Many of the traditional subscription billing solutions out in the market today were built for a time that has long passed us — when SaaS subscriptions were more simple, with predictable annual or monthly contracts, static bundles, and little variation.
If you're hitting a wall with your current billing system, it may be that your legacy billing solution just isn't meeting your business's needs any longer. Here are the top 11 reasons why these traditional billing systems just don't make the cut for the modern SaaS business.
Lack of modern pricing flexibility
As businesses configure and experiment with new pricing and product offerings, their billing solution must connect to and effectively process these changes upstream without breaking what’s working. The idea of launching and reconfiguring new pricing and deal structures can’t come to fruition unless your billing system can actually support them.
Lack of robust subscription management
For SaaS businesses, subscription management is a core part of their customer lifecycle. New customers should be automatically onboarded as soon as a deal is signed, and renewals need to be executed on a regular basis. A billing system with subscription management provides one source of truth for customer entitlements, automates the renewal process, generates more revenue, and creates a better customer experience. Without subscription management, customer success and finance teams will have to run multiple siloed manual reports to understand the health of their customer contract, which is a time-consuming and error-prone process.
Lack of detailed subscription management
New customers should be automatically onboarded as soon as a deal is signed, and renewals need to be executed on a regular basis. A billing system with subscription management provides one source of truth for customer entitlements, automates the renewal process, generates more revenue, and creates a better customer experience.
Siloed billing system
Traditionally, billing has been a siloed process that was solely for the finance department. But in today’s world, billing spans different departments, such as sales, reporting and analytics, and revenue recognition. Each of these verticals need real-time access to subscription data to perform their roles of generating quotes, managing payments, creating financial reports, and recognizing revenue. The key to a successful billing system is that it’s easy to integrate with your core systems. According to Forrester Research, “merchants struggle to integrate new billing solutions into their varied tech stack: It’s often slow and expensive and eats into the time to value of their new solutions.”
Slow, error-prone APIs
Leveraging application programming interfaces (APIs) makes it easier to connect with other third party tools to enhance customization and yield best-of-breed functionality. With an outdated billing system, however, it’s incredibly hard and time-consuming to add new functionality or update existing ones. Connecting a legacy solution to third-party tools and services requires more manual effort due to incompatibility with modern systems. Over time, performance becomes slower and more failures occur. Legacy systems may also be more vulnerable to security issues and data leaks because they’re using older security protocols and standards.
Very long implementation time
Implementing a billing solution is an overwhelming, confusing, and time-intensive process. As mentioned earlier, your billing system needs to seamlessly integrate with other core systems. Even if your billing system can support complex deals and prices, it will require custom integrations and months of development work to synchronize with your CPQ, tax engine, payment processor, reporting tool, and revenue recognition system.
Compounding the issues that go along with a lengthy implementation process, your business will have to migrate data across systems, maintain data integrity, and train and uplevel staff, among other things. All of this takes time and ultimately drives up the cost of the project.
