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What is a Bill Run?
A bill run is an automated, software-enabled process for generating and issuing customer invoices. It is an integral part of the billing process for many businesses, especially those using recurring revenue models.
Bill runs can automatically create invoices as needed or according to a set schedule. They work by gathering information from one or multiple customer accounts and compiling it into a single invoice for each customer.
In the case of subscription businesses (e.g., SaaS), a company’s subscription management software will automatically charge the customer’s credit card or bank account at the beginning of each billing cycle and generate an invoice. Then, it will send a copy of the invoice as a PDF via email.
Bill runs can also automatically create credit memos for negative charges, depending on your invoice and credit memo generation rules. The bill run page displays the total number of billing records, invoices, and credit memos generated during the process.
- Billing runs
- Invoice runs
Benefits of Effective Bill Run Management
Although the process is automated, there’s something to be said for effective bill run management. Businesses that understand and effectively utilize their bill run process can reap several benefits.
Optimizes Billing And Revenue Management
Billing, payment processing, revenue recognition, reconciliation, reporting, and revenue forecasting are significant obstacles for the modern SaaS company. Auto-triggered billing puts these processes (mostly) on autopilot, which makes audits go much more smoothly.
As for the customer-facing aspect of billing and revenue management, improved accuracy and convenience that come with automated invoicing make for:
- fewer chargebacks
- increased customer satisfaction
- faster time-to-payment
- faster troubleshooting for potential billing errors
Automated bill runs streamline the billing process, eliminating manual data entry and other errors. Bill runs support multiple billing schedules and segment lists, which would be impossible to manage at scale without software automation.
Consistency Across Customer Accounts
In addition to supporting individual customers and billing segment lists, bill runs provide consistency across all customer accounts, ensuring that each invoice is created with the same data and at the same time as others.
When a customer signs up for your product/service, they’ll receive a specific set of charges every billing period. If your subscription management software generates invoices automatically, you won’t have to worry about sending duplicate or incorrect bills.
Scalability for a Growing Customer Base
As more customers subscribe to your product/service, the billing load (and the manual work required to run it) also increases. Without automation, this process is too burdensome to handle efficiently. Long story short, it doesn’t scale.
One of the best things about automated billing is you can schedule it to run at a specific frequency. This is sometimes once daily, though many businesses run them more frequently at lower volumes to reduce billing run loads and duration.
Reduces Voluntary and Involuntary Churn
Involuntary churn accounts for as much as 40% of the average SaaS company’s overall churn rate. Most involuntary churn is a direct result of incorrect billing.
- Payment processing errors
- Expired credit card information
- Bank account changes
- Lack of funds in customer’s bank account
- Outdated or incorrect customer information
- Forgotten payments
The list of potential issues that ultimately result in customers not paying for a service they’d otherwise continue to use goes on and on. When software handles the entire process from start to finish, the error rate goes way down, as does the number of disputes, chargebacks, and other support-related headaches.
Businesses can also use bill runs to prevent voluntary churn. Since payment is such an essential part of the customer experience, inconsistent, incorrect, and untrustworthy billing processes turn customers away.
Automated billing allows them to…
- upgrade/downgrade their services without talking to someone from Sales or Customer Success
- access payment-related information when they need it
- feel confident that these processes are secure and reliable
- eliminate their own headaches of filing disputes and attempting to recover from accidental overpayments
…all of which contribute to a positive customer experience and reduce the likelihood of voluntary churn.
Automated billing isn’t the only part of self-service in SaaS, but it’s a significant one. When customers can access their billing history, update payment information, and other account-related tasks on their own, they’re not dependent on your team to keep their service running.
Self-service billing also empowers customers to be more independent. When they can make changes and see the results immediately, they’re more likely to explore other features and services within your product.
This directly benefits both you and the customer. You’ll drive upsells, and they can expand their use of your product at a convenient time instead of waiting for a team member to get back to them.
Improves Cash Flow
If companies are constantly following up with customers who miss payments and fighting disputes/chargebacks, they’re losing money on overhead (not to mention, tons of revenue leakage and potential compliance issues).
When dunning and dispute management aren’t the core focus of the billing team, internal efficiency improves, as does your company’s overall cash flow.
Maximizes Profit Margins
Happy customers, healthy cash flow, accurate billing, and process automation directly correlate to a more profitable operation. Your team can spend less time fixing billing issues, providing support to frustrated customers, and managing disputes and chargebacks. Instead, they can focus on other business areas that drive growth (and save money on compliance costs).
Example of Setting Up Bill Runs in Billing Software
To create a bill run automation flow, use the following steps:
- Log in and access the Billing module. Navigate to the section where you manage your rules and automation settings.
- Create a new bill run. Locate and click on the option to create a new bill run.
- Define bill run parameters. Select the customers or customer segments for whom you want to generate invoices. Choose the billing frequency (e.g., monthly, quarterly, annually). Specify the billing cycle dates. Select the products/services to be billed.
- Set up rules for invoice generation. Determine the format of the invoice. Define the rules for generating the invoice, such as how to handle discounts, taxes, and other charges.
- Configure payment processing (if applicable). Most CPQ and billing software supports payment processing. If yours does, configure the settings for charging customer credit cards or bank accounts. Set up retry logic for failed payments a specified number of days after the billing period.
- Automate communication. Configure the software to send invoices via email to customers automatically. Set up any additional communication preferences, such as sending reminders for upcoming payments or follow-ups for failed payments.
- Set credit memo generation rules. Define the rules for generating credit memos for negative charges, returns, or refunds.
- Activate your new bill run. Monitor the first few loads to ensure they’re processing correctly and adjust settings as necessary.
Best Practices to Ensure Efficient Bill Runs
If you don’t set things up and run them efficiently, you’ll create a bigger mess than the one you were trying to fix. And you’ll end up buried in support tickets, disputes, and unhappy customers.
Use the following best practices to maximize your bill run efficiency:
- Segment customers intelligently. Segment customers based on their billing history, product usage, and other relevant factors. Some segmentation (e.g., localized taxes) will happen automatically. Others, like discounts and tiered pricing, will require manual input.
- Test your settings before launch. Before you put bill runs on autopilot, create test invoices with different combinations of products/services to confirm the invoice data is accurate.
- Don’t skip over payment reconciliation. Even though billing runs automate most of the process, they don’t guarantee 100% accuracy. Reconciling accounts is still crucial for accurate financial reporting and preventing revenue leakage.
- Set up necessary approval workflows. Set up a review and approval workflow to ensure certain invoices comply with internal policies before being sent to customers. Reserve this for enterprise customers and quote-based deals. For most customers, this will only add unnecessary friction.
- Don’t overcomplicate your numbering/tracking system. A logical and sequential numbering system for invoices facilitates tracking and reconciliation. Avoid using ambiguous or duplicate invoice numbers.
- Don’t forget communication flows. Use your subscription management software to automatically remind customers about upcoming invoices and renewals.
- Have a late payment policy. Define and communicate late payment policies, including penalties and interest charges for overdue invoices. Avoid making this policy confusing.
- Track performance with an AR aging report. You can easily track days sales outstanding (DSO) this way. Vary the duration of these reports (some call for monthly, others quarterly) and track this metric over time to identify areas that need improvement
How Automated Billing Ensures Bill Run Accuracy
To put it bluntly, automated billing is the best thing to happen for subscription businesses. It’s impossible to scale billing operations as a recurring revenue business without it.
In the context of bill runs, automation ensures accuracy in billing by:
Data Integration and Validation
Automated billing integrates with your CRM, CPQ, and ERP systems to pull accurate data quickly. This process eliminates manual data entry mistakes.
Invoice Generation Rules and Logic
Bill run automation allows you to set up rules for invoice generation based on your business model and billing preferences. You can define how discounts, taxes, fees, and other charges should be applied. And, you can determine the billing period and specific triggers that activate it.
Self-Service Billing and Payment Processing
Empowering customers to manage their subscriptions and payments via self-service portals reduces errors and disputes. Automated billing also enables features such as prorated charges for mid-cycle upgrades or downgrades, avoiding the need for manual adjustments.
Payment Processing and Reconciliation
Automated billing processes payments, records transactions in your accounting system automatically, and reconciles accounts regularly. This process ensures the accuracy of financial reporting.
Sending invoices manually can lead to delays, missed invoices, or other errors. Automated billing software handles this for you – sending accurate invoices on time and notifying customers about upcoming charges.
Plus, communication helps customers pay their bills faster and improves your contract renewal rate. Best of all, Customer Success and Billing don’t need to watch over every customer account.
Eliminates Manual Errors
Automated billing reduces the risk of human error and eliminates the time-consuming manual tasks associated with bill runs, such as data entry, tracking, and reconciliation. This allows you to focus on other important aspects of your business while ensuring accurate and efficient billing processes.
Automated billing software uses templates to ensure standardized invoices, making it easier for customers to understand and pay them. This also helps with tracking and reconciliation for your internal teams. If your software allows, it also adds an element of professionalism — branded elements, for instance.
Think of automated billing like doing math with a calculator instead of in your head or by hand — it’s faster and more accurate. Automated billing software calculates charges, discounts, taxes, and fees with precision. It even accounts for price localization (automatically).
People Also Ask
What is a bill run date?
A bill run date is the date the first billing run is scheduled to take place. It’s the baseline date for all other billing run dates of the same kind. The billing team sets this up in advance and adjusts it when they need to.
What is arrear billing?
When a business bills customers in arrears, they’re charging for a product or service they have already provided. This is the opposite of advance billing, which is when a business charges for products or services before delivering them. Automated billing handles both billing methods with ease.
How does a billing system work?
A billing system works by automating the process of generating and sending invoices to customers. It integrates with other software systems, such as CRM and ERP, to pull accurate data and apply billing rules and logic. It also handles payment processing and reconciliation, customer communication, and pricing/tax/exchange rate calculations.