5 Recurring Billing Challenges and How to Overcome Them

Growing B2B SaaS companies usually find themselves having to tackle the complexities of the recurring billing process.

And if left unchecked, the consequences can be brutal to your company’s growth, including revenue loss, customer dissatisfaction, and high churn. 

In this article, we discuss five top recurring billing challenges and how you can overcome them. 

5 Challenges of Recurring Billing and Their Remedies

Below are some of the most common subscription billing challenges affecting many SaaS companies, and how you can leverage leading technology to solve them. 

1. Scalability 

Scaling helps to take your company to greater heights and bigger profits. But it also means new payment structures, markets, pricing tiers and a growing subscriber list. 

This can pose a huge challenge for your SaaS company if your recurring billing solution lacks the flexibility to implement all the new incoming changes. 

Solution

You can overcome scalability challenges in recurring billing through the following ways:

  • Implement robust infrastructure and scalable systems capable of handling increased transaction loads and customer numbers. 
  • Regularly collect feedback from your customers and monitor market trends to find new opportunities for innovation and improvement. 
  • Provide your customers with various pricing tiers and subscription plans to cater to their different needs and budgets. 

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2. Establishing Flexible Subscription Billing Frequencies

Some SaaS companies implement a simple billing structure, say a flat-rate charge or a payment that’s only made on the first day of the month.

However, this can pose a challenge to your customers, who may require a more flexible solution. 

Besides, sending invoices too frequently can increase the risk of customer churn. 

Solution

For more flexibility, consider investing in a recurring billing software that’s able to handle different subscription tiers and payment plans.

When choosing the best recurring billing platform for your subscription plans, ensure the plans best match your customers’ preferences and your company growth goals. 

3. Maintaining a Robust Data Security

For recurring billing systems, the majority of transactions occur online. Even though this payment method is more convenient than traditional methods, it allows for many security risks.

One such risk is identity theft. In 2023 alone, over a million people reported cases of identity theft in the FTC’s IdentityTheft.gov website. 

In case of a breach and sensitive data gets hacked or lost, your B2B company can suffer serious reputational damage. Some customers will even opt to use your competitors’ platforms. 

Solution

Consider implementing a secure recurring billing system that has a reputable and secure payment processor. 

Also ensure you follow the right procedures to handling and keeping your clients’ sensitive data, such as:

  • Staying up to date with payment card industry’s (PCI) regulations that protect customer data. 
  • Using a software that encrypts sensitive data to keep it from hackers
  • Not storing a card’s track data, which is a prime target for hackers

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4. Compliance with Revenue Recognition Standards

Most B2B SaaS companies encounter challenges when it comes to properly recognizing revenue from subscription contracts. 

This is primarily due to the recurring nature of revenue streams and the intricacies of subscription-based business models.

Complexity to revenue recognition processes is further caused by factors like variable pricing, performance obligations, and contract modifications. 

Solution

Consider leveraging accounting software or revenue recognition solutions. 

As outlined in the Younium guide, these solutions should be particularly designed to comply with revenue recognition for SaaS under IFRS 15 and ASC 606 rules.

These platforms provide advanced functionalities tailored to the unique needs of your subscription-based businesses, automating your revenue recognition processes. They’ll also ensure your business stays compliant and accurate. 


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5.  Seamless Customer Service

Providing exceptional customer service is at the heart of any subscription-based company. 

And as your B2B SaaS business grows, those numbers add quickly and meeting everyone’s needs can be a challenge.  

A flawed customer management database can seriously damage your relationship with your B2B subscribers. It could lead to communication breakdown, ineffective, or even give your business a perception of unreliability.

Solution

Have a dedicated cloud-based subscription management for your business. This will help you, for instance, to automatically trigger emails to your clients when they’re due to be billed, but their payment is expiring. 

Conclusion

Recurring billing isn’t a straightforward process. Billing errors can, and tend to, happen. But the good news is that these challenges are avoidable, and they can be resolved.

By overcoming these recurring billing challenges, you can help keep your B2B company afloat and your customers happy, no matter how much you grow.

Image by mindandi on Freepik

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