Configuring an Automated Billing Software? Here’s What You Need to Know

~ 5 min read | February 1

An automated billing software handles all the nuances involved in subscription billing, from when a customer is onboarded, till their subscription has to be renewed. Some of these operations would be: billing and managing multiple users, tracking all data related to subscription payments, communicating with all the customers, keeping records of customers who sign up, upgrade, downgrade, or cancel, recognizing failed payments and informing those users, and keeping track of discounts and promotions, to name a few.

Choosing to invest in a software that automates this entire process not only saves you thousands of dollars, but also brings in a billing flexibility for your customers, and allows you to make changes to your plans or subscriptions easily.

However, an automated subscription billing system has some operations that would have to be performed manually before it’s up and running. Let’s  look at what some of these operations might be:

Setting Up Pricing Plans
With a third-party billing system, you can enjoy the flexibility of setting up different plans and automating the process of charging your active subscriptions for those plans. Before you offer your product to potential users, the plans need to be set up. This means charting out the base price, billing frequency, trial period, set up fee, and taxability of a particular product or service. And if you have feature sets pertaining to specific categories of users, you’d also need to customize the plans accordingly.

Accepting Currencies
Once your plans are set, you will have to configure the currencies that you will be accepting. While some payment gateways would allow you to accept payments in the customer’s local currency, some would also let you convert the amount you are charging to your preferred currency before depositing it in your bank account. While you are configuring the price of your product, you would have to specify if it is inclusive or exclusive of tax for the different currencies that you have opted for.

Tax laws vary from country to country and can even be region-specific. For example, take the case of Canadian sales tax. It comprises of GST (Goods and Services Tax), PST (Provincial State Tax), and HST (Harmonized Sales Tax)., and some regions in Canada, like Alberta, would ask for GST and not PST. Before charging your customer, you need to configure all the country-specific taxes for accurate tax calculation.

Presenting Trials
Setting up trials for your customers means deciding on whether it is going to be a free trial, paid trial, if any setup fee would be charged with the trial, how long it would last, and what feature set it would contain. The software gives you the option to configure a trial, since trials may not be necessary for all products.

Presenting Payment Options
When you offer multiple payment options (ACH, SEPA Direct Debit, PayPal, Amazon Pay), you will gain access to more customers. With an automated billing system in place, you would have to only set up the additional payment methods (that suit your business model, customer base, and the country where you operate from), rather than building the individual APIs from scratch.

Integrating a Payment Gateway
In order to collect payments, you’ll first need to integrate your billing platform with a payment gateway. And once you’ve set up the payment gateway credentials, you’re all set to start accepting subscriptions. You can either manually enter the subscription details or ask your customers to do that on the sign-up page.

Changes in subscriptions can be scheduled before-hand. For example: when a trial has to be converted to a paid subscription. When you have configured the plan, add-ons, and coupons (if any), and the relationships between them, you all set to receive subscriptions for your product or service.

Price Override
Offering discounts could cannibalize the long-term revenue potential of a customer. There are many cases where customers are offered a $$ per unit discount and it hurts the revenue potential of a business as the customer continues to scale. Instead, it makes sense to offer discounts on the lower-tier plans and offer custom quotes on higher-tier enterprise plans. Apart from that, large enterprises generate transactions on a large scale and will have their own pricing requirements. Price Overriding/Custom Pricing would help plug the revenue leakage in terms of discrepancies that will arise in the revenue report, when showing the difference in amount as discount vs a custom quote.

Generating Invoices
Before sending out invoices, you would have to customize the invoices in terms of whether the billing period would need to be mentioned in the invoice, whether the line items (services or products and additional charges) need to be hidden, the format to present the information, etc. The information that a customer would need varies, and your invoices have to meet all those specific needs.

Dunning Management
Failed payments cause revenue leakage and customer churn, which can hamper the growth of your company. The process that a billing system uses to retry a card and recover the payment for a failed transaction is called Dunning. To automate the dunning process, you need to set the number of card retry attempts, and the frequency and content of the email notifications that would be sent to the customer.  

Sending Transactional Emails
Emails to customers detailing out information like receipts, payment failures, password recovery, and more, can be customized using the predefined templates to sync with your brand. Once the content has been pre-set, the billing software will take care of sending them out as and when required.

In Conclusion
An external subscription and billing system does not run on the motto of ‘one size fits all’. Each business comes with its own set of requirements and the billing software has to be customized accordingly.
Remember that even when you use an automated billing software, there are certain operations that have to take place before you can automate the entire billing process.

Bhaavika Joshi

Professional dog lover | Part-time writer | Associate Product Marketer at Chargebee