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.

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, like 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:

For the checkout flow:

For SaaS platforms:

For global compliance:

Managing billing, subscription lifecycles, and provisioning

A recurring data model, or the recurring data architecture, sits at the center 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 (like 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 customize 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 installments).

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:

Automation:

Ease of use:

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 tokenization to anonymize 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 customize 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.

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, zip code 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

Optimized and localized payments:

Lower costs:

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 minimize 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 expiration date. Some billing providers even work directly with card networks to automatically update lost, expired, stolen, or damaged cards.

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 canceling, automated churn-deflection logic (such as offering customized 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 personalized outreach and address any issues or concerns.

Questions to ask

Reducing involuntary churn:

Reducing voluntary churn:

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 recognize 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 like MRR, LTV, churn, subscriber cohort retention, recovery efficacy, AR aging, and more. You should be able to drill down, segment, and analyze 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.

Revenue reporting

For businesses with recurring subscriptions, metered usage, or fulfillments-based billing models, manually recognizing 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 like upgrades, downgrades, refunds, bad debt, and disputes, so your finance teams can prepare audit-ready financial statements.

Questions to ask

Business performance reports:

Revenue recognition and reconciliation:

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 customized 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 customize 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 expiration dates.

• Minimize 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.