23 Feb RECURRING PAYMENT SOLUTIONS: HERE’S WHY YOU NEED IT
As a company first launches and starts signing up customers, it’s important to keep costs low and operations as simple as possible. However, as a company grows it becomes paramount to seek out solutions with some level of sophistication to address the growing needs of a maturing organization.
When it comes to recurring payment solutions, the same thing applies. Most companies that offer recurring services will start using their accounting software (QuickBooks being the prime example for the SMB segment). However, as they grow their customer base, accounting software just wont do the trick anymore. Why?
- Not Customer Facing –Most accounting systems are designed for internal use, and not intended for your customers to interact with. With a subscription model, you wantself-signup capabilitiesso new customers can signup online (with mobile being an ever more important component), and youd want aself-service portal for existing clientsto perform routine functions such as paying bills, viewing history, upgrading/downgrading plans, etc. Without a customer portal, your support costs are going to be higher, and customer satisfaction lower!
- Product Catalog does not support Subscriptions –Accounting systems were primarily designed for traditional manufacturing and service type businesses with limited or non-existant support forrecurring revenue models. Weve encountered plenty of clients who gave up trying to shoehorn a square peg into a round hole.
- Lack of Payment Domain Intelligence– A subscription model is all about getting the money in, and that means close integration with payment gateways, credit card processors, ACH and Paypal interfaces, etc. The system needs to have the intelligence to understand concepts like expired credit cards, closed accounts, Visa/Mastercard regulations, etc. and act on this information. This could beintelligently retrying declined payments(payment recycling), orautomatically retrieving replacement credit cards when they expire(account updater), orprogressive notificationsto the end customer to take action via the self-service portal (dunning). Dont expect your accounting software to handle any of this.
- Metrics– With accounting software, it simply keeps track of revenue inflow and outflow. However, with a recurring payment solutions you can generate metrics such aschurn, renewals, declined payments, etc. These metrics can do a better job in helping you plan for your companys growth.
- Flexibility– What happens if your customers want toupgradetheir services? Will youpro-ratemid-month signups? How about if they want to set up apayment plan? Accounting software simply does not have the ability to do any of that; Recurring payment solutions allow you to work with the many changing variables your customers may throw at you company.
- Beyond Debits & Credits– The world of accounting software simply revolves around debits and credits. However, a recurring payment solution is built aroundbusiness eventsthat drive the flow into accounting: customer acquisition, pricing, invoicing, collections, etc.
Starting out with accounting software is something that is completely understandable. However, in order for your company to continue to grow, there needs to be a level of sophistication that transcends accounting software.