Consolidated billing, also called consolidated invoicing or consolidated subscription billing, is an intelligent way to bill that has become very popular in many industries, including software as a service (SaaS).
What is consolidated billing?
Combined billing is a way to send bills that combine several purchases or subscriptions into one bill. Because of this method, the payment process will be easier to handle for both the business and the customer.
In situations where a customer signs up for more than one service, this method works incredibly well. In a typical SaaS company, a customer might sign up for different software packages, cloud storage plans, extra services, or premium features.
In the past, each service was billed separately, meaning the same customer would get more than one bill during the same billing period. This could make things more complicated and make the payment process longer overall. Consolidated billing, which provides the customer with a single bill outlining their services and charges, can solve these issues.
It is easier for the business to handle multiple bills for the same customer with consolidated billing because they only have to keep track of one. The traditional billing method is streamlined, which makes it faster and cheaper.
But consolidated payments aren’t a one-size-fits-all fix; they must be carefully planned. It’s essential to think about things like billing cycles, ways to pay, and the needs of both the business and its users. When done right, consolidated billing can be a solution that benefits everyone. It can make the payment process easier, make operations more efficient, and improve the customer experience.
Synonyms
- Consolidated billing in SaaS
- Consolidated invoicing
- Consolidated subscription billing
How the Consolidated Billing Process Works
The consolidated subscription payment process is a step-by-step plan with four main parts:
Get it now
The customer starts the trip by signing up for more than one service or product from the same company. For a SaaS company, this could mean a range of products and services, such as different software packages, extra services, premium features, or even different levels of membership plans. The consolidated billing method is based on the services or products that the customer chooses. Keep in mind that each customer’s subscription may be different in terms of price, billing period, and contract length.
Take Charge
The next step is to determine how much each paid service will cost. This is a crucial step because it tells you how much the customer must pay. There could be regular subscription fees, one-time fees for extra services, usage-based fees, and any other applicable fees or taxes. To avoid misunderstandings or disagreements, later on, calculating costs must be correct and precise.
Getting paid
The bill will be made once the prices for all the services have been worked out. All the fees are put together on one bill instead of making different bills for each service or product. This single bill gives the customer a complete picture of all their subscriptions and sales. That list shows how much each service costs, how much is owed, and when the payment is due. The combined bill makes it easier for customers to track their spending and simplifies billing.
Getting paid
Invoicing is the last step in the process of combined billing. The merged bill is turned into a statement, which is then sent to the customer to be paid. The invoice has all the information about the customer’s orders, fees, and how and when to pay. It is an official way for the business to ask for payment and keep track of the deal between the business and the customer. The invoice should be complete, clear, and simple to understand. This will make it easier for customers to review their charges and pay.
Why consolidated billing is a good idea
Businesses and customers benefit from consolidated billing, which improves the payment process and makes things run more smoothly. Here are a few important pros:
Less money lost on payments
One of the best things about consolidated bills is that payments are less likely to be missed. Customers may forget to pay one or more bills when they get multiple bills from the same company. This can cause the customer to pay late fees and the business to lose money because of delayed sales. Customers can quickly see how much they owe by seeing all their charges on one bill. This makes it easier for them to keep track of their payments and make them on time. This not only makes things better for the customer, but it also keeps the business’s cash flow steady.
A better experience for customers
By making it easier for customers to pay, consolidated bills make the whole experience much better. Customers can see all their subscriptions and charges in one place, so they don’t have to look through multiple bills. Customers can better understand what they’re being charged for, keep track of their spending, and make budgets when everything is clear. It also lowers the chance of billing issues because customers can see all their charges simultaneously.
Better efficiency
From a business point of view, combined billing makes operations much more efficient. Traditional methods of making different bills for each product or service can take a lot of time and work. By cutting down on the number of invoices that need to be made, tracked, and handled, consolidated billing makes this process easier. This saves time and lowers the chance of making mistakes, making things run more smoothly and quickly.
Costs Less
A business can also save money by combining its bills into one. Making, sending, and keeping track of bills can be pricey, especially for businesses with lots of customers or different services they offer. Businesses can save money on overhead costs by reducing the bills they have to send out. With fewer bills to handle, businesses can also better use their resources, which cuts costs even more and improves the bottom line.
Implementing consolidated billing: Things to Think About
When implementing consolidated billing, there are several factors that businesses need to consider:
Getting the due dates for different subscriptions to match up
Getting the billing times for all your subscriptions to match up is one of the most important things to consider when implementing consolidated billing. Different billing rounds happen because customers may sign up for different services at different times. By lining up these billing times, it will be easier to send invoices and for customers to keep track of their payments. To ensure that all services are billed simultaneously, however, this might mean prorating charges or changing payment cycles. Businesses need to carefully plan and tell customers about these changes so there is no confusion and the shift goes smoothly for everyone.
Make sure that the same payment method is used for all subscriptions.
The method of payment is another essential thing to think about. Credit cards, bank withdrawals, and digital wallets are just a few ways customers can pay for different services. It is essential that all subscriptions can be paid for in the same way for consolidated billing to work. This works better for the business and the customer because it makes handling and keeping track of payments more manageable. Businesses may need to look at their payment policies and processes to meet this requirement.
Taking care of subscriptions in various currencies
Dealing with subscriptions in different currencies can be challenging for businesses in more than one country or area. The amount a customer is charged changes because exchange rates change. Businesses that use consolidated bills need to consider how they will handle currency conversions and whether they will cover any differences in exchange rates or charge the customer. This needs to be carefully planned and communicated to make sure customers understand how their charges are calculated. Also, companies might need to buy billing tools or systems that can easily handle billing in multiple currencies.
Best Practices for Billing Put Together
To get the most out of consolidated billing, businesses should figure out the billing cycle, ensure the invoice has all the necessary information, and use automatic billing software to make the process easier.
Figuring out the billing cycle
Finding out the payment cycle is one of the first things that needs to be done to set up consolidated billing. This is when a company charges its customers for their services or payments every month or two. The billing cycle can be weekly, monthly, quarterly, or yearly, based on the services and what the customer wants. If the pricing cycle is unmistakable, customers will always know when to expect and pay their bills. It also helps companies guess how much money they will make and keep track of their cash flow.
Including All the Important Information in the Bill
A consolidated invoice should have all the necessary information to be clear and make paying easy. This has the caller’s and business’s names and numbers, a list of all the services or goods and how much they cost, the total amount due, the due date, and the available ways to pay. For tracking reasons, including a unique invoice number and payment terms and conditions is also a good idea. Giving complete and transparent information on the invoice can help keep things clear, lower the risk of complaints, and improve the whole experience for the customer.
Using software for automatic billing
Using consolidated bills by hand can take time and lead to mistakes. Using software that makes automatic payments can speed up the process and make it more effective. This program can determine fees, send reminders, make invoices, and even take payments. It can also give businesses helpful information and studies on billing and payment patterns that help them make intelligent choices. Companies should consider the benefits, how easy it is to use, how well it works with other systems, and the cost of the billing software they want to buy. To protect customer data and stop fraud, it’s also essential to make sure that the software follows all the rules and laws that apply.
New technologies used in consolidated billing
Technology has changed the way billing and invoicing are done. New trends are coming up to make the combined billing process more accessible and more automated. RMS of consolidated bills, these are some of the most important tech trends:
Billing can be automated
A big move in the billing business is automating invoices. Automated billing systems can do many things, like figure out fees, make bills, send reminders, and process payments. This cuts down on physical work, speeds things up, and lowers the chance of mistakes. Automation also makes billing more accurate and on time, which makes customers happier and helps companies keep their cash flow steady.
Putting together other systems
Another trend is for billing software to work with other business systems like financial software, CRM, ERP, and CPQ. This makes it possible for data to move smoothly between systems, which cuts down on the need to enter data by hand and the chance of mistakes. Integration also gives businesses a fuller picture of their customer’s data, which helps them understand their habits and choices and make smarter choices.
AI and ML are used in computer programs that learn on their own
AI and ML are being used increasingly in billing software to predict how customers will act, find outliers, and automate routine chores. AI can help find trends in how people make payments, for example, and guess which customers will most likely be late or not pay. This helps businesses avoid getting paid late and improves their cash flow.
Billing services in the cloud
More and more people are using cloud-based billing options because they are flexible, cost-effective, and easy to expand. Companies can get their billing information from anywhere, at any time, and on any device with these options. They also save companies money on IT costs because they don’t have to buy hardware or manage their servers.
Better security features
Security is critical when paying because it involves private financial information. These technological changes make the consolidated billing process faster, more accurate, and safer. New billing software has better security features like encryption, two-factor authentication, and regular security audits to protect data from breaches and fraud. Customers will be happier with your business, and your bottom line will increase if you take advantage of these trends.
