Scaling a startup is an exciting time. Leaders get to dream up and roll out grand visions for the future, bring on great new talent, establish a unique culture, and create a brand from scratch.
These are crucial aspects of business-building. However, they arguably pale in importance compared to building business systems that will scale and enable the grand visions to be achieved. For example, companies can only keep the lights on if customers pay what they owe—which means the billing experience needs to be as quick, seamless, and accurate for both parties. Unfortunately, as things stand, 82% of startups fail due to cash flow issues.
And that’s not all.
The average small business currently spends 120 working days per year on admin and an hour and a half per day alone on chasing unpaid bills. This is unsustainable. Key hires need to spend their days moving the needle for your company rather than manually wading through endless billing processes.
If this sounds familiar, it’s time you implemented scalable billing software for your startup. This article delves into how to choose the best billing and invoice software, providing a short checklist outlining key considerations and critical must-haves.
Six steps to picking the best billing software for your startup
Keep this checklist in mind when reviewing potential billing software vendors.
1. Seek out authority, trust, experience, references, and social proof
When picking an order to cash platform, you need to do some digging. As you begin researching suitable billing software providers, the companies’ websites are going to come first. Going through the websites, ask yourself: What services are offered? Is the offering easy to understand? What are the provider’s unique selling points (USPs)? Do you resonate with the content? Customer testimonials, references, use cases, and success stories also provide information on the industries and business cases for which the accounting software is already being used successfully. But it’s just as important to look beyond companies’ internet presence.
Look at testimonials from customers on trusted rating sites like Capterra, Software Advice, or G2 Crowd. Read their reviews and experiences. Pay special attention to providers that have received the maximum number of stars from their customers. This goes a long way in ensuring that the respective billing platform provides the services listed on its website to the satisfaction of its customers. In summary, make sure you get confirmation that the software does exactly what it says on the tin, metaphorically speaking—never purchase software that comes in a tin.
2. Keep your scaling startup’s goals in mind
Every scaling startup has its own unique context, goals, growth trajectory, and customers. Therefore, you need to pick the right billing software for your individual startup. Be a bit selfish, it’s okay! Identify your goals before working backward to understand which use cases will help you achieve these objectives. A useful exercise is “blue sky thinking” or “if I could be king/queen for a day”? Basically, if everything were to go 100% perfect and 100% within budget, and fit 100% of your expectations, what would that look like? Before considering any limiting factors, think about what the absolute best result is, and then work backward with what is possible.
For example, your blue-sky thinking could reveal you need these use cases for your financial operations:
- Subscription management: “This service is a must-have for us in order to offer a subscription model. We’d like to build unlimited subscription plans and bundle offers from one central platform, offering recurring and usage-based products. Also, it’s important to us that the subscriber lifecycle management is automated to minimize unnecessary manual tasks.”
- Order-to-cash Billing automation: “Automating recurring invoices should make billing fast, reliable, and accurate. We’d like intelligent business logic to help us automate billing for any type of business model, apply flexible billing rules, and generate correct invoices with minimal effort.”
- Payment management: “We’d like to implement a customer-oriented approach to payments and offer payment methods that our customer groups prefer (and actually use). This needs to include one-time transactions as well as automatically triggered recurring payments. The integration of leading payment providers (such as Stripe, Klarna or PayPal) needs to be quick and easy quickly and easily, and the automation of payment assignment and allocation must scale without a lot of effort.”
- Accounting and tax features for digital business models: “We’d like to stay on top of our accounting duties automatically, manage all debtors, automate our sub-ledger accounting, and ensure the accuracy of recognized revenues.”
- Reporting and analytics: “We want customized, highly configurable dashboards that enable real-time financial analysis. This allows us to make data-driven decisions thanks to reliable sub-ledger reporting.”
Once you’ve defined your requirements, the next step is to compare them with the services offered. Are the required functions offered? What functional changes, if any, would be necessary so that you could work with the new solution smoothly? Do you need further details? Don’t be afraid to ask critical questions.
3. Consider picking a billing and order-to-cash platform that offers flexibility and can easily adapt to your industry and use cases.
One of the key drivers of growth within scaling startups is the speed at which billing & invoicing infrastructure can be set up to scale. Often this becomes a critical bottleneck due to hastily completed software implementations during seed stage, or staffing issues.
One of the most direct ways to “break the bottleneck” is to find a software partner that has experience with scaling itself and understands the issues involved. Such companies will understand you and your requirements, offer the necessary flexibility to meet them, and can easily adapt to your individual use cases.
As you search, be sure to see if a potential software partner is able to tailor their offering to meet your goals (like increased productivity and freeing up internal resources). There aren’t many vendors out there that are flexible, cross-industry, provide the functionality you need, allow for quick implementation, and focus on personalized collaboration. Points that are so often missing from large ERP and financial software vendors that currently dominate the market standard. BUT they do exist.
4. What post-sale customer support do they offer?
Signing on the dotted line is just the first step. The best billing and invoice software providers understand that the work only begins once they’ve brought a customer on board.
They must then work with your company to properly implement the tool, train your employees on how to use it, provide ongoing customer support, and always listen to see if you have any feedback or suggestions. In other words, they establish long-term working relationships. They ensure their tool adds value to your business—and if it isn’t, they work with you to fix it.
It’s in your benefit to opt for a smaller, less well-known provider that will always be available to keep you happy rather than an industry behemoth that plants you in the middle of automated, cumbersome customer success calls whenever you try and get in touch with a query or concern.
5. Do they show how to measure success?
Startups and scaleups can’t simply splash the cash without seeing any ROI—even if they have just recently closed a funding round. Therefore, the best billing and invoice software understands that demonstrating the value it enables your team to deliver is very important – from the increase in company revenue, to the number of newly acquired customers and subscribers, to the reduction in DSO (days sales outstanding). This way, you have the most important goals and KPIs of your company in real-time and the ROI always in view.
6. Do they seem like a good long-term fit?
This is slightly harder to judge—nobody can predict the future. However, consider the following areas when determining if a provider seems like a good long-term fit.
As briefly discussed previously, double-check how flexible and supportive the provider is. But rather than think about how flexible and malleable the software itself is, what is their company like? The team working with you? What’s their company philosophy? Their vision? Are they willing to take your business’s specific context and goals into account before tweaking their platform accordingly? If so, this shows they have their customers’ best interests at heart. They don’t simply want to roll out generic solutions—they’re invested in helping their customers improve their own ways of working.
Second, are they transparent? If the system ever goes down unexpectedly, are they honest and upfront about what happened? Or do they hide behind excuses and fail to take accountability? Even the biggest companies occasionally fall below their customers’ expectations. However, if they admit their failings and rectify them going forward, this goes a long way to building a trusted long-term relationship.
Conversely, regularly chopping and changing billing providers will only lead to instability and confusion among both your employees and your customers.
Are you ready to take the next step?
Now that you’ve got six key steps outlined to choosing the best billing software for your scaling startup, think about your next steps. Even if your project is months away from actually starting, or you are reading this planning to scale, you should still consider your options now. Remember to focus on working with companies that help you shorten your time-to-market, easily integrate into your existing tech stack, will scale alongside your business, and are willing to be flexible.