Simplifying Complex Billing with Consolidated Invoicing for SaaS

Customers subscribing to different products from the same business? Great for revenue—but a headache for the management team. Why? Because the more separate subscriptions or add-ons are bought, the more invoices need to be created for each item. At least by the rules of traditional invoicing.

But consolidated invoicing changes it all. It enables the generation of a single invoice that bills customers for all their combined services. So there are no multiple invoices for the same account, and hence less billing inconvenience. Let’s take a closer look at the concept and learn how it simplifies SaaS billing.

Why Billing Gets Complicated in SaaS & How Consolidated Invoicing Helps

Billing becomes complicated when there are too many invoices to deal with, and multiple bills are tied to one customer account. SaaS businesses often have a diverse range of services that are available for subscription or one-time purchase. They invite customers to subscribe to more products, and buy additional items as add-ons.

But the complication arises when customers actually sign up for multiple items over a specific period of time. For example, a customer makes 3 subscription purchases within a week. All 3 subscriptions are monthly. Now there’s two ways the business can deal with this. This first is to create 3 separate billing cycles for all 3 subscriptions because their starting dates differ.

If this method is followed, the business would generate three distinct invoices and dispatch them to the customer in quick succession. So the customer would be receiving three invoices, and would be paying them off separately. This would become especially inconvenient if the payments are manual too.

The second method, however, is way cleaner than the first one. In this method, the customer would receive a combined bill for all three subscriptions at the end of the month. So they won’t have to review each invoice separately, and pay thrice. They can easily pay all the due amounts at once, saving time and energy.

This is precisely what consolidated invoicing means. In the first consolidated invoice, subscription charges are prorated. That’s due to the difference in the starting dates of each cycle. But after these billing cycles are aligned in the first invoice, the future invoices no longer require charge proration.

Consolidated Invoicing Pros for SaaS & Subscription Businesses

Consolidated invoicing gives businesses benefits such as:

Reduced billing errors

The fewer invoices there are, the easier it is to scan them for errors. In fact, smart billing software can check them for mistakes itself. Nevertheless, if there are lesser invoices being generated, then there are lesser chances of them having flaws due to system error as well.

Customer convenience

If customers are required to pay repetitively in the same month, that can be frustrating. And customers may not approach subsequent payments with the same enthusiasm as they had for the first payment. Different invoices in the same month can feel like an unpleasant burden.

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Customers may also take longer to review their charges, and identify which payment is for which subscription. That can also delay payments. But when all charges are present on one invoice, they get easier to review. That’s because a consolidated invoice is itemized, and lists charges along with their corresponding services.

So it facilitates one, unified payment that powers multiple subscriptions or add-on purchases.

Fewer failed payments

More invoices per customer increase the risk of payment failure too. Imagine a customer paid one out of three invoices, but then suddenly faced card declines for the other two. If the customer is proactive about resolving this issue, they may try an alternative method.

Nevertheless, it is highly frustrating. And it’s a lot better to pay for everything in one go so that there are lesser windows open for stubborn failures to creep in. Recovering multiple failed payments by the same customer can be too much work for the business as well.

Lower churn

If paying multiple invoices within a short time-frame feels like a burden to your customer, they might as well cancel one of the subscriptions. But if you make the payment process one-time, and hence seamless for them, then that would create better chances for retention.

Moreover, with fewer invoices, there are fewer disputes too. That translates into better trust and faster payment acquisition.

Lesser costs

There are different types of costs that consolidated invoicing cuts down. One type is payment processing fees charged by payment gateways. Higher invoice quantity means more processing fees, as gateways charge standard fees per invoice. On the contrary, single and combined bills incur lesser processing fees.

Plus, there are hidden fees that producing more invoices can incur. They shouldn’t go unnoticed as they chip away at your profits over time. Hidden fees are incurred due to reasons like: having frequent invoice-related support queries creating extra work for your team, putting more efforts in payment reconciliation, correcting more mistakes by micro-scanning each invoice.

Simplified finance ops

You don’t have to chase multiple payments associated with the same customer. That multiplies payment recovery efforts, and also frustrates customers as they are contacted for the same purpose again and again.

Moreover, finance teams have an easier time reconciling payments, as they only have to check one total payment amount against one invoice.

Common Use Cases of Consolidated Invoicing

Invoices are often consolidated in these business scenarios:

1. One customer, multiple subscriptions

This scenario has already been discussed above as well. Here, customers either subscribe to more than one service by the same business, or they buy add-ons after subscribing. In the former case, they are sent one invoice listing prorated charges for all their subscriptions.

And in the latter case, they are sent an invoice listing their recurring subscription charge, and one-time charges for add-ons. One-time charges aren’t repeated in the next cycle. They are only added when customers make additional purchases.

2. Subscription bundles

A subscription bundle carries many items. Since all items are sold as one unit, they require a consolidated invoice too. In this case, the invoice lists all the items that a bundle contains and also the respective charges of each item. It helps customers review their total payment, as well as the individual item charges to better evaluate the value they have received.

This is especially helpful if bundles offer discounted prices, and prove cheaper compared to buying all items separately.

3. Hybrid bills (usage-based + flat-fee)

Hybrid billing models combine more than one type of charges for more flexible payments. But no matter how many charge types there are, they also must be connected seamlessly. And a consolidated invoice offers this point of connection.

This invoice clearly displays all the charge types applied: usage-based, volume-based, flat-fees, etc. And then it sums up all charges into a single payable total for convenience.

4. Parent/child accounts for enterprises

Enterprise-level clients often purchase SaaS service licenses for multiple departments. There is one paying account also called the parent account and several child accounts that utilize the service but don’t pay. In this case, billing software creates a consolidated invoice for the parent account.

This invoice contains the separate charges for all child accounts and their aggregate. And this is billed to the parent account for payment.

SubscriptionFlow Consolidates Bills with Maximum Efficiency

Use SubscriptionFlow to consolidate your invoices easily. The subscription billing software increases your invoicing efficiency in these ways:

Groups charges across subscriptions

Charges for all of a customer’s subscription plans are neatly presented on their invoice. And this invoice is generated automatically. Meaning, employees don’t have to track plans or add-ons for every user to add them in their respective invoices.

Allows calendar billing

Consolidated invoicing for multiple subscription plans aligns the billing cycles for these plans too. So customers have only billing interval they need to pay attention to. It is also much cleaner than having scattered payment flows for the same customer.

Other than aligning billing cycles for the same customer like that, businesses can enable calendar billing too. That enables them to synchronize the billing cycles of their entire customer base for utmost efficiency and predictable revenue.

Syncs invoices with accounting platform

All consolidated invoices are uploaded to your accounting system automatically to facilitate reconciliation. It doesn’t involve manual data entry and hence eliminates billing errors.

Generates recurring, itemized invoices

Consolidated invoices are auto-created on a repeat basis. SubscriptionFlow ensures that the invoices are regularly and properly itemized based on a user’s active plans and one-time buys.

Leave fragmented billing behind. Begin your consolidated invoicing journey with SubscriptionFlow today, and minimize payment disputes.