If managing recurring payments is a bottleneck to your business growth, this article is for you. This guide explains why subscription billing platforms are your ticket to truly maximizing your revenue despite the complexity of recurring arrangements.
According to Stripe’s state of subscription and billing management report, 41% of respondents said they experienced an increase in involuntary churn. This meant that the number of subscribers whose subscriptions expired—not because they wanted to but because their payment attempt failed—increased. Even then, Stripe found that 32% of subscription businesses still haven’t adopted tools to increase payment success.
This is exactly the job of any subscription billing system with auto-dunning features. These platforms make managing recurring payments simple, efficient, and stress-free. Know more about them below, including the benefits of investing in this service and our eight recommended subscription billing platforms.
What is a subscription billing software?
Subscription billing software or monthly subscription software is a tool for automating and streamlining subscriptions. It’s meant for companies where customers pay on a recurring basis for continued access to a product or service. The platform is used to make sure active subscribers get charged and pay on time. Thanks to recurring billing software, businesses that are following the subscription model
Nowadays, subscription billing services are a key component in the subscription economy which is diverse both in frequency and price. In fact, MarketsandMarkets predicts the subscription and billing management sector will grow from $4 billion in 2020 to $7.8 billion in 2025.
Some of the key functions of a recurring billing software are:
- Automates the entire billing process—from issuing invoices to processing payments
- Supports different pricing models (monthly, quarterly, or annual billing cycle) as well as tiered, usage-based, and one-time billing
- Automates reminders for upcoming or overdue payments
- Manage customer accounts, including their subscription levels
- Automates dunning or retries of failed payment attempts
- Report a business’ financial health
- Ensure compliance with financial regulations to protect customer data
Why is it important to invest in automated billing software?
With the growing number of businesses using the subscription-based model, specialized software is needed to manage recurring charges. Here’s why a recurring billing service is well worth your investment:
It eliminates the challenges of manual billing
Manually managing subscriptions poses many challenges—as with all other manual processes. A report from Sage says this costs companies around $600 billion. Billing errors, late payments, and trouble tracking subscription metrics are typical challenges when it comes to the manual management of subscriptions. Recurring billing services automate these processes so invoices are sent on time, and payments are also received accurately.
It assesses the health of your business
Subscription management and billing platforms streamline financial reporting. How? These systems give you insights into important business metrics like retention and churn rates. By analyzing this data, your business can evaluate its performance and make decisions on improving services or tweaking current offerings.
It reduces involuntary churn
Involuntary churn often occurs when customers miss payments due to outdated card information or other payment issues. In fact, businesses lose about 10% of their revenue because of failed payments. This situation is frustrating both for you and the customers who suddenly had interrupted service. But with automated billing software, you can also automate the retrying process for failed transactions.
It provides higher customer satisfaction and retention rates
The simple fact is inconsistent billing cycles and errors in charges drive customers away. Recurring invoice software provides transparent billing which leads to higher customer satisfaction as most customers appreciate a hassle-free and reliable billing experience. Furthermore, the easy payment system is a major factor for a smoother customer journey.
It aids in cost savings
Inefficiencies and errors in manual billing processes often escalate costs. We’re talking about significant manpower for data entry, invoice generation, payment tracking, and even receipt scanning. Over time, the cost savings from reduced manual labor, error mitigation, and efficient financial management make recurring billing software a financially sound investment.
Key features to look for in a subscription billing platform
When selecting a platform, asking the right questions about its features can guide you to choose the best recurring billing software for your business.
Does it accept diverse payment options?
Limiting payment options isn’t ideal for any business. In fact, 85% of online shoppers choose to ditch a purchase if their preferred payment method isn’t available. Do your research to know if the recurring billing software supports multiple payment methods and currencies—which makes it easy to cater to a global customer base. This is especially since online payments are crucial for global companies.
Can it handle flexible billing models?
An automatic payment software capable of handling flexible billing models like tiered, usage-based, or one-time payments empowers businesses to tailor pricing plans to customer needs and market demands. You also have to be flexible to adapt to changing market conditions and customer preferences. So, is the platform adaptable to various billing models and different customer segments? If yes, then it should be in your top choices.
How does it automate invoicing and dunning?
Without automation, invoicing and dunning can become unsustainable. More so, if you’re growing. Automated invoicing process ensures that you deliver accurate bills while automated dunning processes ensure that you effectively manage overdue payments, increasing recovery rates and maintaining cash flow.
How well does it integrate with other tools?
Asking about integration capabilities ensures the customer portal selected subscription billing system can seamlessly connect with other tools like key business systems such as CRM and accounting software. This integration streamlines workflows, reduces manual data entry, and ensures consistency across different platforms, enhancing operational efficiency and accuracy.
Does it ensure data regulatory compliance?
Choosing a recurring billing system that ensures compliance with financial regulations and data security standards like GDPR and PCI DSS is crucial. Such a system automatically adheres to data protection laws and is non-negotiable for protecting customer data. It provides peace of mind and safeguards that your business is safe against compliance-related issues—and just focus on growth and customer service.
Can it provide analytics and reporting?
Here’s a fact from a survey: About half (48%) of businesses with recurring revenue models have accounting and reporting problems. Businesses struggle to understand customer behavior, revenue recognition patterns, and potential issues in their billing process without analytics. Asking if your automatic payment software offers robust analytics and reporting first makes total sense because it empowers businesses for strategic decision-making. Few of them are optimized billing strategies, improved customer retention, and, ultimately, enhanced financial health.
8 best subscription billing software for managing recurring payments
To help you more, we analyzed eight subscription billing software. This is an unbiased overview of each software solution, describing their strengths and potential drawbacks.
Stripe – best for businesses looking for extensive customization and integration
First on our list is Stripe. Its user-friendly and intuitive interface makes this a popular subscription management tool. Its product, Stripe Billing, is a top choice because the software’s API makes integrating billing and payments into your websites easy. It also supports multiple currencies and a wide range of payment options so you can serve customers around the world. The dunning management ‘Smart Retries’ helps businesses recover failed payments efficiently.
Pros:
- well-documented APIs and developer tools
- seamless integration capabilities
- accept payments in 135+ currencies
- has dunning tools for recovering failed recurring payments
Cons:
- complex pricing structure
Price: Pay-as-you-go pricing at 2.9% + 30¢ per successful card charge or contact sales for a custom package
Pabbly– best for small businesses looking for an affordable billing solution
Pabbly is a recurring invoice software with a no-transaction-fee policy—making it an ideal choice for small businesses. This means you can do transactions with your clients, and the software doesn’t impose fees for that. You can also automatically collect unsuccessful payments and monetize your products using the inbuilt tools for dunning management and affiliate tracking.
Pros:
- does not charge transaction fees
- has inbuilt tools for dunning management
- with an integrated affiliate management system
Cons:
- some customers complained the Client Portal was hard to use
Price: Starts at $49/mo but offers a 30-day money-back guarantee
Recharge– best for eCommerce businesses that rely on subscriptions
Recharge is specifically designed for subscription-based eCommerce businesses. It integrates seamlessly with top eCommerce platforms like Shopify and BigCommerce and commerce tools like Klaviyo, Stripe, and Gorgias. Still, if you need customized integration, its robust API can do the workaround for you. Notable to add is its automated dunning features to help mitigate passive churn.
Pros:
- tailored for e-commerce
- integrates with major e-commerce platforms
- natively integrates with dozens of commerce apps
- with built-in dunning features
Cons:
- constantly raising prices
Price: Starts at $99/mo or 1.25% + 19¢ per transaction
Chargebee – best for businesses looking for a scalable subscription management solution
With Chargebee, setting up subscriptions and plans is a breeze. It simplifies the complex task of managing recurring subscriptions, automating billing processes, and handling various subscription-related tasks so you scale easily. The Chargebee Receivables lets you win back missed payments by proactively alerting customers to expiring cards and invalid payment information.
Pros:
- scale globally with the latest taxation and privacy regulations
- automates end-to-end recurring billing
- dunning feature to better recover payment failures
Cons:
- not so user-friendly
Price: $0/mo for first USD 250K of cumulative billing; 0.75% on billing thereafter (no annual commitment); Starts at $599/mo (annual commitment) for up to USD 100K of billing per month
MYFUNDBOX– best for subscription businesses with international customers.
If you have a global customer base, MYFUNDBOX recurring billing system suits you. It supports multiple payment gateways and currencies, available in 40+ countries and 135 currencies internationally. This software is also known for its heightened focus on security and compliance, ensuring that your global payments transactions are safe.
Pros:
- supports multiple payment gateways and currencies
- PCI-compliant check-out pages
- smart dunning tools to recover failed card payments.
Cons:
- Some of the functions are not intuitive
Price: Starts at 33€EUR/m
Billsby – best for businesses that require a customizable subscription billing
Billsby is an easy-to-use subscription billing platform, so you don’t have to worry about payments. What sets Billsby apart is its commitment to customization and flexibility. You can customize your invoices to your specific styling guidelines and functionality so they feel native to you. It also has automated dunning management like scheduled reattempts, dedicated dunning flows, and communications when a payment reattempt fails.
Pros:
- simple dashboard and setup process
- full brand customization of invoices
- manage failed payments automatically
Cons:
- Some of the reporting software isn’t as robust
Price: Starts at $45/mo plus 0.4% on revenue exceeding $15,000/mo
Maxio – best for B2B SaaS compliance and financial reporting
Formerly SaaSOptics and Chargify, Maxio is tailored for the subscription economy. First, it has enterprise-grade security for smooth recurring billing. Another thing, it offers a comprehensive suite of tools streamlining subscription billing, including both self-service offerings and custom contracts. Also, with Maxio, it’s up to you to set up flexible dunning rules for automated pastdue notices. This way, it’s easy to recover past-due payments and retain customers.
Pros:
- compliant with SOC 1 and 2, ISO 27001, PCI DSS Level 1, and GDPR.
- hosts billing portal
- allows for flexible dunning schedules and reties to reduce overdue invoices
Cons:
- sometimes a bit clunky
Price: Starts at $5,000 based on twelve-month billing volume
Paddle – best for SaaS businesses doing sales internationally
Paddle subscriptions effectively tackle the complexity of international transactions, tax compliance, and payment processing. You won’t need to spend time collecting and paying sales tax to different states and countries. Instead, your Paddle subscription removes the burden of financial compliance and back-end operations, so you can focus on developing products and expanding your market reach.
Pros:
- Acts as a merchant of record for VAT purposes and simplifying accounting
- issued invoices are compliant with a country’s local tax and banking regulations
- Paddle Retain has the best payment recovery rate in the business
Cons:
- the interface isn’t very sleek
Price: The pay-as-you-go option costs 5% + 50¢ per checkout transaction, but you contact sales for custom pricing
Quick tips and best practices for effectively utilizing subscription billing software
Tip #1: Regularly visit your pricing strategies
Stagnant pricing strategies can cause misalignment with market changes. Plus, without regular updates, your rates may not reflect the current value of your service. So regularly visit your current pricing strategies and revise if necessary. Ensure competitive alignment with market dynamics and customer expectations.
Tip #2: Train your billing team
If your billing team uses the billing software ineffectively, it’s just operational inefficiency. So, provide proper training and make sure that your team is proficient in using the subscription billing services. Well-trained users can easily assist customers with billing queries and make the most of the software’s capabilities.
Tip #3: Enable easy upgrades and downgrades
Flexibility to meet customer life-cycle changes is a competitive edge. While a rigid subscription model can frustrate customers who need to change their subscription levels. So, make the process of changing subscription tiers as seamless as possible for your customers. Don’t just have easy sign-up for your subscriptions. Let them smoothly upgrade and downgrade as well.
Tip #4: Leverage automated communication
Still relying on manual communication methods for billing changes, upcoming charges, and payment confirmations? That’s very outdated! Implement automated communication within your billing software to enhance customer interactions. Automated payment reminders, notifications, and personalized messages can keep your customers constantly engaged.
Tip #5: Develop retention strategies based on billing data.
Identify and develop retention strategies using insights from your billing software. Tailor your offers and messages based on your harvested customer data. These might mean personalizing offers or proactively communicating so you address potential issues before they result in cancellations. Effectively focusing on retention produces a more stable and growing customer base.
Get more renewals with subscription billing software
If you’re into subscriptions, investing in subscription billing platforms is a wise decision—it can get you more renewals. From operational efficiencies to financial management and compliance to customer retention, it really simplifies the complexity of managing subscriptions. Especially in reducing the inevitable involuntary churn.
But we don’t just highlight the benefits of a subscription billing system. We’re also here to guide you through the best subscription billing software with our eight reviews. To enhance their use further, consider integrating your subscription billing software with our recovery service. Recover Payments specializes in strategizing and executing a failed payment recovery process tailored to your business.
Don’t let subscription billing be a bottleneck to your business growth. Book a call with Recover Payments for a consultation and reclaim control over your financial operations.
