Five Key Capabilities of Modern Billing Systems
Whether it’s Software as a Service (SaaS), usage-based pricing, scalable subscriptions, or other pricing frameworks, today’s forward-looking businesses are embracing more innovative business models: new price options, product/service bundles, it’s a direct response to buyer demands and preferences in both B2B and B2C sectors. Those buyers want options – and the flexibility to change those options at any time. That creates significant billing and revenue-recognition headaches, including:
- Tiered pricing
- Trial periods
- Usage updates
- Credit and rebills
Unfortunately, these are complexities that legacy billing infrastructures simply can’t accommodate. They were built for the quickly fading era when companies sold and shipped a predictable number of goods from a standard price list or catalog, with few exceptions. Today, however, companies must contend with a vastly greater number of pricing permutations, changing business rules, and a proliferation of data sources.
That’s why they need a modern monetization platform, one that contains the following key capabilities.
When you have a flexible product catalog and a dynamic pricing engine, you have the ability to model virtually any configuration, service, term and price. You can quickly set up configurable pricing models (e.g. recurring, usage, one-time, pre-payment, and more) with standard or custom billing cycles. Before you implement a pricing model, you can pre-validate it to gain some predictive insights into how it will affect future revenue streams.
Contract and Order Management
It’s essential to have an end-to-end profile of each contract through its entire lifecycle. This helps ensure you never miss a renewal, price adjustment, or amendment. By centrally tracking all amendments, you can guarantee there’s no revenue leakage while also gaining new insights about the total customer value.
Many business models price their products/services based on consumption and usage – such as mileage or fuel usage in rental cars or monthly data usage in a cell phone plan. Make sure your monetization platform can collect data from any source – such as IoT sensors, machines, files, APIs, and mobile devices. What’s more, you need to mediate and translate all of that disparate data into a uniform format using rules and custom formulas.
The right billing platform can handle the complexities and scale effortlessly from one-time charges to simple subscriptions to virtually any usage-based model. You can define the events that trigger billing and revenue recognition. You can consolidate bill runs, pre-validate bill runs, and tailor invoices to each customer’s unique requirements and preferences.
Smart Revenue Recognition
Achieve ASC-606 compliance with intelligent triggers that recognize revenue based on activities from any source system. Ideally, your revenue-recognition system should automatically calculate revenue waterfalls and easily maintain retrospective and prospective changes.
As your business moves forward to embrace innovative business models and digital transformation, these capabilities will be essential to achieving successful outcomes.