As many business owners will testify, doing the work - providing the service or supplying the ordered goods - is the easy part. Getting paid? Not so easy.
And it really should be the other way around.
Among other payment challenges, you may either not get paid on time or at all. In both cases, you may either send the invoice late or fail to follow up on unpaid invoices, usually because other tasks get in the way.
As a result, you collect less revenue than you should, which is generally unsustainable. So, how do you plug these revenue leakages?
This article will teach you how to automate billing - step by step - to get paid faster.
Let’s dive right in.
Automatic billing is where you automatically create and schedule invoices so you can send them to customers on a specific date. This also enables you to automatically withdraw payments from customers' accounts, otherwise known as autopay.
Since the process happens digitally, billing customers automatically removes the need to manually prepare and send invoices to customers at the end of every month-end, which saves you time and money.
Manually creating and sending out invoices is a cumbersome and inefficient process. From a sustainability standpoint, it also increases paper consumption, which is bad for the environment.
To understand the potential impact automatic billing can have on your business, let’s imagine you as a law firm using a manual billing system:
Most law firms, particularly those with corporate clients, will have clients on retainer. These are clients to whom they provide services every month, which means they bill them on a recurring basis.
Your lawyers will likely be using a spreadsheet to record all billable hours. At the end of the month, someone in your accounting team will then compile invoices and manually send them to your different clients.
You will also have someone on staff whose job is to follow up on these invoices, as there will normally be clients who don’t pay on time.
This will cost your business a pretty penny in manhours. That is money that you can save by automating your entire invoice workflow.
As your firm grows and takes on more clients, you will have more invoices to send out. This extra workload raises the risk of invoicing errors as your team battles fatigue and the sheer monotony of these repetitive tasks.
So, as well as saving you time and money, automation makes your billing system more efficient, eliminates billing errors, and improves dunning, which helps to follow up on failed payments and plug revenue leakages.
Automating billing puts your whole billing workflow on autopilot. Even though the process of setting it all up is a bit involved and costs money, once it’s running, it greatly reduces your workload and saves you money and time.
Below, we run through the step-by-step process of switching from a manual billing system to an automatic one:
An automated billing system is a software program that allows you to generate and automatically send invoices to customers digitally. You can use these computer programs to request one-time and recurring payments.
Automatic billing software comes in many shapes and sizes. They are designed for different industries, too. For this reason, you must choose one that meets your billing needs.
Consider your current billing difficulties. Has your current system become too complex to manage manually? If so, you must look for billing software with features that simplify your billing and allow you to save as much time as possible.
After all, one of the main goals of automation is to digitise as many human-executed tasks as possible. Among those complicated billing tasks automation software will help with are:
Security is another big concern for customers. Your customers will have high minimum standards on how you secure their payment information and data, with end-to-end encryption at the bare minimum.
You may have to review many options until you find the right automated billing software for your business.
There are hybrid solutions, like Intasend, that let businesses accept recurring payments and also support mobile and online payments from customers.
Still, though, even the closest fit to what you are looking for may not have all the features you need:
Every business will have its unique accounting systems that have evolved. Some of these are determined by your technology stack, including the CRM, ERP, Payroll, shipping, and other software you use in your business.
You must integrate your new automated billing system with all these systems and ensure they can work together seamlessly before full deployment. For example, migrating customer data from your old to your new system should be painless.
You could argue that compatibility with your current technology stack is another checkbox you should tick off when reviewing your automated billing software options.
Customising your new billing system entails programming billing cycles, payment dates, automated payment reminder email schedules, and other settings to reflect your unique billing circumstances and industry standards.
If you are targeting a subscription business model, now is the time to break down your subscription offering into different plans based on customer needs, feature level, access level, price points, and other parameters that fit your business.
This is also the time to set up your reporting dashboard and assign permissions and access levels for your team members. You should also now schedule billing reminders for failed payments if you are using autopay or overdue invoices if you aren’t.
You should not just stop at automating the creation and sending of invoices. You can automate their payment also by asking your regular customers to sign up for automatic bill payments.
The challenge, though, is while automation of your billing system is convenient and highly beneficial for your business, customers may not initially be as enthusiastic about it. And rightly so.
Among the potential disadvantages of signing up for automatic bill payments for customers is the overdraft risk. Customers who do not keep track of all their automatic payments risk overdrawing their accounts.
There is also the genuine potential for invoicing errors that may go undetected because the customer did not review the invoice before authorising payment.
You may, therefore, have to incentivise customers to opt into recurring or automatic billing payments for your regular customers. Among your options for this are:
You can also go for the nuclear option of accepting automatic payments only. This comes with the risk of losing some customers. But this radical move may be justified if the cost of this lost revenue is outweighed by improved overall revenue and the benefit of more predictable revenue.
Automating billing speeds up, streamlines, and helps to eliminate errors from your billing processes. All this synthesises in faster payments since you can send payments faster and won’t have to wait for the customer’s authorisation every time.
And for businesses with loyal customers that buy regularly, automated billing comes with the enticing prospect of recurring payments and, crucially, predictable revenue.
For businesses in Kenya, Intasend is your best option for automated billing and subscription management software. Not only is our billing software designed with the unique needs of African businesses in particular, it is built on ther solid foundation of a tried and tested payment gateway built to serve your customers, whether they are in Kenya, elsewhere on the continent, or overseas.