Approx. reading : about 8 min
CFOs everywhere in the subscription-based economy
Truth is that recurring revenue based model is a good thing but you can quickly find yourself overwhelmed with the workload in case you don’t have the appropriate processes and tools for managing subscription constant changes or processing automatically usage-based billing !
As soon as you are in charge of recurring billing of plans that can either be made of subscription or usage-based items (or both) , you know that managing the plans mean either constant changes and a large volume of transactions (typical B2C) or billing on a case-by-case basis due to multiple or custom pricing configurations (typical B2B) !
Furthermore, on top of all this complexity, the IT challenges caused by your legacy systems may be an additionnal headache. Indeed, how to be efficient and productive when IT sytems are not connected, when data has to be entered several times or when foolish tasks have to be repeated into multiple systems to keep evertyhing consistent accross the organization.
So when you are a CFO taking responsibility on revenue operations but without a proper subscription management and recurring billing platform, it’s a hassle!
It is not that difficult to keep away the complexity caused by a recurring revenue based model; including in the case of configuration where pricing is complex or contract is customized.
In fact, there are not more than 3 reasons to explain the vast majority of the problems you encounter on a daily basis as CFO of a company whose revenue model is based on subscription or usage. Yep, only 3. The best is that as soon as these reasons are behind you, everything becomes simple and your days look very different instantly.
The number one cause of inefficiency and wasted money is the amount of things that finance teams needs to care of manually – collection of information – manual entry on invoices – control of the prices – fill in spreadsheets with data to track results with KPIs and much much more foolish activities…. Dozens of hours every months are wasted because of the absence of proper tools and synchronized systems.
The second reason is the lack of cooperation between the sales team and the accounting team. Let’s not blame them, but let’s try to realize how much it hurts performance. Indeed, why should a quote not being a sort of “pre-invoice”? Why should a quote be re-entered in the accounting system? Does-it bring any kind of value ? Of course not.
Unfortunately, many sales and finance teams live in separate CRM and ERP systems that are designed for transactional businesses. Recurring-revenue business models introduce the element of selling over time, which changes how sales and finance leverage their systems and information.
Equally important, why not make available to the finance teams the commercial details and terms that were negotiated with customer? Why pricing and quote configuration could not be discussed and agreed jointly between Sales and Finance before being communicated to the end customer?
In vast majority of cases the very first root cause of litigation with a customer is due to a difference between what was quoted to the customer and what this customer find on his invoice. Unacceptable right ? Customer litigation drives straigth to CHURN; and CHURN hurts both profit and growth !
In addition, pricing should be clear for everybody into the organisation especially in the event of custom sales. Who cannot agree this ? Nobody. So why is this not the reality for so many businesses? This is even more critical to be clear on pricing internally for companies in the subscription/usage-based economy because flexibility and constant changes are the standard in most of the deals.
A centralized product catalog with documented pricing conditions is a simple but very effective tool to combat errors and omissions. This catalog becomes the only source of truth, the prices are always up to date and the advanced configuration cases (discounts, bundles etc.) are defined in a precise and structured way. No more room for interpretations or omissions.
Statement is clear now ! How can this be changed into the organization ?
Make it simple : What you need is not special. Everything starts from common sense and a shared intention from the leadership team to drive change (that includes the spend of a little time and money).
Quotes and Plans
KPIs and reporting
Do not wait it is too late for your team to start implementing actions that will remove the pain and the overall dysfunction created by your legacy system and process (or lack of system and process).
There are no reasons why your business should not be in a position to improve quickly the way it handles subscription-to-cash workflow. And yes, this can be at the initiative of Finance Team and its CFO because any improvement in the back-end of the business generates very quickly further opportunities of cost reduction as well as sales growth improvement.
Dotsha delivers the first order-to-revenue platform designed to put every subscription-based or usage-based business on autopilot … from quote to cash!
To learn more about Dotsha, please contact our customer team and book a demo.
Approx. reading : about 8 min
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