Your business's billing strategy depends on several factors, and many of those are unique to your industry and your specific business. Creating and maintaining a comprehensive SaaS billing system requires up-front planning as well as consistent re-evaluation. There's no single set of rules that will tell every SaaS company how to manage its billing process, but there are some best practices that most businesses will find useful.

Below, we'll discuss how these best practices work and what benefits they offer – and explain how solutions such as Stripe Billing and Stripe Invoicing can help SaaS businesses achieve them.

What's in this article?

• What is SaaS billing?
  
• SaaS billing management best practices
  

What is SaaS billing?

SaaS billing refers to the processes and systems that software-as-a-service (SaaS) businesses use to charge their customers for SaaS products. Unlike traditional software, which customers might only purchase once, SaaS products are typically subscription-based, meaning that users pay a recurring fee (often monthly or annually) to access the software. These recurring transactions generate high returns, with global industry revenue projected to hit US$339 billion in 2024.

SaaS billing systems handle these recurring transactions, manage different pricing tiers and accommodate other billing-related needs, such as promotions or discounts, free trials and usage-based billing. The billing process is often automated and integrated directly into the software platform, making it easier for the service provider and the customer.

To read more about SaaS billing – including how it works, different types of SaaS billing, and features and functionality that are part of SaaS billing systems – take a look at our in-depth article on the topic.

SaaS billing management best practices

Granular reporting

Granular reporting breaks down transactional data into detailed segments. Instead of seeing broad strokes of user behaviour, businesses can dive deeper into specific user engagement metrics, payment history and service tier interactions.

• Benefits
  Businesses can use granular insights to better model future behaviours, create targeted communications and address potential issues.

• What it looks like in action
  Instead of only seeing that a user upgraded their service, granular reporting allows businesses to see, for example, that the user shifted tiers three times in six months, explored certain features before each shift and tended to upgrade after engaging with specific marketing communications.

• How Stripe supports it
  Stripe Billing provides the tools and analytics needed to understand the behaviours leading to a user's decision. The platform's extensive analytics allow businesses to see and analyse these granular user behaviours.

Centralised billing

Centralised billing refers to the consolidation of all revenue streams – from recurring subscriptions to one-off payments – into a single management system. This system provides a comprehensive view of a company's financial interactions with its customers and eliminates the need to jump between different platforms.

• Benefits
  A centralised system simplifies financial reporting and reduces potential discrepancies in data. Transparency benefits businesses and customers by minimising opportunities for misunderstandings and disputes. Having a single source of information for all billing matters can improve trust and communication between businesses and their user base.

• What it looks like in action
  Imagine a business that began with subscription-based services but has since introduced one-off purchase options and upsells. Instead of juggling multiple systems – one for subscriptions, another for one-off sales and a third for upsells – the business can use centralised billing to combine all of these interactions into a single system.

Real-time updates

Real-time updates mean that as soon as a change occurs – whether that's an account status alteration, a service level adjustment or a usage update – the billing system reflects the change. Therefore, the most accurate data is always accessible.

• Benefits
  Immediate data synchronisation offers several advantages. For businesses, it means always having access to the most recent information, which can lead to quicker decision-making. For customers, it translates into transparency – they can see exactly what they're being billed for at any given time, which can reduce invoice disputes and elevate overall levels of satisfaction.

• What it looks like in action
  Imagine that a user decides to upgrade their service package. The moment they make this selection, the change is reflected in their account, and they can see the adjusted billing amount instantly. There's no waiting period or uncertainty about the new cost.

Customer communication

Businesses keep customers informed about upcoming renewals, successful payments, failed transactions and any adjustments to their service plans by sending prompt notifications.

• Benefits
  When customers are well-informed, they feel valued and respected. Keeping them up to date reduces confusion, minimises disputes and fosters a positive perception of the brand.

• What it looks like in action
  Consider a scenario in which a customer's credit card is about to expire. Instead of waiting for a payment to fail, the business sends the customer a courteous reminder a few weeks in advance, prompting them to update their payment details. This step ensures that their service is not interrupted and demonstrates the SaaS company's dedication to its users.

Multi-tier verification

Multi-tier verification is a process that authenticates the identity of an individual or entity before they proceed with a transaction or other action. Relying on multiple pieces of evidence or steps makes such interactions safer and guarantees their legitimacy.

• Benefits
  With each additional layer of authentication, the risk of unauthorised access or fraud decreases. If one verification point fails or is compromised, another serves as a safety net. This method promotes the highest level of security and ensures that only those with the correct permissions can access sensitive data or complete important transactions.

• What it looks like in action
  Imagine a user logging in to an online platform. After entering their password (the first tier), they receive a code via text message (the second tier), which they must enter for access. Even if a malicious actor obtained the password, they would still need the secondary verification code to log in. For some transactions, there might be a third verification step through which the user confirms their actions via a mobile application notification.

Data security

Data security involves the strategies and measures that protect digital information against unauthorised access, breaches and theft.

• Benefits
  Businesses, customers and partners need to know that their information is guarded against potential threats. Implementing strong data security can prevent financial losses that might occur due to data breaches, and it can also protect a company's reputation. Beyond this, many regional and global regulations require certain data security measures, and complying with them means that businesses can avoid legal complications and hefty fines.

• What it looks like in action
  Think about someone shopping online. After they enter their credit card information to make a purchase, encryption transforms the credit card details into a code to prevent unauthorised access. If an attacker tries to intercept this data, it is unintelligible, rendering the stolen data useless.

Invoice customisation

Invoice customisation is the ability to tailor the appearance and content of an invoice to match specific business needs and branding guidelines. Whether it's changing colours, adding logos or adjusting layouts, customisation allows businesses to create invoices that reflect their identity.

• Benefits
  A customised invoice reinforces brand identity, while allowing businesses to organise information in the way that works best for them and their clients, which can lead to fewer queries and quicker payments. Such personalised touches demonstrate professionalism and attention to detail.

• What it looks like in action
  Imagine a SaaS business that provides a content management system. Instead of sending a generic invoice, it can send one that includes its logo, as well as fields that provide details about how many pieces of content it's helped companies to publish. This reinforces its brand and makes the buying experience memorable for the customer.

Multiple payment options

Accepting a broad range of payment methods, including credit and debit cards, digital wallets and mobile payment apps, allows businesses to support a wider audience.

• Benefits
  Accepting a range of payment methods is convenient for customers and can lead to increased sales. Some customers may prefer paying through a specific method because of rewards or habits. Others might choose a payment method based on its security features. Catering to these diverse needs can result in higher levels of customer satisfaction and, in online settings, can reduce abandoned shopping baskets.

• What it looks like in action
  Consider a SaaS company that has business customers of different sizes. Smaller companies may prefer credit card payments, while larger companies may prefer bank transfers. By offering multiple payment options, the shop ensures that all of its customers can make purchases using their preferred method.

Billing cycle flexibility

Billing cycle flexibility allows businesses and their customers to choose when they want to receive or issue bills. Instead of needing to adhere to a rigid monthly or weekly schedule, there's an option to adjust the billing period to fit specific needs – such as quarterly or bimonthly, or even billing on specific dates.

• Benefits
  Flexibility in billing cycles can lead to improved cash flow management for businesses and better financial planning for customers. For businesses, it helps to align billing with their operational costs or the nature of their services. Customers, especially those with tight budgets or irregular income patterns, appreciate the freedom to choose a billing cycle that matches their other financial commitments.

• What it looks like in action
  Imagine a subscription-based online learning platform that caters to students and working professionals. Students might prefer a billing cycle that aligns with their semester schedules, whereas working professionals might opt for a cycle that matches their pay period. With flexible billing cycles, the platform can accommodate the needs of all users.

Customer feedback outreach

Taking an active approach to seeking feedback from users about a product, service or experience can provide SaaS businesses with valuable insights.

• Benefits
  Gathering feedback can lead to direct improvements in products and services. It provides businesses with first-hand knowledge of what's working and what isn't. When customers see that their feedback matters, their trust – and loyalty – grows. This type of communication can also prevent potential issues, as customers often pinpoint areas of concern before they escalate.

• What it looks like in action
  Let's say that a SaaS company launches a new feature allowing collaboration between team members. After a week, the company sends out feedback forms to customers who have used the new feature. The feedback reveals that many people found the collaboration tools confusing. Acting on this feedback, the SaaS company includes a short tutorial video to walk users through using the collaboration tools, resulting in increased sales and more satisfied customers.

Disaster recovery plan

A disaster recovery plan provides a pre-determined, structured strategy for responding to unplanned incidents that could disrupt operations, including billing. This plan focuses on the systems, technologies and data that are key to an organisation, and details the steps that employees should take if any of these areas are compromised.

• Benefits
  A well-defined disaster recovery plan minimises the risk of data loss and service downtime. When a company can recover quickly from a disruptive event, it maintains customer trust and safeguards its reputation. Companies with a solid recovery plan can also avoid potential financial losses associated with prolonged disruptions. Plus, this planning demonstrates a proactive commitment to data integrity and operational resilience.

• What it looks like in action
  Imagine that an online retailer experiences a server malfunction during peak shopping hours. Because the retailer has a disaster recovery plan in place, it can shift to a backup server swiftly, allowing sales to continue without interruption. Simultaneously, a team addresses the original server issue. Customers remain largely unaware of the crisis happening in the back end, and business continues as usual.

Performance audits

A performance audit evaluates the effectiveness, efficiency and costs of an organisation's operations – with the goal of optimising them and improving outcomes.

• Benefits
  Performance audits are valuable tools that can improve operational effectiveness. Businesses that conduct these audits on a regular basis can find areas of inefficiency or waste, and thus implement corrective measures to streamline operations and boost productivity. With the insights from these audits, businesses can also make informed decisions that help them to meet their objectives and goals.

• What it looks like in action
  A software company regularly experiences delays in product launches. A performance audit reveals bottlenecks in the product testing phase that are caused by a lack of coordination between teams. The business introduces improved communication protocols and revisits each team's role, resulting in smoother product rollouts and a decrease in launch delays.

Learn more about Stripe Billing and how it enables efficient and reliable SaaS billing systems.