Subscription billing errors aren’t just frustrating to customers; they can hit a company’s bottom line. In the telecom industry, for example, up to 15% of all bills are estimated to be incorrect, according to industry research by Unistar Purchasing Solutions. Mistakes of this magnitude are embarrassing and reputation-damaging. And because subscriptions represent recurring sources of revenue, billing errors may not be caught for numerous billing cycles, which compounds financial and reputation losses. Finally, accounting and billing mistakes in certain industries can have regulatory and compliance implications. Consequently, finance teams in subscription-based businesses are under immense pressure to minimize subscription billing errors that affect the company’s all-important annual recurring revenue (ARR).
The key for finance teams to minimize billing and accounting errors is to embrace subscription management technology. Through subscription management technology, companies can reinvent the customer experience across the entire sales lifecycle, including imposing new quality controls and standardization for billing and accounting. Finance teams play a key role in helping their company to design and optimize quoting, billing, and accounting functions for the subscription management platform. It is finance teams that can offer invaluable expertise and firsthand knowledge about how to protect a company’s financial standing and the customer experience.
Let’s explore four key ways that every accountant should be using subscription management technology to prevent billing mistakes and other accounting errors:
1.Enable subscription bundles and billing terms to be customizable: In most subscription-based companies, the sales team typically has limited options for how it can configure and customize subscription bundles, and which special billing terms can be offered (such as a waiver of setup charges, an introductory price, or a nonstandard billing date). The main reason is that many customizations traditionally end up being too difficult to manage—in other words, the risk of errors and mistakes is too high. Subscription management technology, however, makes it feasible for companies to introduce customer-friendly customization options to both subscription bundles and billing terms. The subscription management platform takes care of automatically applying these customizations when generating orders, creating invoices, and recording payments, ensuring that sales teams can configure subscription bundles and billing terms the way their customers want. Finance teams are ideally positioned to help configure a company’s subscription management platform, as finance has the deepest understanding of which configurations make sense and which will create headaches down the road.
2. Ensure full integration with backend systems: When sales teams generate quotes and orders, they’re often responsible for more than just the customer-facing paperwork. They also are responsible for entering relevant sales data—often manually—into order management and accounting systems on the backend. All of these data entry points represent potential places where errors and mistakes can be introduced—problems that can quickly snowball into frustrated customers potentially impacting your bottom line if they are not quickly corrected. Finance teams can prevent this revenue leakage by investing in subscription management technology. Not only does the platform take care of guiding sales reps in generating error-free quotes and invoices, but the underlying data from the sales cycle can be automatically synced with backend order management and accounting systems. In this way, accurate information will flow continuously and automatically between systems, minimizing chances of human oversight and error with data entry.
3.Produce fully compliant, audit-ready reports: Sales teams are supposed to help keep mistakes and errors out of bills and accounting ledgers. But the ultimate responsibility for preventing financial errors falls on the company’s finance team. Indeed, finance teams must be obsessed with keeping records clean and accurate—so they can rely on this data to produce budget reports, meet compliance reporting requirements, and prepare for audits. Subscription management technology helps finance teams to maintain clean, standardized financial records—not only by putting up guardrails and introducing automations and integrations that reduce the data-entry mistakes made by sales teams, but also by automatically compiling and generating various budget analyses and compliance and audit documents. Armed with these resources, finance teams can consistently produce fully compliant, audit-ready reports that ensure they look good in front of executive management.
4. Improve the precision of sales forecasting: Subscription customers have the potential to provide a reliable, long-term revenue source—but only if they’re satisfied and see value in continuing their subscription. Fortunately, there are multiple metrics that companies can use to gauge customer satisfaction and predict likelihood of renewal, and it’s up to finance teams to be tracking and sharing these insights with management. Subscription management technology makes it easy for finance teams to forecast customer satisfaction and renewal rates. Because the subscription management platform automatically tracks characteristics of sales transactions such as “Renewal opportunity” and “Renewal quote,” finance teams can readily configure the platform to produce highly granular, specific intelligence—for example, about existing customers who receive renewal opportunities vs. who request renewal quotes vs. who actually renew (and if the size of renewal deals is going up or down).
Finance teams have an all-important role to play in preventing billing mistakes that damage a company’s reputation among customers and that can drag down the company’s bottom line. Fortunately, subscription management technology can help finance teams achieve their goals by enabling sales teams to customize subscription bundles and billing terms for customers, by automating the flow of data to backend systems, by producing fully compliant and audit-ready financial records, and by improving the precision of subscription sales forecasting.
Simplus specializes in helping businesses improve the quality of their billing data using Salesforce’s industry-leading Subscription Management platform. To learn more about how we empower finance teams to prevent costly, reputation-damaging billing mistakes from slipping through, please reach out to Simplus today. We look forward to showing you how to optimally design and manage your quoting, billing, and accounting functions.