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 reevaluation. 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 purchase only once, SaaS products are typically subscription-based—meaning users pay a recurring fee (often monthly or annually) for access to the software. These recurring transactions generate high returns, with global industry revenue projected to hit $339 billion USD 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—read 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 behavior, 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 behaviors, create targeted communications, and address potential issues.

• What it looks like in action
  Instead of seeing only 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 tools and analytics to understand the behaviors leading to a user’s decision. The platform’s extensive analytics allow businesses to see and analyze these granular user behaviors.

Centralized billing

Centralized billing refers to the consolidation of all revenue streams—from recurring subscriptions to one-time 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 centralized system simplifies financial reporting and reduces potential discrepancies in data. Transparency benefits businesses and customers by minimizing 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-time 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 centralized billing to combine all 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 synchronization 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 to transparency: they can see exactly what they’re being billed for at any given time, which can reduce invoice disputes and elevate overall satisfaction.

• What it looks like in action
  Imagine a user decides to upgrade their service package. The moment they make this selection, their account reflects the change, and they can instantly see the adjusted billing amount. 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 updated reduces confusion, minimizes 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 failure, the business sends the customer a courteous reminder a few weeks in advance, prompting them to update their payment details. This step ensures uninterrupted service and demonstrates the SaaS company’s dedication to its users.

Multitier verification

Multitier 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 unauthorized access or fraud decreases. When one verification point may fail or be 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 into an online platform. After entering their password (the first tier), they receive a code via text message (the second tier) that they must input 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 from unauthorized 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 businesses 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 unauthorized access. If an attacker tries to intercept this data, it is unintelligible, rendering the stolen data useless.

Invoice customization

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

• Benefits
  A customized invoice reinforces brand identity while allowing businesses to organize information in the way that works best for them and their clients, which can lead to fewer queries and quicker payments. Such personalized 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 and fields that provide details about how many pieces of content it’s helped companies 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 might prefer paying through a specific method due to rewards or habits. Others might choose a payment method based on its security features. Catering to these diverse needs can result in higher customer satisfaction and, in online settings, can reduce abandoned shopping carts.

• What it looks like in action
  Consider a SaaS company that has business customers of different sizes. Smaller companies might prefer credit card payments, and larger companies might prefer bank transfers. By offering multiple payment options, the shop ensures that all its customers can make purchases the way they want.

Billing cycle flexibility

Billing cycle flexibility allows businesses and their customers to choose when they want to receive or send out 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, bimonthly, or even 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 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

Actively 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 firsthand knowledge of what’s working and what’s not. When customers see that their feedback matters, their trust—and loyalty—grows. This type of communication can also prevent potential issues, since customers often pinpoint areas of concern before they escalate.

• What it looks like in action
  Let’s say 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 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 satisfied customers.

Disaster recovery plan

A disaster recovery plan provides a predetermined, structured strategy for responding to unplanned incidents that could disrupt operations, including billing. This plan focuses on the systems, technologies, and data key to an organization—detailing the steps employees should take if they’re compromised.

• Benefits
  A well-defined disaster recovery plan minimizes the risk of data loss and service downtime. When a company can quickly recover 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 swiftly shift to a backup server, allowing sales to continue without interruption. Simultaneously, a team addresses the original server issue. Customers remain largely unaware of the backend crisis, and business continues as usual.

Performance audits

A performance audit evaluates the effectiveness, efficiency, and costs of an organization’s operations—with the goal of optimizing them and improving outcomes.

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