By Tarmo van der Goot, VP EMEA, Chargebee
The subscription-as-a-service (SaaS) sector is experiencing some of its strongest growth ever, as an increasing number of businesses start thinking outside the box and offering up attractive packages for customers. However, finance teams are under pressure to stay on top as competition ramps up by winning new opportunities in different markets and shaking up pricing models. It’s certainly an increasingly competitive market when you consider how ubiquitous SaaS products have become: in 2021, organisations reported using 110 SaaS applications per annum, a significant increase from 2015, when they were barely using eight.
SaaS vendors are also facing the challenge of fast-changing customers tastes, with many quick to change or cancel subscriptions altogether if those aren’t to their liking. This is leading to an increase in churn rates, which should be setting alarm bells ringing for all SaaS vendors.
Automation is one sure-fire way to make certain SaaS businesses aren’t left behind when it comes to meeting customer demands, and more and more businesses are taking advantage of it. Rather than have to resort to outmoded techniques such as data entry with spreadsheets, an automated approach can provide finance teams with the tools they need to drive continued growth, particularly in three areas: accounts receivable, account reconciliation and billing.
Keeping cashflow in check with automated accounts receivable
Just as the human body can’t function without a steady blood flow, neither can businesses do without a healthy cashflow. Key to this is ensuring accounts receivable (AR) is collected on time and correctly. Errors in manual accounting or partly – and poorly – automated processes can cause the numbers to stop adding up, and mistakes made in AR can impede other areas of the business before you know it.
Ensuring that the whole process of AR collection is fully-automated can eliminate such headaches, by giving finance teams visibility and control over which customers ought to be charged when, and using which method. This is a particularly important issue for SaaS businesses that give their customers flexibility to amend their plans as they choose. Any fast-growth company opting to manually work out these complexities risks losing sight of more holistic considerations about customer and business priorities.
Once AR is fully automated, the difference is noticeable. Teams can have all the necessary information provided to them on dashboards, so they can keep track of cashflow regularly and act on issues before they fester. Having one’s ducks in a row in this way not only allows businesses to avoid building up a string of bad debts, it also frees up finance teams to focus on proactive, strategic decision-making.
Errors become a bygone concern through automated account reconciliation
Another area where automation can make a real difference is account reconciliation (AR). Not being able to trust account figures through poor AR can cause an under- or overestimation of figures, meaning overspending can ensue. Worse still, businesses can face difficulties paying salaries to their own workers or suppliers, or fail to spot potential instances of fraud, incurring fines that can cost them greatly.
The ability of automated systems to reduce the likelihood of human error in AR collection is an evident advantage here, too, but beyond that, automation can also make payment gateways easier to work with, as businesses can configure and immediately match customers’ preferred payment method and currency to the right gateway account. No need to bring in a finance team member to double-check the process, and no accounting errors to deal with.
Breaking into new markets with automated billing
When presenting a SaaS product to the world, vendors can be juggling numerous features such as add-ons, different price points, coupons, use of foreign currencies or simply unpredictable frequencies for billing. Whether they occur in isolation or all together at once, these issues can make billing processes near impossible to keep track of at times. To compound matters, businesses face the danger of customer churn when payment cards are declined, taking a needless toll on the bottom line.
Compliance across different territories must also be borne in mind, with regards to the varying tax regimes a business may be operating in or data protection laws which might exist. When moving to new markets, employing billing automation software isn’t just a convenience but a necessity. Automated billing allows businesses to remain compliant through improved revenue recognition, helping them stay on the right side of standards such as ASC606 and IFRS15.
The aforementioned problem of declined payments can also be resolved, as dunning management can be automated to the point where revenue leakage is minimised. Automated dunning means customers receive prompts for using out-of-date credit cards, or payment methods can be updated. Put together, these improved practices help prevent revenue falling through the cracks.
In automating billing, businesses can exercise maximum financial visibility and control over existing product families as well as scale billing capabilities to accommodate further growth, be that launching new and exciting product families or services, domestically or abroad.
Automation truly pays in 2022
The world of fintech has been in the grip of a dramatic technological revolution, but not all are equipped to adapt. Moving into a subscription-based model can create a host of new opportunities but these come with challenges of their own which have to be faced head-on. In this environment, financial automation allows businesses to turn their gaze from avoidable mistakes in the rear-view mirror and focus on the tremendous growth opportunities directly in front of them.
 sector is experiencing some of its strongest growth ever, as an increasing number of businesses start thinking outside the box and offering up attractive packages for customers.){kind=link}