Revenue is crucial for businesses, but an inefficient billing system can make payments harder to process, impacting growth. All types of companies can face issues with revenue and payment, but small businesses tend to suffer more. According to a survey by YouGov, 59% of small businesses have experience with late fees, and one-third of them are at risk of closure due to this issue.
As such, technology is emerging as a tool and solution to make billing more efficient. CEO Rex Barr notes that tech like artificial intelligence (AI) is quickly maturing and evolving, paving the way for automating tasks, improving decision-making, and uncovering new opportunities. Automation, in particular, is gaining more traction for billing and revenue management. By leveraging automation technology, businesses can streamline their billing processes, reduce errors, and capture more revenue.
Revenue challenges
Manual processing
Outdated and manual processes can make billing and revenue harder to manage. Time-consuming manual invoicing, data entry, and payment processing lead to errors, delays, and increased costs. Disparate billing systems across different departments can also create inconsistency, complicate reconciliations, and hinder data analysis. Complex subscription models with various tiers, usage-based billing, and frequent changes can be difficult to manage and keep track of using manual processes.
Payment delays and errors
Late payments disrupt cash flow and impact business operations. While customers may sometimes be at fault for this issue, your outdated processes may be causing late charges. Furthermore, billing errors or unclear invoices can lead to customer disputes and damage relationships. Errors might cause you to undercharge, leading to revenue loss or overcharging, which can cost you customers.
Changing customer preferences
Evolving customer expectations for flexible payment options, transparent pricing, and self-service options necessitate adapting billing models. For instance, subscription-billing models are becoming more popular as more people pay for subscriptions to various services; regarding subscription video-on-demand (SVOD) service alone, data from Statista notes that 83% of consumers in the United States pay for this service. As such, businesses must offer dynamic pricing strategies to remain attractive in a highly competitive market, but the transition can be difficult when billing and revenue are managed inefficiently.
How automation can help
Managing complex billing models
Fixed, subscription, recurring, and consumption-based billing are only a few models businesses use to charge consumers. While more complex models can provide more flexibility, it can get complicated to manage, especially if more than one is being used. Automation can streamline even the most complex billing models, keeping clients engaged. SOFTRAX’s consumption billing solution showcases how automated billing software is built to handle the unique operations of metered billing, resulting in a seamless billing and revenue recognition process. It can help monitor usage levels and organize contract details promptly. Automation makes it easier to keep track of consumption to ensure accurate pricing for every customer, maintain relationships, and increase satisfaction.
Data-driven insights
Automation allows your businesses to see and utilize real-time analytics to help improve your billing models and increase revenue. You can gain insights into customer behavior, pricing models, and revenue trends to optimize billing strategies and identify new opportunities. Predictive billing also offers opportunities to gauge how much a customer consumes. Leverage machine learning to anticipate customer spending patterns and optimize pricing models for maximum revenue. More data-driven insights from automation also allow you to spot any errors that can impact payments or revenue. You can spot fraudulent transactions or late payments faster, enabling you to protect revenue and reduce risk.
Focusing on business practices
Managing manual processes and inefficient billing systems can take time away from core business activities. Automation takes care of menial tasks and repetitive tasks with ease, efficiency, and accuracy. This can help, especially if you want to shift to a new billing model. Subscription insights from Inc. highlight that adopting a subscription-based billing model requires planning and forethought to ensure that customers and clients recognize the value of your services. To justify recurring billing, you must demonstrate value and service consistency to customers to keep them engaged and the revenue flowing. Automating your procedures can give you more opportunities to focus on improving the value of your services to increase your cash flow.
