Une plateforme conçue pour la mise à l'échelle
A structuring solution choice, sometimes underestimated
What are the issues involved in choosing a billing solution?
Time to market issues
Challenges related to the business model
Business model with fixed price billing model
The business model is based on the recurrent invoicing of a fixed price service. It implies a functionally simple solution to automatically generate invoices for the period.
It is however necessary to validate needs such as the possibility to choose the period of service (date to date, or aligned on the calendar periods, month, quarter, semester, year,...) with or without proratization of the first and last period. It will also be necessary to be able to choose the billing period.
It is important to note that the fixed price subscription model involves Revenue Recognition (RevRec) accounting obligations.
Business model with variable price billing
The evolution of usage and consumption favors variable billing models. The choice of the billing solution is essential in this case because variabilization implies sending operational data to the billing system to be processed and valued according to more or less complex rules. The level of performance and the flexibility of use of the APIs proposed in order to connect the operational management system is an important criterion.
The valuation of operational data, usually in mass, is not the strong point of ERPs, which are structurally not designed to handle peak loads and can be a bottleneck during billing periods.
Does your solution allow an evolution towards variable pricing ?
Multi-plane contract / multi-item contract
Do your subscription models include products with options or multiple products in one contract?
The ability to manage multi-product subscription contracts can be an important criterion of choice.
Do you have multi-item billing issues ?
Subscription supported by connected objects
Some services are based on connected media (vehicles, bicycles, locks, IOT, sensors, medical devices, etc.). The solution must be able to manage these objects and the associated events in order to realize the value of the associated service. In some cases, connected objects generate contracts with several tens of thousands of lines, thus requiring groupings for the invoice and a detailed section of it for justification (in Excel, csv, pdf).
Do you need to manage connected objects ?
Turnaround time issues
It is crucial to understand the timeframe for implementing the solution. A quick turnaround is :
The ability to generate revenue in a few weeks reducing financial needs
The ability to automate billing and therefore save time and resources and be ready for growth
The ability to create new offers or pricing options in a more agile manner for greater business responsiveness
How long does it take to implement the solution?
Evolutivity of the solution
Recurring business involves connecting the operational system to billing.
The invoicing can be done :
by an independent billing solution
by the billing module of a payment solution
by an ERP
These options have different and significant impacts over time.
A challenge from the beginning
When they are created, startups offering subscription-based services are quickly confronted with the problems of billing and recurring payment. Pragmatic, they naturally turn to online payment solutions, especially by credit card, which they complement with "manual" billing.
For reasons of simplicity of implementation, the recurring model chosen is the fixed rate or simple subscription(ex. : nombre de licences).
With the increase of their turnover, the problem of invoicing arises which can no longer remain "manual" (Excel,...). The choice here is more structuring than it seems.
The need for invoice compliance is addressed by:
The implementation of a management or billing tool (Pennylane, ERP, ... )
Extending the services of the payment solution to its billing or invoicing modules when they exist.
If these answers are totally adapted to the replacement of the Excel sheet, they must be challenged in a longer term perspective, especially on the cost and scalability aspects.
Bank reconciliation is becoming a necessity to better manage outstanding payments and customer positions
Asset management can more or less quickly become a bottleneck, depending on the type of business.
With the arrival of the statutory auditors, the management of revenue recognition according to IFRS standards is a subject to be addressed.
At this stage, internal development generally reaches its limits. Similarly, not all ERP or billing solutions address the entire scope.
During the internationalization phase, the need to consolidate multi-country, multi-currency revenues often implies a change of ERP, requiring a redesign of the interfaces with the production system if billing has been devolved to the ERP.
It is therefore essential to pay attention to the scalability of the billing solution through :
the availability of simple and complete APIs for all operations
connectivity with ERP systems on the market (or ability to connect)
connectivity with payment solutions
A billing solution that is independent of your ERP and payment solutions is a guarantee of evolution.
Invoicing and more generally customer accounting is a strategic process
It is essential that the solution chosen :
Does not expose customer base details: Any operator can reconstruct a customer base with their consumption profile from the information provided to certain payment providers.
N’expose pas le détail des produits et services vendus : Dans le cas contraire un opérateur peut reconstituer un Business Plan détaillé ou en construire un concurrent
Don't turn the startup into a potential collateral victim of international relations. Ex: Russian companies with GitHub in 2022.
Does your solution secure you in terms of sovereignty?
Scalable variable billing solutions tailored to startups are charged on variable pricing models, most often based on revenue.
Is the model strictly linear?
Does the model incorporate a form of automatic degression that adjusts to changes in revenue?
Is the solution available in a licensed form that would allow it to be acquired as a strategic asset?
Is the rate capped?
By allowing customers to adjust their consumption, the transition from flat-rate billing to variable pricing through "pay as you go" subscription models is a component of the company's CSR approach.
u too can switch to variable billing for your services!!!