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FinancialForce Billing Central for Subscription and Hybrid Businesses

The market for subscription or recurring revenue billing software is growing along with the increasing popularity of this business model. The expanding use of cloud-based IT services and a growing preference to rent rather than own things are two of the primary factors driving companies to choose this business method. The main business reasons to adopt a subscription model are to increase revenue, improve customer experience and increase customer loyalty, according to our Recurring Revenue benchmark research. FinancialForce, a provider of cloud-based ERP and financial software, recently announced

the availability of Billing Central, a component of its cloud-based ERP system that unifies billing, revenue management and accounting operations on the Salesforce platform. Billing Central is notable because although all ERP systems can invoice and bill for individual product and service transactions, few are capable of managing the invoicing and billing process for anything but the simplest sub-scription configurations (such as a fixed-term contract with payment up front). Since an important reason why buyers are choosing non-ownership is flexibility in how they con-sume products or services, an increasing number of companies in response are offering more intricate and variable contract struc-tures. For them, subscription invoicing and billing software has become a necessity.

Subscription billing systems can promote customer satisfaction in two ways. The first is by providing flexibility in creating offers configured to address the exact set of goods and services a customer wants. The second is by providing a billing process that is always accurate and complete. Billing systems designed expressly for subscriptions also can reduce administrative workloads in both the front and the back office. In particular, the software can reduce accounting workloads under the new revenue recognition standards (ASC 606 in the United States and IFRS 15 in most other countries), which I have written about. These rules increase the complexity of the accounting process for all but the simplest subscription revenue businesses. The most distinctive feature of FinancialForce Billing Central is that it can be easier to implement and maintain than a stand-alone subscription billing system. This is possible because FinancialForce and Salesforce applications share the same data. And since Salesforce offers sales automation and customer service, these capabilities are already

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integrated at the structural levels of data and process. Moreover, Salesforce offers prebuilt integration with a range of applications (for example, contract management), which simplifies setting up and maintaining these elements of an end-to-end subscription management system. Conceptually, Billing Central competes with stand-alone subscription billing systems. In practice, however, these stand-alone vendors address a different market: companies that have sales automation, customer support, ERP and other components that they do not want to change. FinancialForce Billing Central is designed to appeal to organizations that already have an affinity for the Salesforce platform and need ERP and billing systems that are designed specifically to address the requirements of a subscription revenue business. All such systems offer viable alternatives to stand-alone spreadsheets, which many companies use but which are inherently time-consuming and error-prone. In our recurring revenue research just 15 percent of companies that use spreadsheets for subscription billing said they are satisfied with them. Corporations also are likely to find their use problematic from accounting and auditing standpoints under the new revenue recognition standards. Companies that have a subscription revenue model and want to manage these subscriptions all the way from negotiating a contract to collecting fees should consider FinancialForce. This is especially true for growing or midsize companies that are seeking to replace an entry-level accounting package and even more if the company is already using Salesforce for its sales force automation and CRM requirements. FinancialForce’s ability to handle a range of subscription structures and its integration with the Salesforce platform can address the needs of most subscription business models.

Robert Kugel, SVP and research director–business research at Ventana Research, focuses on the

intersection of information technology with the finance organization and business. His research agenda

includes the application of IT to finance and business process optimization – particularly continuous

accounting and continuous planning; control systems and analytics; and price and revenue

optimization. For more of Robert’s analyses, go http://robertkugel.ventanaresearch.com.