Businesses are now realizing the immense benefits of adopting a subscription model. As such, relying solely on a payment gateway for payments can become a time-consuming headache, especially as your B2B SaaS business scales.
Furthermore, the subscription economy is expected to grow to $1.5 trillion by 2025. This makes it imperative for B2B SaaS businesses to adopt subscription billing software.
While payment gateways handle transactions, they lack the features you need to truly optimize subscriptions. Here’s why subscription billing software is the smarter business choice.
1. Automated Recurring Billing
One of the primary advantages of subscription billing software is to eliminate manual subscription-related tasks. That means, no more sending invoices manually again or chasing down late payments.
Unlike payment gateways, which require manual intervention for each billing cycle, subscription billing software handles the entire process automatically. It not only saves time and effort but also minimizes the risk of errors and missed payments. They ensure your business has a consistent revenue stream.
The curated list from Attrock reviews several subscription billing solutions for any B2B SaaS business. Each option is different, so it’s essential to pick the one that suits your business best.
2. Helps With Revenue Recognition
Revenue recognition ensures you record income only when you truly earn it. It keeps your financial picture accurate and avoids confusion for investors and stakeholders.
However, since you often receive payments upfront for services delivered over time, revenue recognition for B2B SaaS can get tricky.
Subscription software simplifies things by automating prorated charges and subscription updates, keeping your financial records accurate, and saving you accounting headaches. Moreover, the software ensures compliance with accounting standards, which enhances accurate financial reporting.
Contrastingly, payment gateways simply process transactions. They don’t track subscription details or billing cycles, challenging revenue recognition.
3. Helps To Reduce Customer Churn
The B2B SaaS industry has an average customer churn of 5%, although bigger businesses have a higher rate. However, losing customers is expensive, regardless of the size of your business.
Subscription software plays a vital role in addressing this issue. It provides features such as automated payment retries, dunning management, and self-service customer portals. These features provide smooth solutions to failed payments or expired credit cards, ultimately improving customer retention.
On the contrary, while payment gateways can facilitate payments, they offer limited tools to address your subscribers’ ongoing needs.
4. Accommodates Scalability and Growth
Managing subscriptions manually can quickly become a nightmare as your subscriber base grows.
Subscription software eliminates this challenge. It’s built to handle the complexities of managing a growing B2B SaaS business. It allows you to easily add new plans, handle more customers, manage upgrades and downgrades, and keep everything organized as your business booms.
Payment gateways, on the other hand, while efficient, can’t handle the growing pains of your B2B SaaS business. This is because they lack features for processes like diverse billing models, multiple plans, automatic renewals, and varying customer preferences.
5. Offers Flexible Subscription Management
One-size-fits-all doesn’t work in B2B SaaS. Fortunately, subscription software takes care of that. According to a Younium expert guide, subscription billing software lets you handle all of your customers’ activities from start to finish. These can be anything from customer onboarding and support, and recurring billing, to revenue tracking and more.
Most importantly, it lets you create and offer customized solutions, like plans, offer free trials, and manage complex pricing structures, all within a single platform. It gives you the flexibility to cater to your specific customer needs.
This is an important capability since most of your customers expect such flexibility from your offerings.
6. Integrates Several Payment Options
Did you know that nearly 90% of your customers will switch to your competitors after only two poor customer experiences? Friction in the payment process can be a major source of frustration for your customers.
Fortunately, subscription management software keeps that from happening. By integrating with multiple payment gateways, these tools provide various payment options for global reach, boosting customer satisfaction and retention.
It helps you offer the payment options your B2B clients prefer, minimizing friction in the buying process. This increases the chances of successful payments, reducing involuntary churn caused by payment failures.
7. Reporting and Analytics Capabilities
Subscription billing software often comes equipped with robust reporting and analytics capabilities. It provides valuable insights into your business’s subscription metrics, customer behavior, churn rates, and revenue metrics.
This data is gold.
You can use it to optimize your pricing strategy, identify churn risks, and make data-driven decisions. It can also help you identify areas for improvement so you can drive growth and profitability.
Adopt Subscription Billing Software
Subscription billing software isn’t just a convenience but a strategic investment. While payment gateways offer payment processing, subscription billing software is comprehensive and tailored for B2B SaaS businesses.
It can save you time, money, and resources while helping you retain customers, offer exceptional CX, and grow your B2B SaaS business. So, ditch the payment gateway hassle and explore subscription billing software.