As Simon Sinek says – “Start with Why”?
Volumes play an important role in a subscription business. This revenue is billed more frequently, in fact monthly- for 1 customer you are generating 12 invoices a year! The invoices are typically smaller in size than one-off sales. If you are reselling products (which is true for most Microsoft CSP Partners), the margins are tight. If customers don’t pay or delay payments, there is an impact on cash-flow.
How to Collect Cash Faster?
Step 0: Sell to who will pay: In order to make sure there is no risk of non-payments you need to establish credit limits, do background checks and ensure that you won’t be left with the proverbial “bag in hand”- this is typically part of your Sales Process.
Step 1: Invoice Accurately. An accurate invoice is correct on all counts.
- Who has the check or credit card? It could be the finance department, the procurement department, and the IT manager or relevant stakeholder who would need to approve your invoice.
- What are exactly are they getting billed for? Are all the services and subscriptions correct, prices, changes in quantities, and refunds clearly shown in the invoice so that there isn’t any confusion?
- When do they need to pay and most importantly receive the invoice? Is the invoice being sent to the customer on the correct date and with the correct due dates? The invoice needs delivery needs to predictable. We see so many cases where customers have cash flow issues but are not able to generate an accurate invoice on the correct date based on the billing frequency.
Step 2: Invoice: Delivery, Persistent, Actionable, Convenient: It’s imperative your invoice is delivered to the right stakeholders in a medium that is acceptable to them (email, mailed physical signed copies). Is the invoice persistent? Can the invoice be easily accessed by the intended audience? A self-service portal that shows their orders and invoices would allow them to access your invoice when they need it. Is the invoice actionable: Does it clearly state how to pay you and how convenient is it to pay you?
“The customer experience is the sum total of all customer moments. The invoice is a defining customer moment. “
What Systems are Involved in Generating an Invoice and Collecting Cash?
The problem with the above situation is that while you’ve got all the pieces together:
- There are multiple logins/identities
- Your brand is diluted and there is no consistency is not there because of the different looks and feels.
- Data is the new oil – and it’s messy to have oil all over the place
- Access to these systems is limited and to a few people. The lack of access to this data creates problems like selling to customers you don’t want to, inability to create an accurate invoice.
What is Required for a Successful Billing Automation Solution to Generate Accurate Invoices and Collect Cash?
- Customer data in one system
- Single Identity
- Single Portal for everything: what they’ve bought from you, when they bought is from you, agreements, invoices
Cash Collection is a business function:
- Credit Limit should be associated with Aging Data and affect new Sales
- The customer Payment information should be in the customer system
- Automate Collections using Payment Gateways
- Don’t reward bad behavior – Credit Holds so that provisioning is stopped
Work 365 offers a Billing and Subscription application that helps cloud companies archive the necessary requirements and processes to grow your revenue. Learn more here.