Competition between companies has become much fiercer in the digital era. It’s not something anyone can – and should – get involved with. If you’ve been in business for a long time now, such as over 20 years, then you have to be extra careful of the industry “disruptors”. Some of the biggest companies in the world – including Amazon and Google – are relatively new to the industry. They have forever transformed the traditional industry with their excellent new ways to do things. Along the way, they’ve also changed how financial processes and systems work.
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Accounting as a billing blueprint
Dictionary.com tells us that a ledger has initially been a book kept in a single place – such as a church – that would be openly accessible. The idea of ledgers and their value hasn’t changed much since those first days. Nowadays, though, you likely wouldn’t want a ledger to be so open and accessible. The accounting is the blueprint for your billing. It offers clear evidence of your vision and what you want to do. In a similar vein, how you bill customers could be an aspect of your competitive edge. I find that smart billing practices can help you to launch products faster and better enter new markets, as well as tailor services to specific customer needs, minimize waste, and maximize sales opportunities.
Adopt your billing processes
With all that said, the billing process you use now – much like any other kind of process – won’t work forever. You need to update it regularly, much like your company itself, your competition, and the overall market demand evolves. Sticking to outdated practices can slow down the billing approach until everything is being held together by glue and prayers. When that happens, any advantage that you had gained from the process will have been lost. Even worse, you can’t expect someone to let you know when the time comes for you to change strategies. Only you can tell that.
This is why it’s so essential for you to continually be on the lookout that the billing systems and processes need to be changed up. Not to sound paranoid here, but many businesses simply can’t survive if their billing systems are operating at total capacity. Here are some questions you should ask yourself to ensure that you are getting the most value out of your approach. The answers to these questions could help you to fend off problems, and better prepare you for the day when you have to implement a new model, launch a new product or service, or repackage an existing product or service. Here we go;
Are consultants helping improve agility in the billing process?
In my experience, I find consultants can sometimes hinder, rather than help, experimentation with billing. Being willing and able to experiment is an important part of providing flexible billing. Consultants might prefer to try and “patch” a broken process instead of installing a newer, more flexible process that would mean you don’t need their expertise and services as much. If you do choose to hire and seek advice from consultants, you should be prepared for them so that you make the best use of their time. You also want to make sure that you clearly define and communicate your goals for them and their work. You can also dedicate extra resources to training in-house billing and IT workers to enable them to find opportunities and tools and implement these new modern methods.
How well do you benefit from changing market conditions with your current processes?
How does your approach to billing reflect the customer contracts you offer? Are these contracts enforced automatically, or does someone need to review the agreement before deciding how – and when – to bill a customer? If you have a manual process, then you could likely improve on it in some way. Consider adopting a process that lets your company implement sudden changes to rates without much extra paperwork. Layout how this will look and how it works well in advance so that you are prepared when the time comes. This is another case where agility is critical. Many modern billing systems have the sophistication needed to handle changes in real-time. The challenge will be putting together a plan that allows you to take advantage of that. Ultimate, you should let what you do be dictated by the market, but that doesn’t mean you can’t control how things play out.
How flexible – and accessible – are your billing systems?
This is something that you likely want to ask employees who manage billing for you. The most common pain points for staff include long IT cycles around updates that support changes in regulations and new billing methods. If you don’t have a flexible billing system, then the people who have to put the invoices together and report revenue are likely going to have strong feelings about this all. There are many problems associated with having an inflexible system. They include manual workarounds for spreadsheets and other systems outside of the core ERP and billing system.
The sales department and product development team are also going to have strong opinions on this matter. They can be slowed down by inflexible systems. They make it hard for these teams to monetize their new ideas and support better, fresher, more competitive contracts. You are likely to run across the same issues in this department with problems such as manual workarounds. For example, you may see salespeople writing out service contracts that can’t be translated to your current system. This would mean that the finance group has to accommodate one-off invoices and spreadsheets. If manual cycling becomes the norm and not the exception, it creates hours of tedium for the people in finance. This leads to an inability to close fiscal periods on time.
In my experience, having a flexible system – that still has guardrails in place – should allow finance teams to become better organized and responsive to change. They should have the ability to accommodate change with a structured but still flexible system quickly. They should also be able to automate high-volume billing when faced with simple configuration changes to avoid lengthy and expensive development cycles.