How to evaluate billing software: RFP criteria and template

In this guide, you'll learn how to evaluate providers and which criteria to include in your RFP.

Billing
Billing

Stripe Billing lets you bill and manage customers however you want—from simple recurring billing to usage-based billing and sales-negotiated contracts.

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  1. Introduction
  2. Selling and accepting orders
    1. Customization for sales teams
    2. Optimized checkout for self-serve businesses
    3. Embedded billing for SaaS platforms
    4. Global compliance for all business models
    5. Questions to ask
  3. Managing billing, subscription lifecycles and provisioning
    1. Flexible
    2. Automated
    3. Easy to use
    4. Questions to ask
  4. Collecting payments and reducing costs
    1. Payment processor
    2. Lower costs
    3. Questions to ask
  5. Retaining customers and growing revenue
    1. Reducing involuntary churn
    2. Reducing voluntary churn
    3. Questions to ask
  6. Reporting and reconciling revenue
    1. Business performance reports
    2. Revenue reporting
    3. Questions to ask
  7. How Stripe can help enterprises

An effective billing system should be designed for scale, helping you expand into new markets and meet complex financial reporting and compliance needs. Inevitably, as you grow, your business will demand more flexibility from your billing system, like the ability to experiment with new pricing models and support a variety of payment methods.

To find a billing software provider that meets your needs, you may start an official procurement process. When writing a Request for Proposal (RFP), you should define what you need from a billing system in order to understand providers’ capabilities and easily compare across them.

In this guide, you’ll learn how to evaluate providers and which criteria to include in your RFP. While there is no one-size-fits-all approach, we’ve included some of the most important questions to ask and shared examples from companies such as MoonClerk, Slack, Noom, and Figma. To get started quickly, you can also download our RFP template with questions mapped to the five most important areas to consider:

  1. Selling and accepting orders

  2. Managing billing, subscription lifecycles, and provisioning

  3. Collecting payments and reducing costs

  4. Retaining customers and growing revenue

  5. Reporting and reconciling revenue

Selling and accepting orders

The right billing software provider should support your current sales motion and any future go-to-market strategies. You’ll prioritize different billing features depending on whether you have a sales team or an automated, self-serve sign-up flow on your website. For businesses that use both, it’s crucial to have an integrated billing system that can not only onboard a customer when your sales team closes a deal, but can also manage prorations when the same customer upgrades or downgrades on their own.

Customization for sales teams

Look for a billing software provider that makes it easy to close deals and bill customers in one place. By integrating directly with your CRM system, for example, a billing provider can allow your sales teams to automatically convert a signed deal into an invoice or a subscription and manage contract updates when they come up. Because of the negotiations inherent in sales deals, it’s also important that a billing system can handle custom contracts. A customer might want to prepay for 100 seats for the first 6 months and 200 seats for the last 6 months of a year-long contract. Will your billing system enable you to win that deal?

Optimized checkout for self-serve businesses

For businesses that sell online, offering a frictionless checkout experience is crucial for maximizing conversions. The checkout flow should make it easy to order online, in-person, or on a mobile device; reduce cart abandonment; optimize payment acceptance; securely store card information; and successfully identify and block fraudulent charges.

Embedded billing for SaaS platforms

A billing system doesn’t just serve as the infrastructure to charge customers. Depending on your business model, it can also be an integral part of your offering. If you’re a SaaS platform, you may want to integrate billing features directly into your core product, allowing your users to charge their customers using recurring payments and invoicing.

In 2012, MoonClerk was looking for an online payments platform to serve as the foundation for the company. The team wanted to simplify how small businesses accept and manage online payments, but didn't have the bandwidth to build their own platform from scratch.

RFP criteria: A white-labelled solution that would make it easy to offer customers a comprehensive suite of billing tools – including an online checkout experience, global invoicing, and subscription management – without a heavy technical lift.

Global compliance for all business models

Regardless of your business model, it's crucial to stay ahead of the shifting regulatory requirements governing initial order acceptance. These standards vary based on where your customers are located and which payment method is used. For example, customers in the United States who pay with ACH debit have to verify their account via micro-deposits or direct bank integrations. For many online purchases in Europe, Strong Customer Authentication (SCA) requires that businesses use two-factor authentication, such as 3D Secure, to verify transactions. And for B2B purchases in Europe, invoices must include required fields to be compliant.

Questions to ask

For sales teams:

  • Does the billing provider integrate with your existing CRM system?
  • Can sales teams create a quote based on your product catalogue and billing logic?
  • Can an approved quote be converted into a new invoice or subscription? Can an approved quote update an existing subscription when a contract is amended?
  • Is the quote designed to support advanced billing scenarios, such as instalments, prepayments or scheduled usage increases?

For the checkout flow:

  • Does the checkout flow allow customers to start a subscription online, in person or on a mobile device?
  • Does the checkout flow have built-in optimisations to increase conversion, like real-time card validation, address auto-complete and localisation?
  • Does it offer features to improve payment conversion? How successful are they?
  • Does it include fraud logic to detect and block illegitimate payments?
  • Can it securely store customers' payment information and accurately charge them on a recurring basis?

For SaaS platforms:

  • Can you integrate the provider's billing capabilities (such as recurring payments and invoicing) into your offering and sell them to your own customers?

For global compliance:

  • Does it support two-factor authentication, like 3D Secure, to verify online purchases in Europe and when required by the cardholder's bank?
  • Can it support micro-deposits or direct bank integrations for US customers who pay with ACH?
  • Can you request authorisation to debit a customer's account when they pay with bank debits, like pre-authorised debits in Canada or SEPA Direct Debit?
  • Does it handle mandate registration and automatically send pre-debit notifications before charging India cardholders in compliance with the Reserve Bank of India's authentication requirements?
  • Does it comply with data localisation regulations governing storage of India transaction data within India?
  • Does it offer single-click cancellations so that German customers can cancel existing subscriptions without logging in?
  • Are invoice templates regularly updated in line with new regulatory requirements so you can customise an invoice based on your customer's location?

Managing billing, subscription lifecycles and provisioning

A recurring data model or the recurring data architecture, sits at the centre of a billing system and allows you to manage billing, subscription lifecycles and provisioning. It includes the logic behind how and when customers are charged, when customers are granted or lose access to different features, and how information is sent to and received from other internal systems (such as a CRM system, ERP system, tax provider or order management solution). To support you as you introduce new product lines, test different pricing and expand into new markets, look for a provider with a recurring data model that is flexible, automated and easy to use.

Flexible

Before starting a procurement process, it's important to consider how you want to charge your customers so you can evaluate how different billing systems will or won't meet your current pricing structure needs. That being said, online businesses are rarely simple or static. Recurring businesses regularly evolve their packaging and pricing in response to competition, changes in customers' willingness to pay and investments in their product offerings. An ideal billing solution should give you the flexibility to experiment with different pricing models like usage-based pricing, where billing changes based on how many gigabytes of storage customers use or how many users are active each month. You could also try tiered pricing and charge different prices depending on which package of features customers choose.

Find a billing system that makes it easy to customise your promotional strategy (such as offering discounts or coupons), allows you to offer free trials (with or without collecting payment upfront) and accommodates various billing scenarios (such as billing customers based on product usage, scheduling a subscription for a future start date, backdating a subscription or billing in instalments).

Over the past few years, Slack has expanded to serve large-scale enterprises such as Amazon, IBM and HSBC. As a result, Slack was looking for a powerful, flexible billing provider that could help them support this growth without diverting immense engineering resources from its core product.

RFP criteria: Support ACH and credit card payments globally, automate a custom usage-based invoice per customer that accepts multiple payment methods, let customers adjust billing plans and frequency, and apply proper sales taxes or VAT globally.

Automated

Reduce human error by automating complex tasks, such as tax calculation and collection (which vary drastically based on where your customers are located). Automation is especially important as your business scales, when it becomes tedious and slow to accurately account for revenue and prorate bills as customers pause, upgrade, downgrade or cancel their subscriptions. Your recurring data model should also play an integral role in provisioning, ensuring your customers are granted access to the features and capabilities they've purchased.

Easy to use

By surfacing key billing and subscription details in a dashboard, your non-technical teammates can manually create or update subscriptions and invoices as needed. Your customers should also be able to self-serve from a dedicated portal where they can manage their subscriptions, pay outstanding invoices and view payment details in one place.

Questions to ask

Flexibility:

  • Does the billing software provider support a variety of pricing models, including usage-based pricing, good-better-best pricing and flat-rate plus overage fees?
  • Can you apply discounts to specific line items and in a particular order?
  • Can customers start a free trial with or without adding their payment details?
  • Can customers prepay for a subscription before it starts?
  • Can you schedule a subscription for a future start date?
  • Can you backdate a subscription to charge for a past service?
  • Can you bill customers in instalments?
  • Can you create one-time invoices for custom deals?
  • Can customers pay you directly on an invoice?

Automation:

  • Does it automatically calculate and collect sales tax and VAT on subscriptions and invoices?
  • Does the billing provider support proration logic for upgrades, downgrades and cancellations?
  • Can the billing system be used as a source of truth for identifying which customers get access to which features and when?

Ease of use:

  • Is there an internal dashboard where your non-technical teammates can create and manage subscriptions and invoices?
  • Is there a dedicated portal for your customers to manage their subscription and invoices, as well as update their payment details?

Collecting payments and reducing costs

Using the same provider to process payments and bill subscribers allows you to deepen subscriber loyalty, increase revenue and reduce costs. All the core payment building blocks are readily available and connected. And when new payment methods become available, you can be confident they'll work with your billing system.

Payment processor

In order to securely capture payment details, you need to connect to a payment processor. Processors frequently use tokenisation to anonymise payment details and keep sensitive data out of your systems, helping you meet industry-wide security guidelines called PCI standards.

An effective payment processor should make it possible to customise payment methods based on customer preferences. For example, 54% of online transactions in China involve wallets such as Alipay or WeChat Pay and 20% use the local card network China UnionPay. Without supporting these payment methods, you may risk missing out on the substantial and growing buying power of Chinese consumers.

Noom was preparing to expand its digital health platform globally and needed a billing system that could help them offer more payment flexibility to customers around the world.

RFP criteria: The ability to accept popular payment methods, test different payment options, and customise currencies and payment methods based on customer preferences.

Lower costs

Your billing software provider should also help reduce costs associated with processing payments, including the ability to:

  • Acquire locally: Network costs increase as businesses expand globally and process more transactions with international payment methods. Cards issued outside of your country follow a different interchange rate structure and are charged additional cross-border scheme fees. However, it's less expensive to acquire in the region where customers are located because you're able to receive domestic rates and avoid cross-border fees.

  • Pass more transaction data to issuers: Any cardholder data you can pass to the issuers is valuable and helps them validate whether a transaction is legitimate, offsetting costs. Two pieces of information in particular, postcode and Level II or Level III data, can have significant impacts on reducing costs.

  • Offer lower-cost payment methods: You can benefit from lower costs by accepting payment methods that don't go through the card networks, like ACH debit in the US, SEPA Direct Debit in Europe, and BECS Direct Debit in Australia. There may also be opportunities to save on costs by offering lower-cost payment methods that still go through the card networks. While digital wallets like Apple Pay and Google Pay have the same transaction pricing as cards, these payment methods require multi-factor customer authentication, which results in fewer chargebacks and disputes (reducing those associated costs).

Questions to ask

Optimised and localised payments:

  • Does the billing software provider integrate directly with a payment provider? If that's not an option, does it connect with your preferred payment gateway so you can accept major credit and debit cards?
  • Does it support diverse payment methods, such as wallets, bank debits and transfers and bank redirects?
  • Does it support global payments and currencies?

Lower costs:

  • Does the billing software provider offer payments capabilities with local acquiring? (Local acquiring typically enables businesses to increase their conversion rates and lower costs on card transactions.)
  • Can you pass postcode data to issuers?
  • Can you pass Level II and Level III data (such as a description of purchased items, the quantity of units purchased, total amount and unit cost) to issuers?
  • Can you offer lower-cost payment methods, such as bank debits and digital wallets?

Retaining customers and growing revenue

Recurring revenue businesses have to manage both involuntary churn (where a customer intends to pay for a product but their payment attempt fails) and voluntary churn (where a customer deliberately cancels their subscription). A billing software provider should offer scalable solutions to minimise the risk of both types of churn. In the end, it's much more difficult and costly to acquire new customers than it is to retain existing ones.

Reducing involuntary churn

Nearly a quarter of churn is involuntary – it's caused by missed payments and declined cards. However, robust payment retry systems can recover more than one-third of failed payments. Look for a billing software provider that enables automatic payment retries, allowing you to either set your own custom retry schedule or use machine learning algorithms to power retry logic. You also want to be able to automatically notify customers of failed payments, make it easy to update their payment information and send proactive reminders to update their card details before the expiry date. Some billing providers even work directly with card networks to automatically update lost, expired, stolen or damaged cards.

Because their industry has such high customer-acquisition costs, Postmates was looking for a payments platform that could help them increase revenue by optimising each step of the customer journey, from checkout to subscription renewals.

RFP criteria: A system for retrying network declines in real time to improve authorisation rates for initial subscription charges, existing relationships with card networks to update the credentials on saved cards that have expired or been replaced and a tool for optimising when to retry failed subscription charges based on machine learning algorithms.

Reducing voluntary churn

A billing software provider manages and maintains customer details, facilitating your ongoing relationship with customers. As a result, your billing provider is naturally well positioned to protect those relationships and reduce voluntary cancellations, which tend to represent the majority of customer churn. When customers show signs of cancelling, automated churn-deflection logic (such as offering customised discounts based on their cancellation reason) can entice customers to stay. You may also want to notify sales and support teams of at-risk customers to offer personalised outreach and address any issues or concerns.

Questions to ask

Reducing involuntary churn:

  • Does the billing software provider automatically update lost, expired, stolen or damaged cards?
  • Can it automatically send emails or text messages when customers' payments fail, when cards are expiring or before subscriptions renew? Can you customise the email or text message to increase response rates?
  • Does it offer a built-in dunning engine to automatically retry failed transactions on a customised schedule? Does the dunning engine leverage machine learning algorithms? Which payment methods are supported?

Reducing voluntary churn:

  • Does it allow you to survey customers in their cancellation flow to understand why they're churning?
  • Can you build churn-deflection logic that offers tailored messages and special offers to cancelling customers?
  • Does it integrate with sales or support systems to provide high-touch churn mitigation?

Reporting and reconciling revenue

Billing software is a crucial source of insight into customer activity and business health. It should surface these insights into reports to help you understand business performance and reconcile and recognise revenue for accounting and financial purposes.

Business performance reports

To serve reporting and compliance needs, any billing system should offer a dashboard with a snapshot of metrics such as MRR, LTV, churn, subscriber cohort retention, recovery efficacy, AR ageing and more. You should be able to drill down, segment and analyse the data to understand the underlying drivers behind performance. If needed, you should be able to send the data to an external data warehouse for more complex analysis.

To keep up with Figma's growth, the finance team needed to understand how each department was performing against key objectives, identify what was going well or poorly and course correct when needed.

RFP criteria: The ability to accept both subscription payments and invoicing for self-serve customers and enterprises, respectively; offer near real-time reporting on its payments data; and have flexible reporting with metadata parameters to store additional, structured information to ensure data consistency across all systems of record.

Revenue reporting

For businesses with recurring subscriptions, metered usage or fulfilments-based billing models, manually recognising revenue for each invoice in compliance with ASC 606 and IFRS 15 can be tedious and time-consuming, especially as your business scales. Using software for revenue recognition and reconciliation can help you streamline manual processes and gain a comprehensive view of your business's revenue and financial performance. Your financial reporting solution should automatically handle contracts and account for events such as upgrades, downgrades, refunds, bad debt and disputes, so your finance teams can prepare audit-ready financial statements.

Questions to ask

Business performance reports:

  • Does the billing software provider offer automated reports and dashboards with full visibility into your data (including MRR, trial conversion, new/active subscriptions, growth, churn, recovery efficacy and cancellation deflections)?
  • Can you segment, audit and analyse your data?
  • Can you access billing data in a variety of ways? For example, are you able to review your key billing metrics in a dashboard? Can you download your metrics and, if you use an external data warehouse, easily export your data?

Revenue recognition and reconciliation:

  • Does the billing provider integrate with your CRM to perform sales-contract recognition and reporting?
  • Does it integrate with your ERP or accounting system?
  • Does it offer automated revenue recognition tables and charts (like a revenue waterfall) and accounting reports (like balance sheets and income statements)?
  • Can you customise how and when revenue is recognised and deferred depending on your business model?
  • Can you track accounts receivables, refunds, disputes, upgrades and downgrades?
  • Can you quickly and easily audit reports in preparation for external auditors?
  • Can you capture and consolidate revenue from different sources to streamline reporting into one system?

How Stripe can help enterprises

More than 150,000 businesses, including enterprises like Slack and Atlassian, use Stripe Billing to collect one-time or recurring payments globally, via card, ACH and other popular payment methods. The Billing API is easy to integrate with existing websites, mobile apps and CRM systems, and developers can quickly design, test, and launch customised subscription logic and pricing models.

  • Launch new revenue streams: Stay ahead of customer preferences and industry shifts by introducing new business models. Billing offers out-of-the-box support for numerous pricing models, including per-seat pricing, metered billing and custom pricing.

  • Expand into new markets: Use a single API integration to deploy faster and reach customers wherever they are. Stripe Billing and Invoicing are also regularly updated based on new regulations and make it easy to customise invoice templates depending on a country's requirements.

  • Capture more revenue: Stripe uses millions of data signals from across the Stripe network to retry failed payments when they're most likely to succeed. In 2021, Stripe Billing helped businesses recover 38% of failed payments on average. Stripe also leverages its direct relationship with card networks to update payment details with new card numbers or expiry dates.

  • Minimise accounting errors and reporting oversights: Reduce costs and risk with a single platform for unified reporting and accurate accounting. Revenue Recognition and reconciliation, tax calculation and collection and robust analytics capabilities are natively built into Stripe Billing.

  • Integrate with your existing systems: Stripe Billing fits in the middle of your order-to-revenue workflow by connecting to CRM systems like Salesforce, ERP and accounting systems like NetSuite, and more.

For more information, read our subscriptions documentation and invoicing documentation. To start billing customers and accepting payments with Stripe, sign up for an account or contact our sales team.

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