How to Build an Effective Billing Strategy

Billing goes beyond invoicing customers and then collecting their charges. It is a flexible process that must adapt to the pricing needs of your customers. That includes how your customers interact with your products or services, and how their bills should be generated. If billing is not in sync with subscriber requirements, it causes disjointed workflows that need manual patch-ups.

To build advanced billing strategies, your billing system needs to support factors like multiple payment gateways, versatile entitlements, and multiple plans. Otherwise, your billing strategy would be a recipe for revenue leakage.

Modern billing software like SubscriptionFlow exist to help you set up elegant and effective billing strategies, with all the flexibility needed. Keep reading and find out some vital steps that make a billing strategy great, and how to manage them.

Why Billing Strategy is Needed More Than Ever

Effective billing relies on an impactful strategy that is made with customer needs in mind. Your billing operations directly impact your revenue; the smoother the billing ops are, the more optimized the revenue generation. If billing fails to keep up with your business growth, or unique requirements, it causes loopholes that need to be fixed by hand.

And if left unattended, they contribute to revenue leakage. Since subscription businesses can’t operate without recurring billing, their payment processes are closely tied to customer experience and cash flow stability. Confusing invoices, manual payments, and rigid cycles are some huge churn-causing factors. Designing your billing strategy early on is helpful in avoiding these problems altogether.

Similarly, effective billing strategies also help align a business’s needs with its operations, so that it can reach its goals more seamlessly. For instance, you need to figure out what mix of pricing models you should offer, and how they complement your services. Choosing the right billing tools allows you to capture the full value of your offerings, and accelerate growth.

Step 1: Making Billing Cycles Flexible & Tying Them to One Paid Account

Offering a variety of billing cycles is not only a nice-to-have, but a necessity for many businesses. Billing cycles include:

One-time subscriptions
Weekly cycles
Monthly cycles
Yearly cycles
Custom cycles (all billing cadences other than the standard ones)

Each business offers billing cycles that suit the nature of their offerings, and most support an assortment of cycles tied to different plans. When businesses offer more than one cycle for different services, they need a system to manage them proactively. Billing cycle management means tracking the start and finish dates of cycles, activating the right plan tied to each cycle, collecting payments on time, and more.

It also includes tying multiple billing cycles to one paid account. This feature becomes a necessity when you have customers with more than one subscription to your products. If this feature is lacking, you need to create a different account for the same customer each time they subscribe to another plan. This makes things chaotic, as you have to manage multiple accounts under one customer.

The easiest way out of this is to allow customers to view all their active subscriptions from a single account. This is possible with billing software like SubscriptionFlow. With this software, you can freely offer as many product plans you want, each linked to a unique billing cycle. And when your customer subscribes to more than one plan (with different payment cycles even), you can link them all to a single paid account.

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The software keeps track of all the plans your customer is subscribed to, and carries out automatic billing for each plan according to its billing cycle. So no more jumping between accounts—one customer profile suffices for all their subscriptions.

Step 2: Connecting with Multiple Payment Gateways

To expand into specific markets, or scale globally, having a robust gateway-stack is important. Multiple payment gateways are an essential part of effective billing strategies. That’s because relying on only one gateway can be risky, and can really shrink your reach.

Smart billing software activates multiple payment gateways for you, so that you can offer diverse payment methods at the same time. A global gateway-stack helps you accept recurring payments from around the globe, in different currencies. Capable billing platforms also support automatic gateway routing, so that each active subscription plan can be linked to a certain gateway.

For instance, if a customer has 2 active plans at the same time, the system routes payments of one plan through Stripe, and the payments of the other via PayPal. This smart routing prevents payment failures too that may result by relying on one gateway for all payments.

Step 3: Managing Mixed Entitlements in SaaS Plans

Suppose you offer monthly subscription plans, but each plan offers entitlements that have different re-set limits. Entitlements can be:

Lifetime (they are one-time/they never reset)
Monthly (they reset with the monthly plan)
Yearly
Toggle-based (can be switched on and off whenever)

The challenge is, these entitlements need to be managed under a single plan. In other words, if a customer buys more than one entitlement, they should be able to view them all from their self-service portal. Outdated billing systems support one billing cycle at a time, and hence can’t track multiple re-set limits of different entitlements.

But modern software like SubscriptionFlow solves this problem for you. It tracks different entitlement types (monthly, yearly etc.) and resets them right on schedule. It also lets customers buy additional entitlements (add-ons), no matter how far they are into their monthly subscription plan.

And all of the add-ons can be monitored and managed under the same customer profile, making things less-frustrating for businesses.

Step 4: Allowing Seamless Plan Upgrades

When customers decide to switch to another plan, they expect the switch to be instant and effortless. Suppose a customer uses a 50 GB per month subscription plan, but runs out of storage midway through, so they immediately choose to upgrade to the 100 GB per month plan. Now the business must ensure that this upgrade is made instantly and without any friction.

The more the customer has to wait to access their new plan, the higher the risk of churn. This waiting period is needed if businesses have to manually switch the customer’s plan, and calculate their prorated charges. But modern billing platforms come with advanced proration capabilities.

No matter what the customer action is (upgrade or downgrade), and no matter when in their cycle they carry this action out, their proration is handled gracefully. Automatic proration = instant plan changes = faster customer gratification.

Step 5: Automating Dunning Procedures

Payment failures are revenue growth blockers that must be dealt with intelligently. Problem is, without an automated billing system, the most businesses can do about this issue is to rely on customers to pay again. But with SubscriptionFlow, you can actively take part in the payment recovery process, instead of just being the silent spectator.

SubscriptionFlow lets businesses set their own payment retry intervals. So you can create a retry schedule that matches the behavior patterns of your customers. Smart scheduling ensures that when payment is retried, it is a success.

In addition, you can implement other intelligent dunning tactics as well to boost payment success rate. For example, auto-reminding customers, escalating dunning emails, encouraging payment method updates, providing grace periods, and so on.

Effective dunning ensures that billing cycles continue uninterrupted, and that nothing stands in the way of customer renewal.

Make Billing Great with SubscriptionFlow

SubscriptionFlow lets you incorporate the above-mentioned 5 steps into your billing strategy with ease. You get a suite of advanced features like multi-gateway support, multiple plans tied to one account, various billing models, custom billing cadences, and mixed entitlements support—all at your fingertips.

The best part? These features support automation, meaning all your key recurring billing tasks are executed automatically. Moreover, SubscriptionFlow adds as much flexibility to your billing as required. You can have multiple customers subscribed to more than one plans at the same time.

Or you can have different entitlements that reset following different schedules. In such scenarios, traditional systems fall apart. To build an effective billing strategy and cater to complex needs, you need way more than one gateway at your disposal. With SubscriptionFlow as your billing engine, you can navigate such difficult payment scenarios effortlessly.

Gear up with SubscriptionFlow now, and build impactful billing strategies that power growth.