Revenue collection is a vital process for any recurring billing company, regardless of your subscription business model, and this is why it is crucial to ensure its proper management.
Also commonly referred to as revenue recovery, revenue collection is a process of collecting money owed to your company. It includes initiating payments, creating invoices, calculating taxes, and updating payment statuses.
Though often perceived as a relatively simple process (“we provide a service - our customers pay”), revenue collection can present a high level of complexity and, when mismanaged - affect your cash flow and subscriber numbers.
Let us dive a little deeper into the main reasons why revenue collection can be challenging to manage and what can be done about it.
When revenue collection becomes a headache
It is all well and good when you can successfully charge and collect recurring payments from all of your customers. But we do not live in a perfect world, and there will always be cases when customers’ payments fail. This could be because of:
Expired credit cards
Faulty payment methods
Declined by bank
Things escalate even further when your business expands, especially if you manage your recurring billing manually. And when payments fail, it becomes a matter of communicating about it to your customers, or in other words, you need to handle dunning.
Dunning that costs resources
In its essence, dunning is a repeated request for payment. But it is also about communicating to a customer when, for example, their credit card is about to expire (a pre-dunning, if you will).
Dunning helps immensely when recovering revenue; however, manual dunning can also strain your resources. Non-automated dunning is a slow, costly and cumbersome process. As your subscription business grows, you will need to allocate more and more workforce to handle dunning alone.
Changes that cost customers
Manual revenue collection is rigid to changes. People change their contact details, credit card info, or other data all the time. It is important to react swiftly to any changes that affect your subscribers as this will help retain them and prevent churn.
Revenue recognition becomes problematic
If there are issues with revenue collection, revenue recognition gets complicated as well because revenue cannot be recognized until cash reaches the accounts, which means that you cannot generate reports of your recognized earnings and do not have a reliable overview.
Fortunately, there is a way to improve revenue recognition, reduce churn, automate dunning and react to changes with a higher degree of flexibility. And that’s recurring billing automation. You can optimize revenue collection and ensure your company’s financial stability by implementing a recurring billing and subscription management platform.
Collect revenue in time with recurring billing automation
Revenue collection stops being a headache if you automate its processes with recurring billing software, such as Upodi. It can manage the majority of revenue collection and accommodate any changes to customer data or payments.
Having a dedicated system, thorough data tracking, and customer communication can facilitate the whole revenue collection process and help avoid losses.
Stop chasing payments
With Upodi, payments and dunning are automated. You can stop relying on customers to remember their credit card expiration dates - they will be notified well ahead of time and with a customized email, allowing you to collect revenue efficiently and on time.
Upodi allows you to configure an automatic dunning system with specific steps. Such a configuration could be:
If a payment fails, retry.
If it fails again, send an email to the customer and wait for a week.
If the invoice is still unpaid, cancel the subscription.
The less time you spend chasing payments, the more time you can dedicate to nurturing and growing your business. Plus, Upodi will automatically handle invoice matching and ARR calculations for you. No more uncertainty when forecasting your revenue.
Save resources and avoid errors
No more manual revenue collection also means fewer errors and fewer resources used. Having embraced the subscription business model, companies often find themselves drowning in invoicing and dealing with delinquent accounts.
Employees end up spending hours calling and emailing customers. Add international scaling to the mix, and things quickly get out of hand. Upodi helps avoid all that hassle. It is a 100% white label solution that integrates seamlessly into your existing customer journey.
Build a successful subscription business with Upodi
The key to successful business growth is giving your subscribers freedom, and they should be able to change their subscriptions, orders, and contracts. It is your job then to make sure that these changes are implemented to customers’ benefit, as well as your own.
Adapting to changing market forces and customer behavior is crucial. With Upodi, you get a flexible technology that eases adjustments in your subscriptions to strengthen your position and helps your business stand out in the crowd.
Upodi will help you collect revenue and tackle any recurring billing challenges you might have. Get a personalized and devoted service - let us handle your subscriptions while you focus on growing your business.
Ready to discover how recurring billing automation can benefit your business? Reach out to us; we’d be happy to talk.
Mette N. Mortensen is a student employee with a thirst for Marketing. She is driven by her passion, and takes pride in providing the best results possible. As a Marketing Manager, her goals include providing relevant and exciting content, innovative solutions, and provide value to both company and customers. In addition to working at Upodi, Mette is taking her Master degree in Strategic Communication at Aarhus BSS.
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