Natalie Monko Lead Project Manager

    Automated Billing Software: Essential Features and Challenges

    Automated billing software takes care of you, if you are using a legacy billing system, or still handing your billing manually, and know how easy it is to find yourself drowning in a sea of paperwork. It offers you an excellent chance to improve the accuracy of cash flow tracking and reduce human errors.

    Over our 12 years of experience developing fintech projects, we’ve discovered that there are many factors that can make or break a billing system. Today, we’ll share our insights on this complex topic.

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    What is an automated billing system?

    An automated billing system is a computer program that can create invoices and automatically charge your customers. It does so by following a set of predefined rules — such as when charges should occur or when to apply discounts.

    It is especially useful for companies that offer recurring payment plans, such as movie streaming platforms like Netflix or meal delivery services like Home Chef.

    But companies with complex pricing can also benefit. For instance, organizations that simultaneously offer fixed rates, performance-based tiers, and bundles.

    Custom vs. out-of-the box billing services  

    When you’re thinking about streamlining your payment processing, the first choice you’ll confront is whether to utilize an existing service or build a custom solution.

    wave online
    • Using an out-of-the-box service is great for smaller companies or when you are automating financial processes for the first time and want to experiment. But they are not as customizable as solutions developed from scratch.
    • A custom billing service would be more suitable for larger companies, ones with complex pricing models, or when the service needs to integrate with other custom software.

    Although the upfront cost of building custom software is greater, it is often more economical in the long run than trying to modify existing systems to meet your needs.

    Key elements of an automated invoicing system

    We think that to successfully automate invoicing, the billing system should check off the following marks:

    Automated invoicing should be the cornerstone of your billing system. It is key to efficient payment processing, resulting in a significant reduction in errors and time savings.

    Flexible recurring payment logic is necessary to help you control the cancellation policy, billing cycles, how overdrafts are handled or what happens when a customer on a usage-based plan upgrades or downgrades.

    automated billing

    You also need to think about engaging with your customers’ journey. Billing software can do more than simply charge on-file payment methods. It can work together with other tools to nudge your customers along their journey from trial to subscription. For example, you can trigger email reminders or push notifications based on payment cycle dates.

    A marketing automation company might bill clients based on their monthly expenditure, and a cloud-computing service might charge customers by hour and hardware tier. In both cases, accurate tracking of the product usage is essential for error-free billing.

    Having a high degree of customization is key for testing business models and introducing new pricing plans. For instance, consider a business that has primarily worked on fixed monthly rates and begins to onboard bigger clients: a bundled pricing model can help close these deals faster.

    Billing software challenges

    Your billing service will have to fetch data from multiple sources — these  may be legacy solutions and some might use unfamiliar or outdated protocols.

    • Mediation. This is a critical process of standardizing payment information that can come from various sources. Mediation is essential in avoiding accounting mistakes and is often overlooked.
    • Integrations. The billing system should communicate with other data sources that your business relies on. Things can become complicated quickly if the software you use across other sectors of your company is legacy.
    app backend

    While developing a banking app that included a billing service for a major  bank, we encountered a challenge. The client’s old backend used a deprecated Burlap XML protocol, while the new Flutter-based app required data in JSON format.

    To address this incompatibility, we built a server that acted as an intermediary between the old and new technologies, converting data to and from JSON. This solution, known as a middleware layer, enabled the client to gradually update their legacy protocol.

    Get inspired by our fintech app case studies

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    Wrapping up

    Optimizing financial processes is a key factor in growing your business. Out-of-the-box solutions may work for small companies, but for more specific requirements, a custom solution is more efficient and cost-effective in the long run. If you require a custom billing system, Surf would happily be your partner in developing one.