In today’s digital economy, companies increasingly are making the strategic decision to move to a more flexible enterprise billing solution. The reason: They’ve been introducing new product offerings to the market based on usage and recurring revenue, but they are finding themselves bogged down in manual efforts to report on appropriate metrics.
Rather than relying on inadequate general ledger and ERP reports, this movement to sophisticated cloud-based billing platforms addresses the metrics challenge. Built-in, ad-hoc and custom reports provide increased knowledge about customers; enhanced flexibility; greater insight into forward-looking metrics to help plan for cash flow predictability, and greater efficiency.
There’s no limit to the number and types of reports you can use. But, as a starting point, the following four types of reports are “must-haves.”
- Revenue Forecasting Reports
- Customer Value Reports
- Accounts Receivable Aging Reports
- Customer Loss Reports
Revenue Forecasting Reports
You obviously need to understand the strength of your relationship with your customers. And you really need to get a sense of how those relationships translate into expected revenue.
Given the subscription basis of their business, SaaS companies look to Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) reports for that perspective. MRR reports are used by B2B SaaS companies engaged in multi-year terms, while ARR reports are used when the minimum subscription term is a year.
A subscription payment’s regular nature makes it fairly easy to track and forecast revenue; certainly, this is far easier than with other business models. Moreover, this type of data enables you to be better informed about customer acquisition and churn rates; that combination of information also can be helpful to you in predicting future MRR.
Customer Value Reports
You can gain valuable insights into the long-term/lifetime value of your customers with three other reports:
- Revenue by Customer
- Customer Lifetime Value (CLV)
- Average Revenue Per Unit/User (ARPU)
Revenue by Customer
A Revenue by Customer report enables you to consider revenue generated by each customer rather than revenue by units sold. Why is that important? Well, for one thing, you’ll learn which of your customers are buying at full price and which only react to sales opportunities – making them far less valuable. You’ll also be able to compare your customers to “average” customers – and you’ll be able to set some well-informed priorities.
Customer Lifetime Value
In the digital economy, your financial health is not measured by the revenue you are generating today from your customers; instead, customers are viewed as longer-term assets that deliver sustainable (and predictable) value to your company.
A Customer Lifetime Value (CLV) report provides you with a view of the overall value of your customer base. Think: predictable value over specified (contracted) time periods. CLV reports are helpful in developing and fine-tuning customer acquisition, maximization and retention strategies.
Got a complex product portfolio? The data in CLV reports will help you to better align your solutions to specific customer needs.
Average Revenue Per User or Unit (ARPU)
ARPU reports are very useful as they provide you with competitor comparisons and help you to choose customer-acquisition channels, segment users for profitability analysis and forecast.
Accounts Receivable Aging Reports
Given your top-line focus, you find yourself often (too often?) deciding to win new sales by extending credit to customers, offering discounts or ignoring payment terms. You think you’ve built revenue, but what you’ve really done is provide customers with free financing.
Which is the last thing you want to do.
An Accounts Receivable Aging report is extremely useful because it gives you an important snapshot: how much money is outstanding and how much is due to you by your customers. It also gives you a head’s up to customers that might be having problems and are behind on their payments.
AR Aging reports also are enormously helpful when you try to forecast their cash flow.
Customer Loss Reports
As mentioned above, MRR/ARR reports enable you to have a full grasp of your churn rate, or the percentage of your customers that leave your service over a given time period. Customized Churn Rate reports, meanwhile, provide an opportunity to look at churn in any number of ways, which is advantageous as SaaS companies look at churn rates in more than 40 different ways.
No matter which ways you use them, Churn Rate reports will help you understand the answer to the question “why,” which generally falls into one or more of the following areas:
- Customer experience
- Customer expectation
- Customer investment
- Value provided
And a greater understanding of why your customers are leaving can help you better shape your go-forward marketing program. That’s no small thing: attracting new customers can cost six or seven times the cost of retaining existing ones.
Want to help grow your business and manage operations more effectively?
You can leverage BillingPlatform’s built-in capabilities to create and schedule custom reports and configurable dashboards to keep customers, partners and managers informed. We can define and schedule reports in a variety of formats for executive notifications, marketing and product management requirements, accounting ledgers, and audit needs to customer requests.
Read this whitepaper to learn how an agile platform transforms billing from an afterthought, isolated to the back-office, to a powerful tool for modeling and capturing new business.