Subscription Invoicing Software for SaaS Businesses: Key Features

Invoicing may appear simple on the surface, but that’s actually a very crucial as well as complex part of revenue management. This is doubly true for SaaS subscription services that have to deal with recurring revenue. Their invoicing procedures can either help them deliver great billing experiences, or can stagnate their growth due to excessive manual reliance.

To turn invoicing into a growth driving tool, subscription invoicing software is what SaaS businesses need. This software doesn’t just act like a billing assistant. In fact, it becomes the foundation of SaaS growth that helps businesses achieve success faster.

Let’s find out the top features you should watch for when choosing your subscription invoicing software.

Reasons Why Invoicing is Complicated for SaaS Businesses

SaaS businesses often face invoicing complications due to these factors:

Recurring billing cycles

Subscription cycles progress when billing does. That’s why billing cycles are recurring. Since customers need to be billed on a repeat basis, repeat invoicing is required too. Invoices serve two major purposes for the customer. One, they act as payment receipts, and two, they serve as payment reminders.

When a customer’s payment date arrives, their invoice needs to be generated instantly. If the payment is collected on an automatic basis, then the invoice is sent to the customer as a receipt. But if the payment has to be made manually by the customer, then the invoice serves as their reminder.

In either case, keeping up with every customer’s billing interval, and creating their invoice timely can fast turn into a headache, especially if your customer volume is growing. Relying on manual efforts to carry out invoicing leads to errors in billing and erodes customer trust.

Usage-based charges

It’s complicated as it is to manage fixed-fee billing cycles. Adding usage-based charges only deepen that complexity. Each SaaS vendor has different usage metrics. You might generate bills based on the number of API calls consumed, streaming minutes used, storage space utilized, or number of users active. Each metric requires a different kind of measurement, and also has to be converted into a payable amount.

Mistakes in usage measurement means producing incorrect bills, either overcharging for the service, or undercharging. Both negatively impact customer relations and cash flow.

Add-ons, discounts, and credits

Flexible services allow users to purchase add-ons, and that often requires consolidating charges, creating a unified invoice, and handling multiple entitlements for the same user.

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Similarly, managing discounts also needs much more than manual discount tracking and application.

The start and end dates of discounts cannot be missed, and they shouldn’t be granted for longer than the promised duration. Businesses also need to ensure that coupon codes are de-activated at the right time to prevent misuse.

And when credits enter the scenario, they make invoicing even more challenging. That’s because businesses need to keep track of each customer’s credit balance, and need to constantly convert credits into currency or currency into credits for quick renewals or other purchases.

Mid-cycle plan changes

It is great to let customers change their subscription plan at will, either at the start, end or middle of their current cycle. But it requires flawless proration from the business’s end. Otherwise, remaining usage can’t be converted into precise charges, and precise invoices can’t be created.

How Subscription Invoicing Software Becomes the Game Changer

Subscription invoicing software takes billing complications away. It does that by:

Automating invoice generation

With reliable invoicing software, SaaS businesses don’t risk running into billing mistakes, or delaying charges. The software generates invoices that reflect the plan and charges of each customer accurately. Moreover, these invoices are created and dispatched instantly right when the billing date arrives. So, there’s no overlooking bills or delaying payments.

Handling multiple billing models at once

Models like usage-based, tiered and volume-based pricing are supported so that businesses have to put in as little manual work as possible. Billing calculations follow the model selected, and error-free bills are produced.

Prorating precisely

With this software, mid-cycle plan changes are not intimidating. When a plan is changed midway, the software ensures that an updated invoice is created in real-time, and sent to the customer. If any of the customer’s remaining usage is adjusted in the new plan’s total charge, the invoice shows that clearly, fostering transparency.

Supporting multiple currencies and tax calculations

Invoicing can be done in different currencies. Each customer can receive their bill in their country’s currency by default. This makes charges easy to understand, and also removes the currency-conversion complications for businesses and their clients.

Moreover, the software helps with tax compliance as well. Complying with different tax laws all at once is extremely challenging, and businesses can’t afford any mistakes in tax calculations. That’s why the software automates these calculations according to each region’s unique tax rules and applies them to the concerned invoices itself.

Syncing data across all integrated systems

Capable subscription invoicing software for SaaS businesses allows the creation of a unified software ecosystem. To this ecosystem, businesses can add all the applications necessary for keeping their operations going. Such as an accounting and a sales management software.

The invoicing software acts like your central platform, holding all the integrated software together, and syncing the billing and customer data across them to keep it unified and consistent for all your teams.

Key Features You Should Look For

Your subscription invoicing software should be relieving your workload, not adding more to it. That burden often arises when businesses hold onto legacy invoicing solutions that can’t keep up with modern standards. This the list of the essential features found in modern invoicing software, so you can identify and implement the right one for your business:

Automatic recurring invoicing

You should never have to create invoices yourself. Modern software handles that for you. It produces unique invoices for each customer, every billing cycle, and ensures that it is error-free. This not only speeds up your payment processes, but also reduces customer disputes that arise in response to billing mistakes.

Custom invoice templates

What’s more, all invoices don’t have to look the same. A good invoicing software lets businesses personalize invoices by either using the available invoice templates or creating their own. So, businesses can generate customized invoices for different customer segments, making it easier for them to identify which payment belongs to which segment.

Integrated payments

Invoices should include pay now buttons embedded into them. These buttons help users pay with just a single click so that they can pay fast, and without having to fill any payment forms again or going through any other additional steps.

Tax management

Good invoicing software simplifies tax management, by auto-calculating taxes by region, and applying them to the invoices. This way, every invoice shows the appropriate amount of tax deducted and shows the type of tax as well (e.g. VAT, sales tax or GST).

Dunning and retry mechanisms

Recurring payments face higher payment failure rates. Payments can fail because of card expiration, gateway downtime, and insufficient funds. In such circumstances, dunning measures become important as they allow you to win back payments and prevent revenue loss.

Smart software enable businesses to implement numerous dunning strategies. Payment retries, grace periods, payment reminders, and escalating emails among them.

Multi-gateway functionality

Successful businesses build powerful gateway stacks that help them combat payment failures and involuntary churn. Having multiple active gateways simultaneously guarantees that if one gateway is unable to retrieve the payment, the other gateways serve as its backups and redirect payment through them. This increases payment success, and also speeds up collection.

SubscriptionFlow Makes Invoicing More Powerful Than Ever

SubscriptionFlow is an AI-driven invoicing software, designed to elevate billing workflows and improve revenue operations. This is how it makes your invoicing pain-free:

AI-driven dunning and payment recovery

The software makes payment retries effective by learning from past failure and retry data. It optimizes retry timings according to what works best for each customer. Moreover, the system identifies payment methods with least failure possibility, and encourages customers to shift to those for paying.

Advanced usage metering

No matter which usage metrics you adopt, SubscriptionFlow automatically measures your customers’ consumption according to them and records their total consumption precisely. When the usage period ends, it converts all the usage data into an accurate total bill and sends the invoice to the customer itself.

Easy payment reconciliation

Invoices smoothly and automatically move from SubscriptionFlow to your accounting software. This means that you don’t need to manually map invoice data in the accounting software, and repeat this process for thousands of invoices. Your invoicing and accounting systems, instead, harmoniously reconcile payments automatically, and highlight any errors.

Real-time analytics

Businesses get to see their earned recurring revenue in real-time. The software also helps in forecasting revenue at any point in time so that businesses can manage their expenses accordingly. Other than revenue, you can also monitor metrics like customer lifetime values and churn rate. You can also forecast incoming cash flow and payment failures to make your financial planning more effective, and precise.

Subscription invoicing software isn’t just a billing tool—it’s a core part of SaaS revenue operations. Get your invoicing right with SubscriptionFlow, and reach your revenue goals faster.