Billing solutions are software or systems that help businesses manage and automate their invoicing and payment processes. These solutions can generate invoices, track payments, handle recurring billing, manage taxes, and reconcile accounts. They range from simple invoicing tools to complex, integrated platforms. These are useful for businesses that manage multiple currencies, compliance requirements, and customer relationships. Billing solutions are largely automated, which accelerates cash flow while improving the customer experience with transparent, error-free billing.

Billing solutions help connect a business’s sales, finance, and customer service teams to improve internal operations. They integrate with customer relationship management (CRM), enterprise resource planning (ERP), and other core platforms and provide a unified dataset for forecasting, revenue recognition, and planning. There’s a growing demand for these solutions, with the subscription billing software market valued at $4.1 billion in 2023 and projected to reach $13.9 billion by 2030.

Below, we’ll explain the different types of billing solutions, how to choose the right one for your business, and how to manage recurring billing and subscription models using this software.

What’s in this article?

• Types of billing solutions and their features
  
• How to choose the best billing solution for your business needs
  
• How to manage recurring billing and subscription models
  
• Stripe’s billing solution
  

Types of billing solutions and their features

Billing solutions come in various forms, each designed to meet different business needs. Here are the main types and their key features.

Recurring billing solutions

Recurring billing solutions are for businesses with subscription models such as software-as-a-service (SaaS) companies, streaming services, and membership-based organisations. These solutions automate payment collection, renewal management, and dunning processes to manage failed payments for recurring billing cycles (e.g. weekly, monthly, annually). Features often include customisable billing frequencies, automated reminders, proration for mid-cycle changes, and integration with payment gateways.

Usage-based billing solutions

Usage-based billing solutions track and calculate charges based on usage data. They’re ideal for companies in industries such as utilities, cloud services, and telecommunications, which charge customers based on consumption. These solutions can manage complex pricing models such as tiered pricing, pay-as-you-go, and hybrid pricing. Features include real-time usage tracking, dynamic invoice generation, automated usage alerts, and analytics for customer insight and revenue forecasting.

One-time billing solutions

One-time billing solutions offer straightforward invoicing with customisable templates, tax calculation, and payment tracking. They typically integrate with accounting software and cater to businesses such as professional services firms, freelancers, and retailers that need to bill clients for one-time services or products. Features include simple invoice generation, quick payment processing, and options for discounts, partial payments, or deposits.

Enterprise billing solutions

Enterprise billing solutions suit large-scale businesses or enterprises with complex billing needs such as telcos, global SaaS providers, and financial institutions. These solutions can handle multi-currency support, multi-entity management, and advanced tax compliance. They usually integrate with ERP and CRM systems and might include features such as adjustable billing workflows, support for multiple revenue recognition methods, advanced reporting, audit trails, and scalability to handle high transaction volumes.

Hybrid billing solutions

Hybrid billing solutions combine elements of recurring, usage-based, and one-off billing. They’re a versatile choice for businesses with varied revenue streams and are common in sectors such as telecommunications, cloud services, and complex business-to-business (B2B) SaaS. These flexible solutions can mix and match pricing models, manage subscriptions alongside one-off purchases, and handle complex discounting. They might also include features such as unified invoicing, customer management, integrated analytics, and flexible application programming interface (API) integrations.

Billing platforms with integrated payment gateways

Billing platforms that integrate directly with payment gateways simplify billing and payments for businesses and their customers. They can typically support multiple currencies and payment methods (e.g. credit cards, Automated Clearing House [ACH] transfers) and might have features such as fraud detection and automated reconciliation. E-commerce businesses, marketplaces, and subscription services that want an all-in-one solution often use these platforms.

How to choose the best billing solution for your business needs

Choosing the right billing solution means understanding your business needs and finding a tool that fits both your current setup and future plans. Here’s what to consider:

• Billing model: Think about how you bill your customers, whether through subscriptions, one-off payments, or usage-based fees. Different models need different features: subscription businesses might need automated renewals while businesses with usage-based pricing might need real-time tracking.

• Integration: Seek solutions that can integrate with the tools you already use – such as your CRM, ERP, or accounting software – or that come with flexible APIs. This integration can reduce manual work and keep your data clean and accurate.

• Scalability: As your business expands, your billing needs will probably change. Choose a solution that is capable of handling that growth, whether by adding new pricing models, managing more transactions, or supporting multiple currencies. With a flexible billing system, you can expand without making major changes.

• Reporting and insight: Find solutions that provide in-depth reports on revenue trends, customer churn, and payment failures. This insight helps you make informed decisions and refine your strategy.

• Compliance and security: Ensure that the solution you choose can handle the tax, privacy, and security regulations relevant to your business, especially if you operate in multiple regions. Seek features such as automated tax calculations and data encryption.

• Customer experience: Billing can be a touchpoint for customer satisfaction. Look for features that improve the customer experience such as flexible payment options, clear invoices, and automated reminders. A smooth, transparent billing process can make a big difference in customer loyalty.

• Overall value: Evaluate the price and the overall value. A more expensive solution might save you money in the long run by reducing the risk of errors, speeding up payments, or minimising manual work. Consider how a solution can help your business and support growth over time.

How to manage recurring billing and subscription models

Recurring billing and subscription businesses have particular considerations regarding billing practices. Here are some best practices for billing if your company is one of these business types:

• Planning for growth: Choose a billing platform that can adapt as you scale or change course. Look for advanced capabilities such as usage-based billing, complex proration, and real-time metrics that integrate with your product and financial ecosystem. Platforms such as Stripe Billing enable substantial customisation and can handle intricate pricing models.

• Designing pricing: Use dynamic pricing, legacy rates, or hybrid models to maximize customer lifetime value (LTV) and reduce churn. Craft clear, detailed pricing documentation that supports sales and reduces friction in customer onboarding. Revisit and test pricing tactics regularly using A/B testing balance acquisition and retention.

• Automating subscription payments: Use automation for complex dunning flows, smart retries for failed payments, and multi-channel communication tactics that proactively engage customers about their billing status, potential payment issues, or upselling opportunities.

• Upgrading customer portals: Empower customers with a portal that lets them manage usage, view detailed billing history, and understand the value they get from your service. Features such as in-app notifications for billing thresholds or account health can reduce churn and increase satisfaction. Consider integrating AI to provide personalised insight and recommendations.

• Managing global compliance: Automate the way you handle value-added tax (VAT), goods and services tax (GST), and local withholding requirements to stay compliant with global regulations without manual overhead. Look for billing systems that have native or partner integrations with tax compliance solutions to handle compliance across multiple jurisdictions.

• Building data-driven retention strategies: Review subscription metrics such as customer behaviour trends and predictive churn analytics. Use this insight to develop targeted retention strategies, refine pricing models, or adjust the customer journey.

• Improving the payment experience: Localise payment options to match consumer preferences and increase authorisation rates. Consider implementing smart routing for payments and multi-currency pricing to capture a broader market share.

• Designing customer communication flows: Build sophisticated communication flows for different customer milestones or behaviours that reinforce value, anticipate customer needs, and prevent churn. Dynamic content, personalised messaging, and timing can make or break a retention strategy.

• Protecting against fraud and chargebacks: Use a layered security approach for your billing and payment processes with machine learning-based fraud detection, adaptive authentication, and real-time monitoring. Manage chargebacks proactively with detailed documentation and comprehensive dispute management processes.

Stripe’s billing solution

Stripe Billing helps businesses automate and manage their billing processes. It includes the following features:

• Billing: With Stripe Billing, businesses can implement a variety of subscription plans with different pricing tiers, billing intervals (e.g. monthly, annually), trial periods, and add-ons. Stripe Billing can also handle one-off invoices for single purchases or custom charges.

• Payment collection: Stripe Billing automates the entire payment collection process. After a customer subscribes, Stripe automatically handles recurring payments.

• Dunning management: If a payment fails, Stripe has built-in dunning management to automatically retry payments based on customisable rules and send emails alerting customers to update their payment methods.

• Custom invoices: Stripe Billing lets businesses customise invoices to align with their brands, handle complex billing scenarios, and add discounts, coupons, or pro-rata charges.

• Tax calculation: Stripe Billing provides integrated tax calculation through Stripe Tax, which automatically calculates, collects, and remits the right amount of tax depending on the customer’s location.

• Integration with other Stripe products: Stripe Billing integrates with the broader Stripe suite easily, including Stripe Payments, Stripe Tax, and Stripe Radar for fraud prevention. This creates a unified platform that handles billing, payments, tax compliance, and fraud detection.

• Reporting and analytics: Stripe Billing has strong reporting tools that track metrics such as monthly recurring revenue (MRR), LTV, and churn rates. This insight helps businesses understand their financial health and enhance pricing tactics, customer retention efforts, and overall growth strategies.

• Customisable API: Stripe Billing provides an adaptable API that allows businesses to create customised billing experiences. You can integrate Stripe Billing into your website or app, customise the checkout flow, and automate billing operations, all while using Stripe’s extensive developer resources and documentation.

Learn more about Stripe Billing, how it works, and how to get started.