If there is one thing most people agree on, it’s that getting paid is GOOD and the only thing better than getting paid is getting paid FASTER. But when you are dealing with large B2B customers, getting paid can sometimes be a long, arduous journey. Case in point, we can all appreciate the value of closing a large invoice covering a prosperous month with tens of thousands in a wide variety of well-sold and executed goods and services. But all that revenue tied up in a single invoice can quickly turn bad when your valuable enterprise customer decides to dispute a few $100 charges, thereby holding up all that hard-earned revenue for months!
The Work Around
What many providers try to do to mitigate this is to split large invoices into several smaller ones based on common goods and services or related events. The optimal strategy is to send each invoice out the minute the service is delivered or completed. If the service is based on a subscription, then it may be beneficial to logically sub-divide the recurring charges based on a logical demark – products of type X bill weekly, services of type Y accrue a monthly charge based on the day the service started. All this overhead in diverse sub charges and cycles can be an ominous accounting ordeal where frustrated billing clerks spend all their time polling ERP systems, running reports, and auditing usage against billing while trying to plug revenue leaks. Wouldn’t it be nice to leave this all behind and join the subscription economy? Tell that to shipping and freight companies whose bread and butter will always hinge on units processed and services delivered.
The Light at the End of the Tunnel
Is there a solution to getting paid faster in a complex enterprise without killing the billing department? Surprisingly the answer is yes; it’s called the event-based billing cycle. In this process, a set of attributes are defined at the product level that detail a natural grouping of billing events along with a single event that signals the close of an invoice. Here, usage flows in a continuous stream through the billing system from ERP and other sources (in this case the grouping could cross systems), automatically generating invoices and delivering them when the “closing” event is discovered. Another adaptation of the same theme is to define your billing components to accumulate charges and then close invoices on a specified cycle, creating a common time interval for delivering bills for a subset of products and services.
In this automated rainbow of love, your billing clerks are relieved from their dark days of arduous tedium and refocused on more profitable and useful tasks without compromising your ultimate, lofty purpose: to get paid as soon as possible (GPASAP) (while spending as little as possible of course)! Using this approach, revenue is a continuum based on a constant stream of transactions that are distributed such that its recognition is diversified and throttled based on product mix and not customer size. It increases your ability to make billing and receivables more predictable and ultimately cheaper and easier to manage.