Billing Integration

What is Billing Integration?

Billing integration refers to the process of connecting your billing system with other key business applications and systems, including CRM, accounts receivables (AR), payment gateways, ecommerce, and subscription management. It aims to automate and streamline data flow across different platforms, eliminating manual data entry, reducing errors, and improving operational efficiency.

There are six main types of billing integration:

• Native integration — the seamless connection of applications built by the same provider or designed to work together. It is the most straightforward type of billing integration, requiring little to no customization with a high degree of interoperability.
• API (Application Programming Interface) integration — a type of integration that allows different software applications to communicate and share data with the billing platform. It lets developers create custom connections between systems and build out integrations and automated workflows.
• Cloud-based integration — using cloud-based services like Zapier or IFTTT (If This Then That) to quickly and easily connect billing to different business applications. It requires minimal setup and configuration, best used to streamline workflows (e.g., payment gateway -> billing -> accounts receivables).
• Middleware integration — middleware serves as a bridge between billing and systems that might not otherwise be able to communicate directly. It translates data from one format to another, making it useful for complex data exchange.
• iPaaS (Integration Platform as a Service) — a cloud-based platform that provides tools to connect the billing platform with different software applications. It is typically used for more complex integrations and offers powerful features like data mapping, transformation, validation, and multi-system orchestration.
• Custom integration — writing custom code to connect the billing application with other business systems.

Most businesses will only ever need a native platform or API/cloud-based integration, but larger businesses with complex data flows may require middleware or iPaaS to ensure the best performance. Custom integration primarily supports enterprise billing.

Synonyms

• Process integration for billing management
• Billing and payment integration

Benefits of Integrating Billing Software

As seemingly unexciting as billing and AP/AR processes are, they directly involve the one thing that is: revenue. Without integrated billing software, companies don’t have a clue whether or not they’re meeting goals or staying on top of cash flow, making smart decisions, or even retaining their customers.

Implement Order-to-Cash Automation

The order-to-cash process comprises everything from the customer making an order, to them paying for it and finally receiving their product or service. With integrated billing software, this entire process can be automated with few manual steps required.

This means customers will receive invoices (and pay them) faster. As soon as a payment comes through, it’s automatically processed in the system and allocated to the correct customer account.

Automated billing might work differently for companies with complex sales cycles. When a customer or sales rep places an order, the website or CPQ tool can automatically create a purchase order, accept a down payment, send it through to the supplier, and generate an invoice once the product or service is fulfilled. Other software is involved, but this workflow isn’t possible without billing.

Data Synchronization

Since businesses use it to collect payments, billing software is the primary source of financial data. Whether or not it is a source of accurate financial data depends on billing integration.

Businesses use financial data to:

• understand day-to-day revenue operations.
• track sales and marketing performance.
• calculate customer lifetime value (CLV) and net revenue retention (NRR).
• monitor customer retention efforts and understand the health of the customer base.
• communicate progress to investors, stakeholders, and the Board.
• forecast future revenue.
• decide where to expand, pull back, and invest in resources.

If the most up-to-date revenue insights are tucked away in billing, it can’t feed revenue forecasting algorithms, underscore trends in the customer base, or give company stakeholders a current snapshot of company health — all of which are processes other systems carry out.

Ensure Quote-to-Revenue Accuracy

Billing inaccuracies are a problem, but they’re a bigger problem when the core systems involved in the quote-to-revenue process aren’t connected.

Suppose a customer makes an order for a service with an accompanying quote. If the billing system isn’t connected to the CRM or sales operations, this quote won’t automatically generate in billing. Instead, someone from the billing or sales department manually creates the invoice without visibility into other parts of the business.

Incorrect tax calculations, outdated pricing agreements, and missing discounts are among the countless things that can go wrong.

Decrease Revenue Leaks

Companies lose about 9% of their annual revenue to revenue leakage — revenue lost through financial and administrative mistakes. Since it’s primarily caused by human error, leakage is easily preventable with integrated financial systems.

Billing and subscription management platforms have triggers for potential signs of a leak, such as a mismatch in customer data, incorrect tax code, or outdated customer information. It can then alert the business of any inconsistencies the billing team needs to address.

Increase Subscription Renewal Rate

Billing solutions handle payments, but subscription management handles customer communication (e.g., email marketing campaigns) and customer support (e.g., building out a helpdesk).

Integrating billing and subscription management allows companies to deliver personalized renewal reminders with all the details customers need, such as payment amounts, invoices, and promotional offers. This gives customers and account managers the power to manage their subscriptions with minimal back-and-forth communication.

Ideally, businesses should look for a subscription management platform with native billing integration. That way, all the data and workflows are present in the same tool for sellers and customer success teams.

Regulatory Compliance

Billing noncompliance can cost organizations as much as tens of thousands of dollars per violation. Integrating billing software with other business systems can help companies adhere to regulatory requirements like:

• PCI DSS
• GDPR
• ASC 606 and IFRS 15
• VAT
• State and federal tax laws

Some regulations give customers the right to know how their information is stored and used. Others require a certain level of security or visibility into financial operations. Integration means encryption, data validation, and real-time access to customer payment information (plus the ability to delete customer data if someone requests it).

Improve Customer Experience

Customers primarily want three things out of their customer experience: efficiency, personalization, and self-service. They don’t want to talk to a sales rep every time they need to make a purchase (60% of buyers don’t rely on sales reps at all!). And they don’t want generic, impersonal emails and engagements.

• Integrating billing data with sales software (e.g., sales enablement, CPQ, and sales automation) gives companies visibility into customer activity, interests, and preferences. This data provides the basis for personalization with targeted engagement at every stage of the customer lifecycle.
• Payment gateway integrations make it easy for customers to pay by card or bank transfer without a seller emailing them an invoice. If they’re also integrated with a website or customer portal, customers can track their payments, update subscription information, and manage records without ever leaving the website.
• CRM integration with billing creates a visible track record of customer behavior. Understanding customer buying habits, preferences, and past purchases helps companies anticipate customer needs in the future (and deliver on them).

Billing Integration Challenges

As crucial as billing integration is to the operational efficiency of a subscription-based business, the journey is not without its hurdles. 

Here are six key challenges:

Syncing Billing Data Between Disparate Systems

With different systems holding different pieces of customer and transaction data, synchronization is often easier said than done. Even minor discrepancies can lead to major issues down the line, from failed transactions to inaccurate financial reporting. Thus, maintaining the consistency and accuracy of data across systems is a constant challenge.

Complex Workflows

Subscription billing and one-time transactions with complex products are by no means linear. They involve myriad components — discounts, upgrades, downgrades, cancellations, refunds, and renewals. Integrating all these components and ensuring they all flow smoothly between various systems can be quite a task.

Technical Skills Gap

The process can be technical and complex regardless of whether you’re dealing with API integration, middleware, or a custom solution. Organizations often struggle to implement and manage billing integrations without the right in-house expertise — a cost that rapidly increases as a business grows its customer base (and, by extension, its IT infrastructure). Hiring outside help is an option, but even that carries a hefty price tag.

Misalignment Between Budget and Requirements

It goes without saying the largest companies can invest in resources that support complex billing. But early-stage companies often can’t. If they have complex billing cycles (e.g., usage-based, step-up, or pay-as-you-go), they cannot sustain their business without expensive tools to track usage and payments.

Regulatory Compliance

Ensuring that the integrated systems comply with various regulatory standards like GDPR, CCPA, PCI DSS, SOC, and tax regulations can be daunting. With changing regulations, keeping your integrated billing system compliant requires continuous monitoring and updates.

Integration Maintenance

Just like any technology, billing integrations require regular maintenance. API versioning, performance monitoring, error handling, and upgrading systems to accommodate new features or regulatory changes require human development resources. Even a well-integrated system can fail or become a compliance liability without proper maintenance.

Applications to Integrate with a Billing Platform

Customer Relationship Management (CRM)

CRM software is the beating heart of a business’s customer engagement. Integrating billing and subscription data with your CRM allows for more personalized, automated engagements — for example, sending customers renewal reminders with specific discount codes or account updates.

Customer Self-Service Portal

90% of buyers would leave a company if their digital channel doesn’t meet their needs. And 87% would pay more for one with an excellent ecommerce portal.

Integrating billing technology with a customer portal provides customers with secure access to their payments, invoices, subscriptions, and other customer-facing information in one place. More importantly, customers can update their accounts directly without ever having to speak with a representative.

Websites/Ecommerce Platforms

Integrating billing with your website or ecommerce platform allows customers to purchase and manage subscriptions electronically, with no need for manual intervention from the sales team (not to mention greater accuracy in terms of pricing and discounts). Plus, you can support more payment options, including a wider range of credit cards, PayPal, ACH transfers, and international payments.

Configure, Price, Quote (CPQ)

CPQ streamlines the process from an initial product configuration to the final sales contract, but where does it go from there?

There’s plenty of room for error when the seller has to enter product and billing information into a separate system. Integrating billing with CPQ software allows for automated pricing, discounts, renewals, invoicing, and payments — all from one centralized system. Plus, you can track customer transactions in real-time while ensuring regulatory compliance.

Finance and Accounting Systems

AP and AR teams often spend their time hopping back and forth between billed and non-billed transactions. This can be a time-consuming process, especially when the customer payment posts date is several days after invoicing. Integrating billing with your finance and accounting systems eliminates this back-and-forth, making for quicker workflows that result in faster customer payments.

For businesses dealing primarily with contracts, revenue recognition is another concern. Integrating billing with a finance and accounting system allows you to monitor revenue recognition in real-time, ensuring accuracy and compliance with GAAP (Generally Accepted Accounting Principles).

Payment Gateways

Payment gateways come standard with most ecommerce platforms, but integrating them with a billing system is more complex. By connecting your payment gateway to your billing platform, you can secure customer payments while minimizing manual data entry and the potential for fraud and irregularities.

Order Fulfillment

As soon as a customer configures a product or bundle, the information has to make it all the way to the fulfillment team. Integrating billing with an order management system means people on the warehouse floor can begin working on the order the same day it’s placed.

Service Provisioning

Billing is one of the most important parts of professional services automation. Billing for services rendered, recognizing revenue in the correct period, and tracking credits and invoices all require a precise integration between billing and CRM, ERP, and project management. Especially considering most service businesses rely on manual input (i.e., to carry out their services), manual billing processes would be even more error-prone and add to the administrative burden.

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