Billing is an essential task that every business must tackle accurately to ensure profitability and long-term success. But as critical as it is to revenue collection, it is one of those tasks many would rather not do.
Routine but often laborious and complex, billing is the perfect business task to automate. But what does billing automation entail, and besides taking the task off your to-do list for every month, what other benefits do you get from automating your payments?
We will answer these and other questions on billing automation in this article.
Let’s get right down to it.
Billing automation establishes a process for generating and sending invoices and collecting payments with minimal manual intervention. An automated billing system uses specialised software to prepare invoices and charge customers’ supplied payment methods on specific dates.
An automated billing system fits businesses that have regular customers they bill every month. The system works even where the invoice amounts you are billing for are not uniform from month to month.
Automating billing enables the collection of recurring revenue, a key feature of subscription businesses where you seek the customer’s consent to process payment at scheduled intervals without asking for the customer’s authorisation every time.
Billing automation solves the inefficiencies and risks associated with manual billing systems. Among other functions, an automated billing system can:
All of this happens with minimal intervention by your team, which frees them to work on other areas of the business that can’t be easily automated.
A well-chosen automated billing system will help reduce invoicing costs and ensure you get paid faster. But how does billing automation work in practice?
An automated billing system gathers data from multiple systems in the business onto one platform to digitally create and send invoices and process payments on time.
Here’s how an automated billing system works:
The automated billing system collects and verifies data on submitted customer orders from the order management system. This data will include all applicable additional charges like tax, shipping, and transport costs.
If all the information is accurate to the individual customer and their account specifications, the billing system will generate the invoice and send it to the customer.
If you are using a subscription or recurring payments model, the automated billing software will proceed to charge the payment method you have on file.
The system will then file invoices for reference and bookkeeping purposes. This e-filing step also enables sales analysis and tracking, tax filing, and other reporting that helps to give an overview of the business’s cash flow in real-time.
As payments are completed, the automated billing software will automatically update the sales ledger to give an up-to-date picture of sales revenue.
Leveraging automation in business payments unlocks several key benefits. Let’s quickly explore these.
While every business will have systems for billing customers and collecting payments, these systems will get more complicated to enforce as your business and team grow. As well as reducing efficiency, there will always be a few bad apples in your team that resort to cutting corners, leading to invoicing errors.
An automated billing system rigidly follows the rules you set to ensure uniformity across the invoicing function. As a result, all invoices are sent at the prescribed times, and any applicable discounts and charges are applied as programmed into the system.
Creating and processing invoices manually is time-consuming work. The same applies to chasing late-paying clients. Automating your billing system will eliminate manual effort and speed up the billing process, saving you precious time.
You can spend the saved time doing high-level work, like improving your product and serving your customers.
If automation speeds up creating invoicing and processing payments, it will get you paid faster. And faster payments mean a healthier cash flow.
If you cannot bill customers and get paid quickly, you may have to use expensive short-term financing to plug the cash flow gap. This cuts into your bottom line and hamstrings your growth.
While the cost of investing in an automated billing system may seem prohibitively high, it will pay for itself in the labour, invoicing errors, and revenue leakages it saves your business.
Manually preparing invoices and requesting payment requires significant human effort. So, automating this critical business task will take a major task off your team’s plate.
As well as the administrative expense of human labour, this will remove stationery, postage, and other costs. Not to mention the manhours spent chasing down overdue payments. This adds up to significant savings that will boost your business’s bottom line.
As your business grows, you will have more customers to bill and invoices to process. Often, this means more work for a team that may not be growing at the same pace, which increases the incidence of billing errors that cause revenue leakages.
Automation with scalable billing software that grows with your business would improve billing accuracy and plug revenue leakages.
Automating your billing system will also ensure that customers are immediately notified of failed payments, which would easily be neglected by an overworked team using manual billing processes.
While it does not entirely remove the need for human intervention in the payment follow-up processes nor guarantee that the invoice will be paid, it will ensure that the customer is at least notified of the failed payment as soon as it happens.
Overcharge disputes caused by invoicing errors can lead to churn as affected customers switch to more efficient providers. For example, a customer who fails to receive their regular order on time because someone within your accounts department failed to bill the customer on time.
This has repercussions for the customer’s business as it may mean failing to service their own customers on time. Aggrieved customers may rightly choose to switch suppliers.
Remember that point on invoicing errors common with manual billing processes? Well, they have repercussions on compliance, too.
Levying the wrong tax, for example, will mean paying less tax than you have to, putting the business in the crosshairs of the tax authorities. Using billing software removes this risk, ensuring a blemish-free tax record.
Billing automation optimises and boosts revenue collection, which drives growth. It also enhances customer experience and reduces churn by eliminating overcharges and other billing errors that can rile customers up.
Automating your billing system should not be a mere box-ticking exercise under your business’s digital transformation agenda. It has to solve recurring billing problems that your business is facing.
This highlights the importance of choosing the right automated billing software for your business. Your billing software must be scalable and designed to meet your business and customers' needs.
For example, the Intasend automatic billing and subscription payments software is perfect for businesses looking to implement the recurring revenue model. It seamlessly integrates into your website, lets you create and tailor subscription plans to your business needs, and gives your customers in Kenya and abroad multiple ways to pay.
Streamline your billing processes with Intasend’s automated billing and subscription software. Sign up today and let us take care of your invoicing and recurring billing so you can focus on higher-level tasks.