While subscription-based SaaS products have become more mainstream for consumers, the behind-the-scenes business processes of the companies that develop them remain unique, and a bit complex. Think about it: what once was billed on a one-time basis is now billed on a regular, recurring basis—whether that be monthly, quarterly, annually, or anywhere in between. Subscription models typically make software more attainable for customers through lower costs and OpEx classification, but can easily create an administrative nightmare behind the scenes. And once you start growing, the difficulties only multiply. That’s why subscription billing software for SaaS companies needs to work seamlessly with the rest of your operations.

When your business needs more than just subscription billing

Very few companies start out with the technology they need to grow. This is especially true in the software industry as there is little to no overhead required—just a computer, developers, and a dream to conquer the world. When it comes time to go to market, many development companies choose to invest in basic bookkeeping software instead of a comprehensive, enterprise-level business management tool. This is understandable, as software-as-a-service companies don’t have to deal with the complexities of, say, a manufacturer. But as a SaaS company grows, its own set of challenges can quickly crop up—namely, financial management, recurring billing, and revenue recognition. And as success continues, so do the hurdles: international expansion, payroll, sales, planning & budgeting, and project management.

What it boils down to is this: no matter how innovative your software offerings are, you need to have the back-office infrastructure to support your growth, make your customers happy, and keep the cash flowing. The minute you stop providing value anywhere along this value chain, your customers will stop providing revenue.

Before we dig more into subscription billing and how it fits into the ERP equation, let’s first take a look at some of the most common problems SaaS companies face and how they can stop growth in its tracks.

5 common ailments of SaaS companies

Tip: A band-aid won’t fix a broken leg. To find the best solution for your company, you have to have a complete understanding of your pain points and processes.

Subscription Billing Software for IoT Companies
#1: Disjointed Processes

You’re frustrated by:

  • Time-consuming workarounds
  • Duplicative work
  • Clunky Excel spreadsheets
  • Manual & confusing customer renewals
  • A different platform for every function
#2: Painful Closings

You’re frustrated by:

  • Manual reconciliations
  • Lack of controls and audit trails
  • Re-keying existing orders (and making mistakes in the process)
  • Rushed closes
Subscription Billing Software for IoT Companies
#3: Slow Order-to-Cash Process

You’re frustrated by:

  • Lack of CRM visibility
  • Manual order validation
  • Bad data
  • AR delays
  • Compromised liquidity
#4: Rev Rec Problems

You’re frustrated by:

  • Maintaining compliance with ASC606
  • Managing deferred revenue
  • Relying on spreadsheets and manual formulas
  • Validating data sources
  • Calculating allocations
#5: Manual Billing & Subscription Management

You’re frustrated by:

  • Manual upsells/downsells
  • Calculating promotions
  • Misaligned contract begin and end dates
  • Missed renewal opportunities
  • Manually tracking devices
  • Revenue leakage

The common denominator

Why do so many SaaS companies struggle with the same problems? A hodgepodge of disparate business management systems (CRM, professional services management, accounting, billing) that don’t talk to each other or share information in real-time.

You’re lacking a single source of truth, therefore spending more time tracking down information and data re-entry. This manifests itself in the frustrations discussed above.

What’s the fix?

Well, it depends. You need to have the right technology to support your unique SaaS value chain operations, communicate with and manage your subscribers, and stay in compliance.

Subscription Billing for SaaS Companies | 360 Subscription Billing - Built for NetSuite


Subscription billing software for SaaS companies

While subscription billing is only part of a software company’s woes, it’s an important one.

Subscription billing is charging customers a predetermined rate at a regular, predetermined interval, i.e. monthly, quarterly, or yearly. This popular billing model allows a customer to spread charges over a period of time rather than all upfront. For business customers, subscription-based purchases are typically classified as operating expenses which boils down to fewer headaches and more cash flow.

With the recent boom of companies offering subscription-based products and services, there is no shortage of recurring billing software platforms to choose from. Like most other software purchases, which one is right for you is largely based on your business’ specific needs.

But what if you have a mix of license and service offerings and have needs beyond just what the popular, non-ERP-based subscription management platforms can offer?

For software companies, that’s often the case. Here’s why:

  1. Being able to start billing and recognizing revenue for the subscription usually also requires that the license be activated and/or the services be completed as well, if applicable.
  2. Including all of the bundled elements (software subscription, professional services, etc.) on the same order is critical for revenue recognition. Remember, per ASC606, they must be all together for “Fair Value Recognition” to keep them in compliance.
  3. Being able to manage professional services and related billings along with SaaS subscriptions all in one system, while, at the same time, keeping it simple enough for your teams and providing a great user experience. Scaling your business can be very tough if internal pains from consolidating, co-terming, and protating charges become transparent to your customers.

And that means…?

You need to have the right mix of technology and processes in place to sell, manage, track, and bill both the license(s) and associated subscription services for the lifetime of the relationship.

For SaaS companies, that stack typically looks something like:

  • Cloud-based ERP – A scalable financial management solution that automates critical processes from billing and revenue recognition to payables and payroll, and that provides complete and real-time visibility into financial performance.
  • Professional Services Automation – A PSA system should streamline bid-to-bill processes associated with your services division, and include project and resource management, project financials, and invoicing capabilities.
  • Subscription Billing Platform – Automate recurring billing with easy renewals, subscription changes, rev rec compliance, device/assets/sites tracking, real-time integration with the financial system.

Subscription Billing Software for SaaS Companies

NetSuite + 360 Subscription Billing

Built with SaaS in Mind

NetSuite provides built-in functionality to meet the complex requirements of software-as-a-service companies. From accounting to project management, budgeting to payroll—NetSuite is the world’s #1 cloud ERP system with native functionality to meet these needs.

When integrated with 360 Subscription Billing, it’s easier than ever for growing software subscription companies to expedite financial processes, ensure compliance, manage recurring revenue, deliver quality services, and more—all in one system.

It’s time to leave the manual labor and disjointed, siloed business processes where they belong—in the past. Get connected with one of our experts to discover the potential.