How to build big billing models

Today’s SaaS CFOs need to build billing models that are both flexible and capable of profitably scaling to enormous transaction loads.

That’s a tall order, but with the right processes and billing technology in place, it’s more than achievable.

Here, we’ll be diving into big billing models in SaaS.

How are they built? What does great SaaS billing look like? What pitfalls should you avoid?

If you’ve been wanting to scale your billing with robust tools and best practices, this post is for you.

Here’s what we’ll cover

Story — A finance person’s nightmare

Picture this: It’s a Friday afternoon, and John, a seasoned RevOps leader, is wrapping up a hectic week.

He glances at the clock, eager to head home and unwind. Just as he reaches for his coat, his phone rings.

It’s Lisa, a finance manager at a key customer company and she sounds frustrated. “John,” she begins, her voice tense, “we’ve got a serious problem.”

John feels his heart sink.

Lisa explains that the latest invoice arrived weeks late and is riddled with errors.

There are incorrect charges that don’t match their usage, missing discounts they were promised, and a tax breakdown that’s completely unclear.

Lisa explains that now she has to drop everything to sort out these errors, scrambling to get approvals before the payment is due in just a few days.

This means countless emails, phone calls, and stress, all to avoid late fees and service interruptions. Instead of focusing on her strategic financial management duties, Lisa is stuck firefighting billing issues.

This situation makes John realize that an invoice is more than just a bill — it represents his company to customers.

A clear, well-crafted invoice not only enhances your brand image but also builds trust with your customers.

They need a better billing system to avoid such issues and keep their customers satisfied.

What does great billing look like?

So, what makes a billing system great?

The ideal billing system is one you barely notice. It should be robust, flexible, and run smoothly.

Your customers should always know exactly how much they are being billed and why.

Clear and transparent billing builds trust and keeps customers happy.

Maximize your revenues by pricing based on the value you bring.

A great billing system lets you align your pricing strategies with the actual value delivered to your customers.

Think of billing as one seamless workflow — from metering to billing to collections.

Everything should be simple and integrated to ensure accuracy and efficiency.

Lastly, handle tax and data security right from the start.

A good system will manage tax compliance and protect sensitive customer data, keeping you compliant and safeguarding your customers’ trust.

Now that we know what a great billing system looks like, let’s go back to John’s story and see how he tackled the problems they were facing with their billing system.

Challenges in big data billing models: John’s story

As John looked deeper, he saw that their current billing system wasn’t keeping up with the company’s new usage-based pricing model.

This model included various usage metrics like API requests, text messages, service bundles, and data consumption, tailored to different customer needs.

The old system couldn’t manage the largely increased transaction volume, the various data formats, and the complexity of these usage calculations, often getting the data wrong and forcing the team to do many calculations by hand.

This led to delays and mistakes in the bills — just like the ones Lisa encountered.

Their customer details and billing data were all over the place. Nobody really knew where the data was coming from, where it resided, or where it needed to go.

This confusion led to more mistakes and delays, frustrating customers and delaying cash flow.

John realized clean and audited data is key.

They needed a new, robust billing system to handle large amounts of data efficiently, able to handle the increased volumes not just for today, but for years down the line.

The system also needed to be resilient, and to have the technology to quickly adapt as the competition moved.

The four P’s of building big billing models

So, John came up with a strategy based on the Four Ps of building a successful billing model.

Plan – client value focus

John started with a solid plan, focusing on what customers value the most — they loved paying for exactly what they used, which increased transparency and trust.

By actively listening to customer feedback, he continuously improved the billing process.

He aimed to send out accurate and timely invoices that clearly reflected their usage, reducing errors and reinforcing the company’s reliability.

John also included detailed usage reports with the invoices, breaking down every charge so customers knew exactly what they were paying for.

This turned a frequent pain point into a positive customer journey.

People – collaborative effort

John knew that connectivity between key stakeholders and having the right people were essential to building a successful billing platform.

He formed a team from across the company, including experts from Product, RevOps, SalesOps, Marketing, Finance, IT, and Legal.

Everyone brought their own important views and insights with the platform.

The Product team ensured the billing model aligned with the service features.

Sales and marketing provided key insights on customer interactions and satisfaction, while Finance and IT handled the technical data flow and ensured financial accuracy.

This diverse team worked together to make sure the billing system was efficient and aligned with broader business objectives and compliance requirements.

Platform – scalable technology

And then, John looked for a robust platform capable of handling massive transaction volumes while being flexible enough to adapt to new market demands.

After rigorous evaluation, he chose a billing platform known for its scalability and flexibility.

This platform efficiently handles large amounts of data while maintaining a stable, high-speed performance.

Additionally, the billing system incorporated AI technology to provide real-time analytics and accurate projections, helping management make smart decisions quickly.

What NOT to do: common pitfalls in billing systems

Before we close out, let’s talk about what NOT to do with billing systems.

Keep it simple

Don’t make your billing system too complicated.

A simple system is easier for everyone to understand and use, reducing errors and increasing efficiency.

Always test

Skipping the testing phase can lead to big mistakes that are costly to fix.

Testing gives you a chance to catch problems before they affect your customers.

Use standard systems

Custom solutions might seem appealing, but they can be difficult to maintain as your needs evolve.

It’s better to use standard, updatable systems that can grow with you.

Value customer feedback

Always listen to your customers.

Their insights are crucial for improving their experience.

For example, incorporating feedback on invoice clarity can greatly enhance customer satisfaction.

Prioritize compliance and privacy

Don’t overlook the importance of following tax rules, regulations, and protecting your customers’ data privacy.

These steps are vital for compliance and maintaining customer trust and confidence.

Learn even more about building big billing models

Remember, a robust billing model isn’t just about getting paid; it’s about making a positive impression on your customers.

That’s why SaaS billing was a huge topic of discussion at this year’s Modern SaaS Finance Forum.

Hosted by Sage Intacct, the full-day digital conference was attended by 2,000+ SaaS industry experts, investors, and leaders who all had one goal — to share and learn what SaaS finance success looks like in the months and years ahead.

After receiving exceptional feedback, we’ve made the conference sessions available to anyone who’d like to listen.

You can access them here.