Technology & Innovation
Usage-based billing software: Billing-only vs. a complete FinOps platform
The type of usage-based billing software you use can make or break your SaaS company. See how stand-alone billing solutions stack up against Sage Intacct. The type of usage-based billing software you use can make or break your SaaS company. See how stand-alone billing solutions stack up against Sage Intacct.
The demand for billing flexibility is one of the hallmarks of the SaaS industry. Between usage-based billing, feature pricing tiers, and all kinds of hybrids between the two, accounting teams at startups are quickly discovering the need for effective, sophisticated usage-based billing software.
That was the situation that Jared, a newly hired SaaS CFO, found himself in. His company was experiencing strong growth, and since manual processes were no longer sufficient, it was his job to:
- Optimize the firm’s billing: Growth is always a positive for recurring revenue companies, but it needs to be managed intelligently to be maintained across time. Jared needed to make sure that his choice of usage-based billing software could help him not only avoid manual billing bottlenecks but also help him forecast to find the most profitable billing strategy.
- Ensure accounting operations scaled with demand: Sometimes, when companies scale without the right usage-based billing software, something that should be positive–fast growth–starts fueling complications. Customers can be invoiced incorrectly, compliance architecture frequently isn’t in place properly, and other issues can arise from corporate growth that isn’t supported by an automated software suite.
Knowing this and wanting to get ahead of it, Jared made his first investment in SaaS recurring revenue software.
Jared’s first automated billing-only software
For his initial foray into usage-based billing software, Jared selected a billing-only solution. At first, he and his team were quite content with the results it was facilitating.
In particular, they were pleased with their newfound ability to:
- Automate their AR invoicing: As they were previously using manual billing software, the whole team was happy about introducing automation into their receivables and payables workflows. The greater speed and integration between data gathering, validation, and payment processes was highly appreciated.
- Do simple revenue recognition: ASC 606/IFRS15 and other financial regulation wraps a lot of red tape around modern companies. Introducing usage-based billing software into the mix gave Jared and his team valuable peace of mind that they were always staying on the right side of GAAP and other regulations as their billing needs expanded and grew more complex.
- Do AR reporting: Accounting teams who use manual billing software like Quickbooks all run into a similar issue sooner or later. Their data and workflows are spread across so many locations that they’ve slowly ceased operating as an effective, cohesive unit. Starting with tracking AR, DSO, and invoicing is a good start.
Despite these benefits, Jared felt something was missing after spending two financial quarters with his new software purchase. He spoke with his team and rallied their support behind looking at how to scale the FinOps Tech Stack with the next level of software solution.
Billing software for 21st-century teams
Jared’s second attempt at implementing usage-based billing software allowed them to scale reporting, forecasting, cash-flow, AP, and SaaS metrics. He went with Sage Intacct and was immediately able to:
- Leverage role-based dashboards: Jared was looking for billing software that could help him track the relationship between pricing decisions and metrics in real time. Sage Intacct’s role-based dashboards exceeded his expectations in this regard and even helped them break into overseas markets. Each customizable dashboard allowed key finance leaders on his team to see all the metrics and data they needed for their roles in one glance. Tedious data gathering was no longer necessary to make essential billing decisions.
- Access billing flexibility for any need: Jared’s company was using a unique hybrid billing model which his previous billing software had experienced difficulty supporting and integrating with. Luckily, he and his team were able to use Sage Intacct to finally access the hybrid billing flexibility they needed. Almost overnight, reporting problems and other accounting issues that had been nagging their department for months began to improve.
- Strategize for long-term profits: When teams use billing software to forecast different billing strategies, minor pricing differences can have substantial cumulative impacts. Pricing differentials measured in cents–and even fractions of cents–matter far more than you’d think over time. Jared loved that he could use Sage Intacct’s advanced cloud-based forecasts to run a fine-tooth comb through all his pricing possibilities before committing to decisions.
- Automate the invoicing process: Given the rate at which the company was growing, Jared knew he needed a completely automated invoicing process. Leaving even one aspect of that critical workflow to manual processes was too risky. It only takes a few customer reviews about billing mistakes to negatively impact a company’s online reputation. Jared saw a second important role behind billing management–corporate reputation management. Thanks to Sage Intacct, he knew touchless invoicing would cut errors to zero.
In the end, Jared got lucky. It only took two tries to find software that helped his company scale effectively and surpassed all his needs in general. That’s because he went into the usage-based billing software buying process with a clear idea of what he wanted from his purchase.
Usage-based billing software that gets results
If you and your accounting team have found yourself feeling like your billing software could be doing more, you’re probably not wrong.
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