Dominic Smith, Marketing Director at Cerillion, explores how the role of billing solutions is changing from that of passive support and administration systems to becoming strategic platforms for creating new revenue streams and greater business value.
For many years, billing has been seen as a function or process carried out by the ‘back office’. Consequently, how to bill customers has often been the last thing to be worked out when building a new business or launching a new service.
Now, as Andrew Dailey of MGI Research states in his Forbes article, “billing and monetization processes and solutions are becoming critical ingredients enabling corporate innovation”.
Agility is fast becoming an overused word in business, but it is unquestionably now a crucial attribute for the on-going survival and success of all companies in the new hyper-competitive business landscape.
I have previously explored some of the challenges that the big energy companies have faced with poor management of complex billing system transformations.
To be able to respond quickly to the market and to customers’ needs is vital, and in an increasingly dynamic business climate, timing is all. Having the ability to monetise your products or services with an agile billing model is now crucial for companies launching new subscription and usage-based services because a legacy billing system can substantially affect your time to market – time in which a more agile competitor may overtake you.
Dailey says research shows that more than 65% of new product trials have either been delayed or scaled back because of inflexible and outdated billing systems.
Accuracy and efficiency
Until recently, most companies established and assessed their billing processes based on billing accuracy and cash collection, but in a fast moving business environment, outdated billing systems and manual processes based on spreadsheets are leaving many finance departments struggling to keep their heads above water. Billing is increasingly seen as strategic as organisations recognise that agile billing systems can help them not only improve the efficiency of cash collection, but also introduce new and innovative subscription-based services.
But agile billing is so much more than subscription management. As Dailey says, it can be defined as “business, product, and IT agility”. Previously, companies had very little choice but to invest huge amounts of money in complex billing systems that took a team of IT consultants many months and sometimes years to implement. And any subsequent changes would then need the same, expensive consultants, meaning that such systems were only viable for the biggest and wealthiest organisations.
How can agile billing systems help?
Now, agile billing solutions such as Cerillion Skyline can equip smaller and medium-sized businesses with the same flexible billing and subscription management capabilities as any multi-national behemoth. And this brings a number of key benefits for all companies:
- Being able to quickly launch new products and services
- Automating the traditionally labour-intensive billing, payment and renewal processes
- Access to new market segments using a mix of subscription and usage-based (pay-per-use) pricing models
- Enabling customers to pay via their preferred payment methods, including credit card, direct debit/ACH and PayPal
- Offering more flexible payment terms by enabling customers to spread the cost of big ticket items over a number of billing periods
- Real-time business management through visibility of key metrics including enrolments, monthly recurring revenue (MRR) and churn
This is particularly relevant in the enterprise software industry with so many companies evolving to offer SaaS versions of their traditional products and solutions. Even though agile billing doesn’t automatically mean it has to be “cloud-based” it is no surprise that most agile billing solutions are being built in the cloud because of the lower costs and ease of use. In fact, MGI Research’s survey reveals that 76% of cloud infrastructure companies and 83% of software-as-a-service businesses have opted for agile cloud billing systems.
In a highly competitive business environment, one of the few certainties is change. It is therefore crucial that companies must continue to create innovative products but be able to use pricing flexibility as a critical point of differentiation that quickly adapts to whatever the market conditions might be. So the time is now for billing platforms to move out of the back office and become strategic tools that enable business agility.
Dominic Smith
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- Recurring Billing vs Recurring Payments: A Primer - March 15, 2017
- Agile Billing and the Future of Business Innovation - October 19, 2016