Using Billing Data to Power Growth

Today, billing is no longer considered only a mechanical process, with payment collection as its end goal. It has become more of a dynamic process that gives businesses much more than only payments. One of its key products is data: data related to finances or customers.

For businesses, billing data is like virtual gold. It’s a hidden factor that drives growth by letting businesses evaluate their performance, and formulate informed strategies. Businesses can boost their revenue, and customer lifetime value by using their billing data wisely.

In this article, we’ll explore what billing data entails, types of billing data in a subscription business, and how businesses can make effective use of this data.

What is Billing Data?

Billing data is, essentially, all the information a business collects through billing. This includes all the data obtained from:

invoicing
payment processing
subscription management
revenue recognition

These processes are a rich source of numerical, and customer data. Numerical data includes revenue earned/deferred, churn rate, retention rate, customer lifetime value, and more.

Customer data includes customers’ personal information, payment details, behavior patterns, preferences, account changes, and so on.

Why is Billing Data Important for Subscription Businesses?

Unlike typical businesses, subscription businesses don’t bill once. They collect payments on a recurring basis. This means that every new billing cycle brings in a fresh wave of data. Data obtained from a new billing cycle might not be consistent with that obtained from the previous one.

It might bring in new revenue figures, subscription renewal percentages, payment success rates, customer payment updates, etc. Advanced billing software helps render this data into financial or customer reports, and subscription analytics.

This makes it easier for businesses to compare data from the new billing cycle to that of the previous one, and gauge improvements or declines. But billing data doesn’t necessarily have to be compared only. Evaluating this data over time can get businesses insights into their overall performance over extended periods.

They can identify their peak and lowest selling periods, revenue trends, popular products, and changes in customer demand. Moreover, good billing software helps in forecasting revenue by analyzing previous revenue records. When cash flow is predictable, businesses can better organize their expenses, and allocate resources.

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Furthermore, revenue data is essential for compliance with the revenue recognition rules (ASC 606 and IFRS 15). It is mandatory to maintain accurate and transparent records of both earned and deferred revenue. Organized accounts make it possible to smoothly transfer deferred to earned revenue over time.

Types of Subscription Billing Data

Following are the major data types that subscription businesses have access to:

Customer Account Information

This includes the customers’ personal information, such as their names, contact information, and addresses. It also includes their payment details, such as preferred payment methods, card numbers, bank account numbers, etc.

Additionally, businesses save the customers’ preferred modes of payment. For instance, billing via invoice, or automated recurring billing. Customers are always billed according to what they agree to in their subscription contracts.

Subscription Plans and Prices

Another important source of data is the subscription plans that customers subscribe to. Each plan can differ by its features, cost, and billing cycle. Billing cycles can include weekly, monthly, bi-monthly, quarterly, or annual cycles.

Analyzing which plans are popular with customers offers a great insight into what they prefer. A business might have majority of its subscribers from its basic and least expensive plan. It can utilize this information to tailor its costlier plans according to customer demands, so that they gain more subscribers as well.

It can also alternatively optimize pricing for its basic plan to maximize profitability.

Usage Data

This type of data is relevant to usage-based billing. Powerful billing systems can track service usage in real-time, such as the usage units of a cloud-storage service. This data then determines the total cost of the service over a certain time period.

The more the usage, the more its charges. This data is also helpful in measuring how different segments of customers utilize data, and which features they use the most. On the basis of this information, customized plans or bundles can be offered to these users to make them feel valuable.

Tax Calculations

This data type is especially relevant to international businesses with global subscriber bases. Each country has its own tax rules. This means that tax calculations vary for customers residing in different countries.

Staying proactive about tax updates, calculating all tax types accurately, and filing tax reports on time are crucial for staying compliant with governmental regulations.

Invoice Records

It is crucial to maintain invoice histories. Past invoices tell a lot about a customer’s payment patterns. For instance, whether that customer pays on time, how often they encounter payment issues, do they frequently initiate chargebacks, etc.

Customers can also actually be segmented according to clean or problematic invoice records. Another benefit of storing past invoices is that they are necessary for audits. They serve as proofs of valid transactions.

Additionally, customers can access their invoice history whenever they like. This boosts transparency, and lets customers assess their spending patterns as well.

Refunds and Adjustments

Businesses can access refund history of each customer, and analyze how often they switch between their subscription plans. They can also clearly view each customer’s available and used credits.

In addition, they can also see the discounts and promotions applied, and their impact on revenue, and customer churn.

How Does Billing Data Drive Business Growth?

Businesses cannot operate randomly, without any quantifiable growth metrics in place. Even if they experience growth without a proper strategy, that growth is most likely going to haphazard, and unmeasurable. If businesses don’t utilize their billing data effectively, they’re likely missing out on big revenue.

Here are some ways how billing data can be used to power revenue growth:

Offering Customers Personalized Experiences

Personalization is a great strategy to make customers feel valuable, and retain them for longer periods of time. Billing data helps businesses personalize customer communication, and customize special subscription bundles for them.

Personalized communication, such as payment reminders, and offer announcements, carries a sharper impact. Additionally, offering customers what they prefer, based on their past purchase history, can actually make them spend more on a business.

For example, e-commerce businesses can offer appealing cart recommendations in order to cross-sell. Similarly, online subscription businesses can also tailor more-expensive plans so they offer exactly what the customer requires. This strengthens chances of upselling, meaning that a business can derive more revenue from each customer.

Improving Financial Reporting

Financial reporting is key for evaluating business performance, and for staying audit-ready at all times. Billing data provides all the information that goes into generating such reports. It offers detailed transaction data, failed invoice records, discount information and dates, etc.

Through this data, businesses can measure their revenue, and track earned and deferred revenue. Accurate revenue reports are vital for compliance with ASC 606 and IFRS 15. Businesses can also easily produce data records for auditing purposes to boost credibility and financial transparency.

Facilitating Accounting

Accounting is not possible without billing data. Billing platforms like SubscriptionFlow allow real-time synchronization of billing data with accounting software. This ensures that all data is transferred for accounting, and eliminates data silos and discrepancies.

Accounting software can then be used for managing expenses and inventory, and generating cash flow and profit/loss statements etc.

Optimizing Relationships with Different Customer Types

A business has varying types of customers, and billing data helps differentiate between them. There are high-value customers that generate more revenue, or a consistent revenue stream by staying loyal.

Then there are habitual late payers that cause revenue delays. Some later payers might actually come under at-risk customers as well due to their decreased activity, and signs of disinterest. Payment failures also sometimes highlight at-risk customers who can churn involuntarily.

If customers don’t respond to payment reminders, then potential churn might be voluntary too. Businesses can form growth strategies according to these customer categories. For instance, they can incentivize high-value customers to switch to more expensive plans.

These customers can also be offered loyalty rewards to give them more reasons to stay committed. Similarly, personalized discounts can be extended to at-risk customers to win them back. They can also be offered custom subscription bundles based on their unique needs.

Moreover, if customers opt for cancellation, businesses can ask them the reason behind that before they actually cancel. They can then extend appealing offers based on specific cancellation reasons in real-time to discourage customers from leaving.

For example, if customers select budget constraints as reason for cancellation, then they can be immediately offered attractive discounts to make them stay.

How to Secure Subscription Billing Data?

Since billing data is central to business operations, there must be ways to safeguard it. Sensitive billing information is prone to data breaches and unauthorized access. Businesses must sign up with secure billing software to maintain credibility, and earn customer trust.

Here’s how advanced software helps protect billing data:

It encrypts data. Data encryption ensures that it is unreadable for third parties, such as online vendors. This eliminates chances of data breaches.

It offers smart access controls. Access controls act as data-protection barriers. B2B businesses can create custom roles for an organization, with each role having different access permissions. For example, an Editor role can allow users to fully edit documents, and a Reviewer role can allow users to only review documents, not change them.

It employs two-factor authentication. Only authorized users must be allowed to access service and customer portals. The system implements identity verification methods such as facial recognition, finger-print scan, or one-time codes to ensure that only the right person gets access.

It complies with data security standards. Reliable software complies with security regulations like PCI DSS and GDPR. This shows that it is committed to protecting customers’ personal and payment data.

SubscriptionFlow Unlocks Efficient Billing Data Management

SubscriptionFlow is a powerful billing engine designed for subscription businesses. We unify and organize all your billing data onto one platform for easy access. We also automate complicated billing, so that you can have clear, consistent and accurate data records.

Here are some services that we offer: