Billing, it's all about the invoice

Let’s face it, you’re in business to make money.  Invoicing is how you monetize your product or service.  Think of it as the headwaters of your company’s river of cash.  The easier you make it for your customers to pay your bill, the faster you get paid. 

Collecting payment is easy when it’s one subscriber and one invoice per subscription.  That’s the business-to-consumer (B2C) model and it’s pretty well defined and people know what they’re getting.  As a vendor, your billing problem is simple. 

Life gets vastly more interesting and challenging when you start sending invoices to companies.  That’s the business-to-business model, or “B2B”.  Unlike a consumer, the B2B customer’s left hand (think “Accounts Payable Department”) usually doesn’t know what the right hands (the users of your product) are doing.  They rely on systems rather than memory, and your invoice has to work within their system, or payments will be delayed or stopped completely. 

In its most basic form, a business to business invoice has to communicate six things: 

• the seller’s identity
• what was purchased, usually by referencing a purchase order number and line number
• the value and how it was calculated
• taxes applied
• currency
• location and method of payment (electronic or physical)

 

Most consumers only care about the first, third and last points.  Businesses need them all, especially when the auditors arrive.  Things like corporate tax identifiers, company registration numbers and other information that looks needlessly bureaucratic is essential to getting your invoice through the maze of approvals and checks at the receiving end.  Even if payment is automatic, poor preparation of the invoice can lead to needless effort resolving issues that should never have come up in the first place.

Freemium conversions: Sales versus Finance - whose job is it?

An automated billing solution smooths out the flow of revenue and cash from freemium renewals by ending the debate over whose job it is to remind your customers to renew. 

Let’s just say that you’re commercializing an open source product on the freemium model.  You have a million or two “free” users and a nicely growing group of paid subscribers getting the enhanced version of the product.  While you might not consider your customers “subscribers”, the term “subscription” in this context is a bit of payments and billing jargon that describes an enduring business relationship that has to be invoiced occasionally to keep it alive.   

Depending on your business model, but most likely once a year, your existing paid premium subscribers need to renew their subscriptions.  The question is, which part or your org chart should be responsible for making sure renewals happen?  In most companies, Finance takes the position that coaxing customers to renew isn’t their job, and that they wouldn’t be very good at it even if it was.  Meanwhile, to keep the growth rolling, your sales force is tightly focused on generating new revenue from new customers.  They’re loath to stop pursing new business and turn their attention to what looks like a low-value maintenance job.   

But, regardless of whether anyone wants to do it, somebody has to reach out and remind your customers that it’s time to renew.  Your customers are more focused on using the product than paying for it. Chances are good that if you don’t remind them to renew, they just won’t get around to it.  If the “premium” part of their service stops when they don’t renew, they will probably get around to renewing in a few months, but then again, maybe they won’t.   

What’s our experience in this model?  Well, in the last few months, two freemium business-model companies have begun using Monexa Billing to automate their renewals.  It’s a simple solution to a vexing problem.  The subscription billing application remembers the customers’ details and it automatically reminds them when their subscriptions are about to run out.  This keeps the sales force selling to new customers, and allows the finance staff to respond only to exceptions where payments don’t arrive properly.    

You get a smooth revenue flow, peace between finance and sales, and best of all you have happy, up-to-date paying customers.