Guide to Subscription Invoicing and Accounting with Fortnox Integration

Gone are the days when scattered spreadsheets used to be the source of truth of accountants. Today cloud-based innovation, data syncing, and effortless access shine. Subscription businesses have to manage both invoicing and accounting—processes that demand more than just manual oversight.

Fortnox integrated with subscription management software relieves their workload, and frees them from manual grind. It bridges billing and accounting, accelerating financial processes, so that businesses never have to fret about being compliant. Let’s explore how subscription invoicing and accounting with Fortnox integration works.

Why Subscription Businesses Need Invoicing and Accounting Automation

Subscription businesses face unique financial challenges, and resolving them demands much more than only manual oversight. They have customers whose billing cycles vary from one another: some may be on monthly plans, some on yearly, and others on quarterly. Without automated workflows, dealing with all these cycles individually can become a real headache.

These are some factors due to which invoicing and accounting can become especially complicated for subscription-based companies:

• Recurring payments

A subscription means billing customers on a recurring basis, according to certain cycles or cadences. It is impossible to manually manage recurring payments at scale. Imagine the manual work required to ensure that each customer receives their invoice on time. And that their invoices carry accurate charges.

It doesn’t stop at issuing invoices. Each invoice and any changes it goes through have to be meticulously recorded. Then its payment status also needs to be tracked and updated in the books.

• Proration

Leading businesses allow customers to move between subscription plans too, instead of getting locked in any one. This means that their customers are given options to upgrade and downgrade plans.

When a customer chooses to do any of the two, they have to be issued a new invoice. And if they make the jump to the new plan mid-month, then their billing amounts need to be prorated too.

• Tax management

Tax rules are ever-changing, and it’s important to keep pace with them to avoid penalties. Thing is, it is just as difficult as it sounds. Imagine having customers from various countries. Their invoices need to be tax compliant according to the laws of their countries. If there is any VAT or GST to be applied, it has to be done meticulously.

• Revenue recognition

In light of ASC 606 and IFRS 15, revenue recognition is obligatory for all subscription businesses. They have to clearly categorize their earned and deferred revenue on their financial statements. The biggest complication here is the subscription cycles.

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Each customer’s upfront payment has to be turned into earned revenue over their specific subscription cycle. Such as, over a month or over a year. Businesses should always be updated on their earned revenue at any point in the cycle.

If any of these processes is managed manually, these are the drawbacks businesses have to suffer:

Calculation errors: Invoicing, proration, and taxation all require accurate calculations. Machine-like precision cannot be expected from employees. Businesses need a powerful software that executes all calculations accurately and automatically.

Delayed financial reporting: Manually matching payments, entering data into the general ledger, and consistently updating records can waste many hours if done manually. It delays compliance.

Compliance risk: If a business ends up with inaccurate financial statements due to error-prone calculations, it can incur penalties. 

How Fortnox with Subscription Management Software Assists

When Fortnox, a smart accounting system, is integrated with subscription management software, it simplifies your financial management. What is important here is the integration of the two systems. Without this connection, you have to deal with data stored in two disjointed systems, and have to manually keep both these systems consistent.

One of these systems is responsible for billing (the subscription management software), and the other for bookkeeping (the accounting software). When these two are integrated, they help businesses with:

• Invoice syncing

When invoices are generated by your subscription management system, they automatically flow into Fortnox, thanks to the integration. This can save you from duplicate data entries, i.e. entering invoice data in the billing system first, and then the same data in the accounting system. Because manual data entry is not required, it also eliminates chances of error.

• Financial updates

There are many billing and account updates ongoing in the subscription management software. These are required when customers change their subscription plans, request refunds, and initiate chargebacks, etc.

With Fortnox integrated into the system, such updates are synced to Fortnox automatically as well. Any update events and their timestamps are recorded as journal entries. They are then posted to the GL.

• Compliance and reporting

Fortnox is purpose-built with the needs of Scandinavian countries, especially Sweden in mind. If you operate in Sweden, it can handle it all for you: VAT, invoice formatting, payroll taxes, revenue recognition and other country-specific compliance requirements.

It also helps businesses generate reports such as the profit and loss reports, and balance sheets. You don’t need to rely on spreadsheet data for that. Moreover, all reports can be exported in formats that are accepted as standard.

• Centralizing data

All the financial data is stored inside Fortnox, since the billing data flows into it, and then gets categorized within its GL accounts. When data is stored in one place, it gets easier to access it for audits or financial planning instantly.

Use SubscriptionFlow + Fortnox Integration for Your Billing & Accounting Needs

SubscriptionFlow offers subscription management and billing, automating your subscribers’ lifecycles. It combines with Fortnox to facilitate accounting that takes care of itself. With this integration, you get to manage your finances faster and free of stress, and save lots of hours every week.

This is what this combo unlocks:

• Automatic invoicing

SubscriptionFlow handles all your billing cycles for you. It automates invoice creation, collects payments, renews subscriptions, and updates accounts. These workflows don’t need manual interference to run.

Businesses also get access to dashboards that keep them posted regarding their billing activity. They can see all their customers’ profiles, and their paid and pending invoices, and easily access their billing histories.

• Real-time data syncing

Whenever customers are billed, or their invoices are updated, all these bills and updates flow into Fortnox in real-time. Manual data exports and imports are not needed. This means that you can automatically reconcile accounts, matching invoices to received payments.

Any update to billing within SubscriptionFlow is shared with Fortnox immediately, so it is registered there as a journal entry with a time-stamp. The GL is updated automatically according to the journal entries, and you get an accurate and complete trail of your data for audits.

• Automatic revenue recognition

Whenever upfront customer payments are collected by SubscriptionFlow, they are categorized as deferred revenue in Fortnox. If a customer is subscribed to a monthly plan, their payment is converted to earned revenue smoothly over the span of a month. Employees don’t have to move the numbers from one category to the other, it happens automatically.

• Scalable workflows

This integration supports scalable operations, so you can expand without worries. SubscriptionFlow is capable of handling large volumes of invoices simultaneously, and in multiple currencies too. And Fortnox seamlessly sorts all the billing data under the right accounts.

• Customizable Operations

Businesses can flexibly create workflow rules in SubscriptionFlow. Such as for data syncing. They can, for instance, set a payment amount limit. Invoices under that limit can be synced with Fortnox directly, and invoices exceeding that limit can first be sent to, say, the business’s financial manager for approval. Then, once they are approved, they can get recorded in Fortnox as well.

Bookkeeping taking too much of your time? Automate subscription invoicing and accounting with Fortnox integration with SubscriptionFlow.