What NOT To Look For in A Recurring Billing System

Stop Customer Churn
March 17, 2021
Most new startups and businesses that have recurring billing needs to weigh in several points before choosing a recurring billing system. But it’s not as simple as choosing the first software that works.
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Fun fact. Billing is as old as the human civilization when the Mesopotamians used the cuneiform script on clay tablets to record transactions. 

Since then, billing has leaped a thousand times, some moving on to be a recurring event and became what is known today as subscription billing. 

Most new startups and businesses that have recurring billing needs to weigh in several points before choosing a recurring billing system. It’s not as simple as choosing the first software that works. This is because the reach of a recurring billing system is more extensive than what people might initially assume. It can affect your product, customer care, as well as reporting and accounting. 


If you don’t consider these, you might end up with an additional expense and possible disruption in your business. Here are some reasons why a subscription billing system might not work for your business


1. Fixed Billing Systems

The market is ever-changing, and your business should be, as well. Be careful not to choose a very particular system that can limit the implementation that can help you implement various ideas that take advantage of new market opportunities.


For example, does it feature dunning management? Dunning is an important aspect that your recurring billing system should be able to handle. If you have declined payments, what does it do? Does it bombard your users with reminder emails? Or does it just stop the billing and cancel the account entirely? 


If you’re using an inflexible system. It can lead to missed opportunities for your business and also might lead to poor customer service. 


The system should be able to give an easy way for users to upgrade, downgrade, or cancel their subscriptions. Rigid systems might make your customers feel like they’re locked or stuck to a level or package. Giving your customers the power and control to manage their accounts not only provides better customer service but also saves you time and reduces billing support queries.


2. Lack of Standard Accounting Processes

Aside from billing capability, your recurring billing system should be able to handle other financial management needs that are connected to billing. Among other things, you may need credit card reporting, sales analysis, and financial reporting, collections, and cash receipts. Choose a billing solution that can manage these standard accounting processes.


3. Lack of Integration Options

Most startups and new businesses have unique in-house applications or processes that come from their business model. Adding a billing system into the mix may result in unexpected ways. Especially if integrating with legacy systems, most subscription billing systems get stuck or might be totally non-integratable. That’s why it is very important to also consider this when choosing your subscription billing system. 


Take advantage of billing systems that offer robust API which can be used for in-house custom calls. At best, your billing solution should have a developer platform so your programs can be properly integrated in a way that works best for your customers. 


4. No Proper Reports for Revenue Tracking

Over time, your system will get clogged up with recognized revenue and deferred payments. A powerful ledger-based subscription management platform allows a business to control revenue recognition at the product level so it can differentiate between earned and deferred revenue on subscription products while also earning one-time fees immediately or over a period of time as desired. Tracking these becomes a problem and most custom legacy systems and off-the-shelf billing systems will not update your general ledger. It cannot give an updated and accurate report nor perform other complex calculations. However, the right recurring billing software can easily monitor this revenue recognition schedule for you in real-time. Ignoring  these can lead to compliance and audit problems and doing these functions manually can result in high internal costs and time wastage. 


5. Missing Customer Service Tools

Your customers are the center of your business. Therefore, your billing system should allow you to look them up easily, and edit them at will without the extra steps and unnecessary processes. Subscribers might contact you thru email or phone and request downgrades or upgrades, some require refunds or credits for any problem encountered. If you have a rigid and inflexible billing system, this can be detrimental to keeping your customers happy and satisfied with your service to prevent further chargebacks. 


6. No Customer Relationship Indicators

Aim to get a billing system that alerts you when your customers are about to churn. You should be able to set reports if a customer has not logged in for some time or with credit cards about to expire. This can allow you to have plans when this happens or set up a process to avoid future churn. 


Having so many options out there can be confusing. But it is essential to research and compare your options to whittle them down to your favorites. Get to know their capabilities and limitations, – especially considering the possible effect they can have across your entire organization. Also, remember that a subscription billing system is not the be-all and end-all answer to subscription problems and churn. A system is important but probably more so is the choice of how to retain your customers. 


Here at Gravy, we’re glad to extend the power of your billing system with a personal touch that is personalized for your brand. Human connections grow active customers by more than 50%. Customer relationships are the core of any business. Unlike dunning software — Gravy maintains your customer loyalty regardless of their situation.

Fun fact. Billing is as old as the human civilization when the Mesopotamians used the cuneiform script on clay tablets to record transactions. 

Since then, billing has leaped a thousand times, some moving on to be a recurring event and became what is known today as subscription billing. 

Most new startups and businesses that have recurring billing needs to weigh in several points before choosing a recurring billing system. It’s not as simple as choosing the first software that works. This is because the reach of a recurring billing system is more extensive than what people might initially assume. It can affect your product, customer care, as well as reporting and accounting. 


If you don’t consider these, you might end up with an additional expense and possible disruption in your business. Here are some reasons why a subscription billing system might not work for your business


1. Fixed Billing Systems

The market is ever-changing, and your business should be, as well. Be careful not to choose a very particular system that can limit the implementation that can help you implement various ideas that take advantage of new market opportunities.


For example, does it feature dunning management? Dunning is an important aspect that your recurring billing system should be able to handle. If you have declined payments, what does it do? Does it bombard your users with reminder emails? Or does it just stop the billing and cancel the account entirely? 


If you’re using an inflexible system. It can lead to missed opportunities for your business and also might lead to poor customer service. 


The system should be able to give an easy way for users to upgrade, downgrade, or cancel their subscriptions. Rigid systems might make your customers feel like they’re locked or stuck to a level or package. Giving your customers the power and control to manage their accounts not only provides better customer service but also saves you time and reduces billing support queries.


2. Lack of Standard Accounting Processes

Aside from billing capability, your recurring billing system should be able to handle other financial management needs that are connected to billing. Among other things, you may need credit card reporting, sales analysis, and financial reporting, collections, and cash receipts. Choose a billing solution that can manage these standard accounting processes.


3. Lack of Integration Options

Most startups and new businesses have unique in-house applications or processes that come from their business model. Adding a billing system into the mix may result in unexpected ways. Especially if integrating with legacy systems, most subscription billing systems get stuck or might be totally non-integratable. That’s why it is very important to also consider this when choosing your subscription billing system. 


Take advantage of billing systems that offer robust API which can be used for in-house custom calls. At best, your billing solution should have a developer platform so your programs can be properly integrated in a way that works best for your customers. 


4. No Proper Reports for Revenue Tracking

Over time, your system will get clogged up with recognized revenue and deferred payments. A powerful ledger-based subscription management platform allows a business to control revenue recognition at the product level so it can differentiate between earned and deferred revenue on subscription products while also earning one-time fees immediately or over a period of time as desired. Tracking these becomes a problem and most custom legacy systems and off-the-shelf billing systems will not update your general ledger. It cannot give an updated and accurate report nor perform other complex calculations. However, the right recurring billing software can easily monitor this revenue recognition schedule for you in real-time. Ignoring  these can lead to compliance and audit problems and doing these functions manually can result in high internal costs and time wastage. 


5. Missing Customer Service Tools

Your customers are the center of your business. Therefore, your billing system should allow you to look them up easily, and edit them at will without the extra steps and unnecessary processes. Subscribers might contact you thru email or phone and request downgrades or upgrades, some require refunds or credits for any problem encountered. If you have a rigid and inflexible billing system, this can be detrimental to keeping your customers happy and satisfied with your service to prevent further chargebacks. 


6. No Customer Relationship Indicators

Aim to get a billing system that alerts you when your customers are about to churn. You should be able to set reports if a customer has not logged in for some time or with credit cards about to expire. This can allow you to have plans when this happens or set up a process to avoid future churn. 


Having so many options out there can be confusing. But it is essential to research and compare your options to whittle them down to your favorites. Get to know their capabilities and limitations, – especially considering the possible effect they can have across your entire organization. Also, remember that a subscription billing system is not the be-all and end-all answer to subscription problems and churn. A system is important but probably more so is the choice of how to retain your customers. 


Here at Gravy, we’re glad to extend the power of your billing system with a personal touch that is personalized for your brand. Human connections grow active customers by more than 50%. Customer relationships are the core of any business. Unlike dunning software — Gravy maintains your customer loyalty regardless of their situation.

Start Recovering
Failed Payments Today.
Start Recovering
Failed Payments Today.