What is SaaS Billing? Best Practices and How-To Guide

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What is SaaS Billing?

7 Best Practices for B2B SaaS Billing

How to Do B2B SaaS Billing Right

FAQ

Conclusion

If you run a B2B SaaS company, you know how difficult it is to manage customer billing. Given its recurring nature, B2B SaaS billing is not as simple as traditional billing.

If you’re new to the B2B SaaS niche and are struggling to manage SaaS billing processes, then this article is for you.

Here, we’ll take you through the basics of SaaS billing, along with the best practices you should follow to streamline your billing process. Let’s get right to the point.

What is SaaS Billing?

The process a software as a service (SaaS) company uses to charge its clients and receive payments is commonly known as SaaS billing.

Unlike traditional billing, which involves a customer paying for a product or service, SaaS billing is more complex. Here, clients don’t pay for a one-time purchase, but for a subscription to keep using your software solution for a certain period of time.

Since different clients have different contract terms or subscriptions, B2B SaaS companies have more complex billing scenarios to deal with. 

So, how should you manage your B2B SaaS billing and ensure accuracy and customer satisfaction?

Well, that’s what this guide is about. Read on to find some great best practices for and a how-to guide on B2B SaaS billing.

7 Best Practices for B2B SaaS Billing

Follow these SaaS billing best practices to streamline the process and run everything smoothly for your business.

1. Set Clear and Transparent Pricing

One of the most crucial SaaS billing best practices is to maintain flexible and transparent pricing.

For most companies, this would involve having subscription plans with fixed pricing.  However, for advanced B2B SaaS businesses that might not be feasible as they’ll negotiate different pricing terms with different clients, especially large enterprise clients.

Here’s a visual explanation of an advanced SaaS business model.

In this case, you won’t display subscription plans and pricing on your website but offer custom pricing. That doesn’t mean you can’t maintain transparency or have clear and logical pricing.

So how can you do this right?

When negotiating client contracts, provide a clear price breakdown and list all fixed and variable costs (usage-based). Ensure there are no hidden costs or unexpected charges that clients discover during the billing process.

If there are any one-off or add-on charges, make sure they’re clearly displayed on the invoices during billing. Using a good SaaS billing platform can help with that.

Younium, for instance, allows you to create consolidated invoices that include regular subscription charges and one-off charges for easy SaaS billing.

Image via Younium

2. Use a Good Recurring Billing Solution

SaaS billing is complex, but it’s even more so for a B2B SaaS business. Managing different SaaS billing scenarios and unique subscription plans is not easy, especially if you try to do it manually.

In fact, we’ll go as far as saying that it’s practically impossible to do it manually.

That’s why you need a good recurring billing software solution to handle these complex SaaS billing scenarios. A subscription management software solution with billing features would also work perfectly.

Here are some ways using a subscription billing solution can help you simplify SaaS billing.

Accommodate Various Pricing Models

A good subscription billing solution like Younium can allow you to choose a pricing model that works for your SaaS business. It will be able to accommodate different pricing models, so if you want to offer unique pricing plans for each client, you can do that.

Here are some common subscription pricing models you can choose from.

Handle Complex SaaS Billing Scenarios

As mentioned, a subscription billing platform should be able to handle the various complex billing scenarios for a B2B SaaS business.

Some examples of these scenarios are:

• Letting clients choose on which date they want to be billed and being able to handle different billing dates for different clients.
• Offering limited-time discounts and offers and billing clients on regular plans and those on promotional plans differently.
• Charging old and new clients differently for the same plan, in case the price has changed over time or different clients negotiated different prices.
• Managing changes to subscriptions, including upgrades, downgrades, and add-ons.

Enable Advanced Invoicing

Effective invoicing is the foundation of streamlined B2B SaaS billing. Your billing and invoicing processes work in tandem, so an issue in one can affect the other.

If you want your SaaS billing process to work flawlessly, you need to optimize your financial workflow, especially invoicing.

Luckily for you, a good subscription billing software solution will handle both and help you create a streamlined SaaS billing workflow.

Choose a solution that offers the following.

• Allows automated invoicing, which involves accurately billing clients and sending them invoices on their chosen billing dates.
• Enables you to send automated billing reminders to clients when payment is due, to ensure there are no late payments.
• Lets you consolidate invoices that include all the fixed and one-off charges for a client to make billing more transparent and efficient.
• Has the ability to send customizable invoices that allow you to add the specific fields you want to tailor your company’s invoices to your preferences.
• Allows you to collect advance payments to make the SaaS billing process hassle-free for both you and your clients.

Check out this visual showing the various advanced invoicing features you should look for in a subscription management platform.

3. Automate Invoicing and Reminders

We’ve touched upon this briefly in the previous section, but let’s delve a little deeper into it since it’s an important best practice.

Consider this:

You have 15 clients, each with a different pricing plan and billing schedule. If you were to send invoices and payment reminders manually, you’d be busy practically every day of the month. It would become a tedious task in and of itself, taking up a lot more time than required.

Now, if your business grows and you have hundreds of clients, then keeping track of invoicing and reminders will be next to impossible.

Automating invoicing and reminders ensures that these processes work in the background, without requiring much time and effort or human input.

If you’re still doing things the traditional way, it’s high time you consider automation as it will make your life easier and simplify invoicing and billing for your B2B SaaS business.

4. Leverage Billing Data to Your Advantage

Leveraging revenue data insights is one of the SaaS billing best practices that can be a game-changer for your business.

As you know, customer data is extremely important for gaining insights into your business performance. While you definitely need to focus on SaaS metrics for that, you shouldn’t ignore billing data.

Customer billing data can help you gain insight into usage patterns and even churn.

Your SaaS billing software solution is already collecting tons of usage data that you can use to predict churn or possible plan changes. This can help you proactively take action to avoid potential churn and downgrades and incentivize upgrades.

You can also use this data to measure the effectiveness of your pricing changes and promotional campaigns, such as discounts and offers. For instance, an increase in upsells due to an ongoing deal signifies that the promotion was effective.

5. Offer Flexible Billing Contracts and Terms

If you run an advanced B2B SaaS business, then simply offering tiered subscription plans may not be enough. Most businesses have specific needs and preferences and would prefer to create custom plans based on their business needs.

Offering flexible plans, pricing, and contract terms is one of the best practices you should follow if you have a B2B SaaS business.

Here are some tips to help you with this.

• Negotiate with each client and draft customized contracts and pricing plans for each.
• Let customers decide the payment schedule they’d like to follow, such as advance payments, monthly payments, annual payments, and so on.
• For monthly payments, allow customers to choose the date on which they’d like to be billed and the payment method they prefer.
• Customize the billing, payment, and other contract terms for each client.

How can you achieve all that to provide a smooth billing experience to customers?

Choose a subscription management solution that allows you to manage multiple types of contracts, no matter how varied they are.

Younium is one such platform that offers complete flexibility to clients in terms of billing schedules and payment terms.

Image via Younium

It’s a specialized B2B subscription management solution that can cater to the needs of large enterprises just as well as those of small SaaS businesses. It offers custom plans for each client, offering more flexibility than most subscription billing systems.

6. Ensure Accurate Billing

Any trivial errors in billing and invoicing can cause you to lose customer trust and may even cause churn in the long run. It could be something as simple as adding an add-on cost incorrectly or billing the customer for their old plan after they’ve changed their subscription.

These kinds of errors can occur if you’re calculating the bills manually or even if you’re using a basic subscription management system. A basic subscription management platform might not provide the robust billing features required to handle B2B SaaS billing.

The inability to accommodate various billing scenarios associated with a B2B SaaS business can cause such errors, which can be costly to your business.

To avoid this situation, regularly audit your invoicing and billing process and smooth out any inefficiencies.

7. Offer Multicurrency Payments and Ensure Compliance with Regulations

If your B2B SaaS business serves clients from multiple geographical locations, then ensuring compliance with local regulations is extremely important.

Any non-compliance, whether intentional or unintentional, could lead to severe penalties and damage your business reputation.

Most countries will have their own tax regulations, which you need to follow when billing clients from the region. You should use a B2B subscription management platform that can automatically calculate taxes based on a client’s region to ensure tax compliance.

Similarly, your subscription management platform should allow you to bill clients and accept payments in multiple currencies. This helps you elevate your payment experience for clients from different countries.

How to Do B2B SaaS Billing Right

Follow these simple steps to streamline your SaaS billing process.

1. Choose the Right Billing Platform

The first thing you need to streamline your B2B SaaS billing process is to find and invest in a good subscription billing software solution. A good platform not only helps manage recurring revenue but also integrates with other tools to help you create an optimized SaaS billing process.

We’ve already covered the various benefits of using a good subscription management platform, so we won’t discuss that. Instead, let’s take a look at some of the most important features you should consider when choosing a platform.

Here are the must-have features you should look for when choosing a subscription management platform.

• Flexible Billing Options: The ability to handle custom billing schedules and pricing plans, which might be unique to each client.
• Advanced Invoicing: Automated invoicing, consolidated invoices, customization options, and more.
• Custom Analytics Reports: To create custom reports that show the SaaS metrics that are most relevant to your business.
• Multiple Payment Options: Option to offer various pricing models and multiple payment methods to customers to improve their overall experience.
• Tax Compliance: The ability to automatically calculate taxes during billing and ensure compliance with local tax regulations for each region.
• Notifications/Reminders: Option to send automated reminders to clients to make payments on time.
• Multiple Integrations: Robust integration options allow you to create streamlined workflows for billing and invoicing.

Of course, you should also consider whether a platform fits your budget and offers customized plans that suit your specific needs. If you’re looking for an overall great B2B subscription management platform that offers tons of flexibility, then Younium might be your best choice.

2. Integrate it with CRM and ERP Systems

Next, you should integrate your subscription management system with other tools to ensure that it works optimally. 

A good subscription management platform can act as a single source of truth for all your customer data. However, to collect all possible customer data, it needs input from various software, such as customer relationship management systems.

When equipped with comprehensive customer data, subscription management platforms can provide you with detailed analytics and reports to help you streamline your financial processes.

3. Set Up Streamlined Billing Workflows

Once all your customer-centric software solutions are working in sync, creating complex billing workflows becomes easier.

Your subscription management platform ensures customer data is always updated and accurate. This allows it to create accurate invoices and charge customers automatically, without human involvement.

The entire process of creating and sending invoices, sharing reminders, and collecting payments can be managed effortlessly.

FAQ

SaaS billing refers to how a SaaS company charges customers and receives payments. It involves various sub-processes, such as invoicing and payments, apart from the actual billing.

Basically, the process of calculating monthly bills for clients, sending invoices and reminders, and collecting payments is called SaaS billing.

SaaS billing is more complex than traditional billing because customers pay for a subscription to use the software over time, rather than making a one-time purchase.

B2B SaaS companies also face more complicated billing scenarios because of varying client contract terms and subscriptions. Clients can upgrade or downgrade their plans or opt for add-on features or services, which can change their monthly bills. 

Handling these dynamic billing scenarios is what makes the B2B SaaS billing process so complex.

Here are some common SaaS billing best practices that you should follow:

• Maintain complete transparency in pricing and ensure that there are no hidden costs or unforeseen charges that customers discover during the billing process.
• Use a subscription management or SaaS billing system to simplify the B2B SaaS billing process.
• Automate your invoice creating and sending process and also set up automatic payment reminders and notifications for clients.
• Use customer billing data and usage patterns to draw insights, make strategic business decisions, and avoid churn.
• Negotiate and create unique contracts for each client and let them choose a billing schedule and payment terms that best suit their needs.
• Regularly audit your billing process and use a good SaaS billing software solution to ensure you charge clients correctly and don’t make any invoicing errors that may cost you.
• Serve clients from multiple geographies seamlessly by offering multi-currency payments and ensuring you comply with local tax laws in every region your business operates in.

Handling B2B SaaS billing is no walk in the park. It’s complex and requires the ability to handle unique billing cycles and scenarios for different clients.

From upgrades, downgrades, and add-ons to different billing dates for different clients, there’s a lot to keep track of, while still ensuring accurate billing. Doing all of this manually, especially as your business scales, is next to impossible.

A single billing error could cause a client to lose trust in your business and can be bad for your business.

That’s why you need a SaaS billing software solution that can handle these complexities with 100% accuracy and transparency.

One of the best ways to streamline B2B SaaS billing is to invest in a good subscription management platform. Opt for a specialized B2B subscription management system like Younium that can handle the billing complexities of an advanced B2B SaaS business.

It can streamline various aspects of SaaS billing for you, from invoicing and reminders to payments.

Also, make sure you regularly audit your entire billing process to weed out any inefficiencies. A software solution can do a lot, but how well you use it also matters.

Lastly, ensure that you integrate your SaaS billing software solution with other tools, such as CRM, to collect comprehensive customer data for analytics purposes.

Conclusion

SaaS billing is a tough nut to crack and is especially complex for advanced B2B businesses. However, with the right subscription management platform, it can be managed effectively and efficiently.

Follow the best practices listed in this article to streamline SaaS billing for your business. Also, invest in an end-to-end B2B subscription management platform like Younium that can handle your SaaS billing process efficiently. Check out its features and ask for a demo today!