Running a business means juggling a lot of responsibilities. It’s managing products and services, ensuring customer satisfaction, and most importantly, making sure that your clients are paying you on time.
Coordinating a streamlined and efficient billing process is a major challenge for both emerging and established businesses. But with a comprehensive billing software solution, you gain access to a wide variety of useful tools and shortcuts that strengthen your cash flow, minimize billing errors, and free up valuable time for other business activities.
In this post, we’re going to explore why your choice of billing software is such an important consideration, what capabilities you should prioritize, and the top solutions in the marketplace.
What is billing software?
Billing software refers to a software platform that gives medium and small business owners the ability to track billable products and services. It’s often bundled in with other programs, such as accounting software, but can also be offered as a standalone service.
Billing software automates many repetitive workflows associated with the billing process to minimize manual tasks, enabling higher productivity. Most programs will offer a range of functionalities depending on the pricing structure, including:
- Time tracking employee hours for billing purposes
- Online invoicing (generating/sending templates)
- Setting custom payment reminders and schedules
- Time tracking for client projects
- A leading billing platform acts as your merchant of record/integrated PayFac, handling the movement of funds directly, not just “connecting” to a third party.
- Analytics and reporting, e.g. cashflow, late payments, expenses
Why does your choice of billing software matter?
Billing software might feel like a very uninteresting purchase. But it’s one of the most important administrative decisions you can make as a business.
Why? Because billing software determines the workflows you use to organize your professional invoices, project management, and payment processing. Depending on the level of customization and automation your billing and invoicing solution offers, this can have a big impact on the profitability of your business.
Your choice of billing software can affect the following capabilities:
Keeping all of your billing information in one place
Whether standalone or bundled, ensure your billing software provides bidirectional sync with your GL (general ledger) to prevent data silos and reconciliation nightmares. Without this, your staff will be constantly bouncing from one interface to another to view and update information, such as accounts payable or expense tracking. This makes it difficult to get a proper overview of business activities — and may result in outstanding payments being missed.
With an all-in-one billing solution, you can see all important billing information on a single dashboard in real-time, or even on the go via a mobile app. This helps to streamline your workflows and be proactive in identifying potential billing issues.
Automating your communications
Keeping track of invoices and accounts receivable is a full-time job for many small businesses. When you’re juggling a full roster of clients, it’s very easy for communications such as emails to slip through the cracks.
By choosing an automated billing solution, you no longer have to dedicate hours each week to chasing clients. You can automate follow-ups via email or SMS or automatically schedule your calendar in advance with phone calls to clients who’ve yet to respond. You can even embed unique links within customizable invoices to make the payment process as frictionless as possible; your clients will certainly thank you for it.
Moreover, automation should include smart retries (dunning logic) and account updater services to refresh expired cards without customer intervention.
Easy auditing
Having to do a surprise audit for tax purposes or legal reasons is an unavoidable part of doing business. But there’s nothing worse than having to compile financial information from across multiple spreadsheets because you don’t have a system that can auto-generate reports.
This takes up valuable staff time and adds considerable friction to business activities. But it’s entirely avoidable with a robust billing software solution that makes auditing easy and painless. You should also be wary of compliance audits. A robust platform automates your PCI-DSS 4.0 Attestation of Compliance (AoC), reducing the massive burden of security audits.
Better customer relationships
If a client doesn’t receive confirmation that a payment has been received, this can provoke anxiety that a payment hasn’t been processed. Moreover, not even getting a simple “thank you” is hardly going to strengthen customer relationships.
When interactions with your clients are seamless and transparent, this promotes trust and more profitable relationships because clients feel comfortable doing business with you. Billing software helps you to manage the customer experience much more effectively as a form of CRM (customer relationship management). If customers always understand where they’re at, this helps to reduce customer churn.
Valuable analytics
Excel spreadsheets might be excellent for recording data, but they aren’t the best at expressing insights. For example, if you wanted to know the average time it takes for a client to pay an invoice (and whether there are repeat offenders at paying late) you’re going to have to spend considerable time crunching numbers, which isn’t an effective use of staff time.
There are also other important metrics you should be tracking, such as:
- MRR (monthly recurring revenue), net revenue retention (NRR), and dunning recovery success rates
- Rate of failed payments
- Percentage of overdue invoices
- Accounts receivable turnover ratio
- Which payment options are most popular
This is where billing software can be your most valuable tool in getting high-level insights and measuring the performance of your business—but only if you choose a program with the right capabilities.
What to consider when choosing a software provider
Here are some questions to ask to determine the right billing software for your business.
1. Do you require a general billing solution or a more specialized one?
There’s a massive number of software offerings out there — far too many for your business to explore independently. That’s why it’s a good idea to decide right off the bat whether you’re looking for dedicated practice management software or something more generic.
Some industries, such as medicine and legal, have very specific needs when it comes to billing and invoicing features. Ensure the platform supports industry-specific compliance standards, such as HIPAA for medical or IOLTA for legal trust accounting. Likewise, companies in the SaaS space may need additional functionalities due to their pricing structure.
If a basic bookkeeping offering is unlikely to tick the boxes for you, it’s important to rule these out at the start to streamline your search.
2. What customer support is available?
Migrating to a new billing system can cause a lot of disruption, especially with transferring existing data. It’s important to check what level of customer support a software provider is offering, both during the initial onboarding and afterward.
For example, some providers will offer self-service implementation only, while others will give you a representative to guide you through the process. This will usually be reflected in the pricing, so you need to think carefully about how much support you’re likely to need.
Here are some other questions to consider when vetting software providers:
- How long will onboarding take for an organization of your size?
- What contact methods are available? i.e. email, live chat, phone
- How comprehensive is their documentation?
- What time zone their customer support team is located in?
Yet the most critical support factor is data migration support. Ask if they will securely migrate your tokenized card-on-file data from your legacy gateway to the new platform.
3. How easily does it integrate with your existing systems?
It’s quite likely that you’ll be using other business systems alongside your billing software. This could include a dedicated CRM, payment gateways, invoice templates and/or task management platforms that help you to collaborate across teams. The ability of a software offering to integrate seamlessly with your existing programs and workflows is essential to prevent data from having to be duplicated across systems, which increases the likelihood of billing errors.
If you’re using a popular program, many billing software options will offer a native integration. If not, check the API documentation to see whether you can build an integration in-house without too much development work.
Note: If you’re interested in a solution with a mobile app, make sure that it’s offered on both IOS and Android.
4. How user-friendly is it?
This might not seem like a very important consideration, but the ease of using and training staff on new billing software can determine how well you’re able to maximize this investment. If lengthy tutorials are required, this adds friction to the transition and increases the likelihood of costly billing mistakes. Moreover, if your software isn’t intuitive to use, this may result in your business only using the most basic functions, rather than advanced customization capabilities that allow you to gain more insight into business activities.
5. How scalable is the software?
You don’t just want to be looking for a billing solution that works for you at the present time, but one that’s capable of handling increased demand as your business grows. Otherwise, you may end up needing to transition to new software within a short timeframe, which is highly disruptive to business activities.
Small businesses, in particular, may find themselves experiencing rapid phases of growth with little warning, so it’s a good idea to choose a billing solution that offers multiple pricing plans up to the enterprise level. This way, you can simply switch to a larger plan that supports a higher number of users when necessary.
The steps to take when shopping around for a billing software solution
Compare pricing vs. features
Billing software comes at a variety of different price points, so it’s important to drill down into each of your options to understand what features they do or don’t include. The most expensive monthly fee doesn’t necessarily offer the most comprehensive solution.
Look at customer reviews
There’s only one way to get a well-rounded perspective of different software options; by finding out what users themselves have to say. According to Capital One Shopping Research, consumers read an average of 10 online reviews before they trust a business. Why? Because we trust what consumers have to say about a product or service more than the business offering it.
Online reviews are a great way to get authentic and honest feedback about different platforms, including the pros and cons, best features, and other miscellaneous information that helps you to decide between options.
Research what billing solutions other businesses in your space are using
If you require a more specialized billing solution, there’s likely to be an industry standard that’s considered to be the most reputable system. It’s always a good idea to ask around your industry contacts to find out which provider has the best track record (and also the ones you should avoid).
For regular billing software, have a look at their case studies to see which industries or company sizes are the most represented. This will give you a good idea of whether they’re a good fit for your needs.
Get a demo
Most software solutions will offer a free plan or demo that allows you to navigate the interface directly. It’s a great idea to walk through this demo with the staff members that will be using your billing software, as their perspective on ease of use will help to decide whether it’s a viable option.
If you have a custom-built website, your developers should review the API documentation or “sandbox” environment before the sales demo to ensure technical compatibility.
If the provider offers a guided demo, this is a great time to ask questions about the program’s capabilities and to explain what your needs are so they can recommend the appropriate plan. Proper demos do take quite a bit of time, so it’s worth saving this experience for your top two or three options.
Final words
Choosing billing software can be a real headache for businesses. When there are so many diverse options out there, it’s easy to worry about making the wrong decision. But by following the steps we’ve outlined in this post, you’ll be well on your way to choosing the billing solution that’s perfect for your needs.
To learn more about how the Stax all-in-one platform can help your business with recurring billing, invoicing, and seamless payment processing, fill out the form below to request a custom quote today.
Quick FAQs about billing software
Q: What is billing software, and why is it important for small and medium businesses?
Billing software refers to a software platform that helps small and medium business owners track billable products and services. It automates many repetitive workflows associated with the billing process, minimizing manual tasks and enabling higher productivity. It’s important because it can enhance cash flow, minimize billing errors, free up valuable time, and offer valuable insights into business performance.
Q: What capabilities should I consider when choosing a billing software?
When choosing a billing software, consider capabilities such as time tracking for billing purposes, online invoicing, setting custom payment reminders and schedules, online payment processing, and analytics and reporting features. The software should also be user-friendly, scalable, and integrate easily with existing systems.
Q: Why is it important to automate the billing process in a business?
Automating the billing process is important, as it reduces the time spent on manual tasks, minimizes the likelihood of billing errors, improves customer relationships through seamless interactions, and provides valuable analytics for business performance measurement.
Q: How can billing software affect the profitability of my business?
Billing software can affect the profitability of your business by streamlining your invoicing and payment processing workflows, reducing billing errors, improving customer relationships, and providing valuable insights into your business activities. This can lead to increased efficiency, improved cash flow, and enhanced customer satisfaction.
Q: How can I decide on the right billing software for my business?
To decide on the right billing software for your business, consider your specific needs and requirements. Ask yourself whether you need a general or specialized solution, what level of customer support you require, how easily the software integrates with your existing systems, and if it’s scalable to accommodate your business growth. It’s also useful to compare pricing vs. features, read customer reviews, research what billing solutions other businesses in your industry are using, and get a demo if possible.
Q: What are the steps to take when shopping for a billing software solution?
When shopping for a billing software solution, start by comparing pricing and features of various options. Look at customer reviews to get authentic feedback, research what billing solutions other businesses in your industry are using, and get a demo if available to understand the user interface and features. It’s also important to consider the scalability and integration capabilities of the software.
