Three Reasons Why Billing Has Become a Strategic Function

A closer look at the marketplace today reveals a dramatic shift in ownership models: from perpetual ownership and fixed-term subscription models to hybrid models that combine products, subscriptions and services. This is driving how businesses sell. Sellers have shifted their focus from a transaction-focused relationship with the customer to viewing it as a relationship that needs to be built and nurtured. Companies are facing pressures to launch, build and grow recurring revenue streams as a means to survive in the marketplace. This is causing business model innovation and businesses are scrambling to offer novel models. An alarmingly large proportion of their attempts are met with failure. In this market landscape, there are three primary reasons why billing is taking the spotlight as a strategic business function:

1. Billing impacts revenue

According to Andrew Dailey of MGI Research, “in the past two years, over 65 percent of new product initiatives have been delayed or forced to narrow the scope of their programs due to inflexible, outdated billing systems tied to legacy ERP systems.” Furthermore, MGI Research estimates $150 billion in lost revenue opportunity world-wide; due to lack of capabilities to offer innovative products, goods and services and delay in time-to-market.

2. Billing impacts cost

Point billing systems address only a piece of the billing puzzle: subscriptions, one-time transactions, or projects. Expensive integrations and enhanced human capital are needed for point-billing solutions inflating the costs incurred by the business. This has a direct impact on profitability and the bottom line.

3. Billing impacts customer attrition

MGI Research estimates 28 percent less customer attrition due to enhanced transparency with the customer. The billing system plays a vital role in demonstrating the right level of “proof” on value delivered. This drives positive sentiment and reduces attrition.

In days of yore, billing was undermined as a “house-keeping” function, something that a business needs to do to keep the “lights on”. In a complete indictment of this archaic valuation - the fair market value of billing has finally emerged. Billing is claiming the spotlight as a highly strategic, business function. It’s high time.