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Bills are a part of life and that will never change. How bills are being paid, though—that’s another story. Increasingly, consumers are paying for services they regularly use through a more streamlined, convenient process. That process being facilitated by recurring billing.
Recurring billing offers those who are making payments the option to set it and forget it. By providing their payment information once, the need to manually pay bills (or remember to pay them at all) is no longer necessary.
When providing businesses with billing software solutions, the digital trends that influence important technological evolutions, impacting the way businesses operate must be kept in mind. Currently, many businesses have already or are planning to move to the cloud, changing their business model to offer Software as a Service (SaaS) versus traditional methods of imparting software.
For billing software to evolve along with the way businesses operate, billing platforms must be expanded to include recurring billing solutions.
Companies that offer services through a subscription-based business model are cashing in on this technological trend to offer services that customers pay for regularly, usually monthly. As more businesses rely on these repeated payments, they are looking to utilize billing software that supports recurring billing for the payment of services including:
Software as a Service (SaaS)
Entertainment and media
Recurring billing doesn’t only affect the way consumers pay for services. Increasingly more business-to-business (B2B) vendors are looking to offer recurring billing for their clients who make regular purchases from them as well.
The storage of sensitive client information is the cornerstone of how subscription services operate. Rather than having consumers input their payment information every month, billing software must initiate Card-Not-Present (CNP) transactions to satisfy subscription bills.
Cardholder data and bank account information can’t just be stored and used however a company sees fit. Billing software must ensure that this data is kept safe through compliance with standards such as:
General Data Protection Regulation (GDPR)
Payment Card Industry Data Security Standard (PCI-DSS)
Payment Application Data Security Standard (PA-DSS)
National Automated Clearing House Association (NACHA)
Service Organization Control 1 (SOC1) & Service Organization Control 2 (SOC2)
The appropriate encryption, applied to the Primary Account Number (PAN), is enabled through PCI compliance in particular. To ensure the protection of the specific numbers in the customer’s or client’s electronic file, the numbers must be encrypted at the column, file, or disk level.
Tokenization is another process utilized to ensure the safety of Personal Identifying Information (PII). This method allows businesses to store sensitive customer data in the form of a “token.” This token represents customer payment information in billing systems, mapping back to sensitive customer data through a tokenized system. Since the token takes the place of sensitive data, it also cannot be restored to the original values.
For many companies in the modern marketplace, subscription billing and automatic payments software can be the lynchpin of ongoing growth as these tools give businesses the flexibility to grow accordingly. For businesses that operate digitally in the cloud, such tools are even more fundamental. Advantageously, billing software integration can offer more than just the subscription management services, including:
Automated alerts for upcoming payments
Crisis management tools
Consider the way a business grows. Businesses operating in the cloud with a subscription model need an easy payment system. If their clients can pay with ease, then they are more likely to sign up for service. Then, when monthly billing comes due, a streamlined billing system will ease them into ongoing payments. It is only when clients are frustrated that they are likely to scale back their service or cancel altogether. In this way, an effective subscription billing system with automatic payment options already integrated into the system can enhance any earning potential.
Engaging in any kind of subscription management means data for any billing platform. Consumer and client data ranging from personal information including names, addresses, and contact information to billing information such as credit card information and billing addresses all need to be stored and managed through the recurring billing system for proper invoicing.
Recurring billing integration with accounting systems allows financial teams to gain critical financial insights with just a click of the mouse. With full financial history on display, the making of critical business decisions is made all the more easily as insights on things like consumer demand trends are made visible.
For proper Generally Accepted Accounting Principles (GAAP) and ASC 606 compliant revenue recognition, billing software integrated with accounting systems easily tracks earn vs deferred revenue, streamlining end-period reconciliation.
Most modern consumers are tired of waiting on customer service representatives to make basic changes to their accounts. If all they need to do is change their payment method, it makes sense that subscription management software includes self-service modules for those simple changes.
Alongside access to their private information, users can opt in or out of subscription services without ever having to talk to a customer service representative. This small shift reduces the hassle and encourages long-term participation as consumers gain the freedom they desire to make decisions regarding their accounts.
Another critical component is email integration. With any kind of recurring billing integration, businesses immediately focus on dollar signs. It is easy to think about how simple it is to collect ongoing fees now that monthly payments can be fully automated. However, this power must be balanced with real subscriber communication.
Consumers need to be fully cognizant of their subscription, what it entails, how much it costs, and when they’re going to be charged. An effective billing software system will minimize direct interactions between the financial staff and consumers by frontloading the important details in automatic emails.
Finally, a quality subscription billing platform should have dunning management as a standard feature. Dunning management refers to the software's ability to handle billing complications.
For as many problems as recurring billing and automatic payments solve, there are other issues created. What happens when a charge is declined? What happens when the payment source is out of date? When these details change, the consumer may not remember to provide the necessary updates. The software system should have the necessary fallbacks to cope with expired payment details and failed transactions.
To offer payment solutions that capitalize on the convenience and popularity of automatic payments, billing platforms must be expanded to include recurring billing solutions. As both a critical service that current clients want and as an essential tool for attracting new clients to billing platforms going forward.
Whether having a system build from scratch or integrated with third-party billing tools, this software must be developed with precision, be properly matched to the business model in question, and be Payment Card Industry Data Security Standard (PCI-DSS), Payment Application Data Security Standard (PA-DSS), EMV, Check21, and NACHA compliant.
Naturally, companies need help incorporating recurring payments functionalities. When offering payment solutions, it’s imperative to meet the needs and limitations of the business in question. Employing a skilled support team, in the form of expert software developers, to help with implementation is how you’ll do just that.
Chetu, Inc. does not affect the opinion of this article. Any mention of specific names for software, companies or individuals does not constitute an endorsement from either party unless otherwise specified. All case studies and blogs are written with the full cooperation, knowledge and participation of the individuals mentioned. This blog should not be construed as legal advice.
Chetu was incorporated in 2000 and is headquartered in Florida. We deliver World-Class Software Development Solutions serving entrepreneurs to Fortune 500 clients. Our services include process and systems design, package implementation, custom development, business intelligence and reporting, systems integration, as well as testing, maintenance and support. Chetu's expertise spans across the entire IT spectrum.
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