from your customers. Billing is one of the major operations of a SaaS business and thus you need to devote time to find a good billing solution. In your search, you might come across online billing software and recurring billing software. What is the difference between these two billing solutions?
Both online billing and recurring billing software share many features and function in a similar manner.
On an elementary definition, online billing software simply refers to an application that enables you to bill your customers online. A basic software will enable you to send invoices and receive payments from your customers.
On the other hand, a recurring billing software is simply an application that enables you to collect recurring payments from your customers. The software can also have other features that will make communication with your customers easy.
Most online billing software support recurrent payments and most recurring billing software are used for online payments. Therefore, the two solutions are greatly similar than they are different, and most of the time, the words are used more or less to mean the same thing.
However, there are various features than are more common with applications regarded as “online billing solutions” and those that are categorized as “recurring billing solutions”. Let’s look at some of the common features that usually set these two applications apart:
Online Billing Solutions
Online billing solutions are mostly associated with invoicing and time tracking systems. The systems can perform various accounting functions like automatic extrapolation of employee payrolls, adding expenses to invoices, setting automatic payments and so on.
Extensive Customer Report
You can receive different types of reports from online billing systems. Once again, the reports are mainly accounting related. For example, you can get reports on profits and expenditures, customer sign up data, and so on.
Time tracking feature allows you to see how much time you spend doing a client’s work. If you bill by the hour, this is an important feature that your online billing solution should have.
Doing taxes can be quite a hassle especially when no paper receipts are given. To make work easier for companies, most online billing systems have integrated VAT features that users can include in the invoices they send to their customers.
Recurring Billing Solutions
Custom Recurring Billing
The main feature of a recurring billing solution is that users can bill their customers based on a set schedule, be it monthly, quarterly, semi-annually or annually. Apart from recurring billing, other account features may be available.
Coupons and Discounts
You can set coupons and add-ons options in your billing solution. Coupons and discounts can be used to attract new sign ups or upgrades in for your service.
More at the blog post 5 different ways to use promotional coupons in your SaaS Company
Business Metrics Reports
Unlike most online invoicing systems that provide mostly accounting data, recurring billing systems provide more of operational metrics data. You can measure important metrics like the monthly recurring revenue, churn percentage and others.
Perhaps one of the best distinguishing factors of online billing software and recurring billing software relates to who uses them. Online billing software is mainly used by freelancers or companies that provide a service that is charged by the hour.
On the other hand, recurring billing solutions are mainly used by SaaS companies that offer services to a large number of users, who are billed on a regular monthly schedule. However, it can be quite difficult to make a clear distinction between the two solutions since they have more or less of the same features.
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