Many startups don’t take advantage of billing systems since the process seems straightforward. As time passes, companies realize the importance of using a high-quality program to take care of their billing tasks.
Today, billing is much more than sending an invoice and waiting for the customer to pay. It includes data gathering and an extensive analysis to help you improve your billing process and the company’s bottom line.
How do billing systems work? Why do you need one? Let’s take a closer look.
What is a Billing System?
The basic definition of a billing system is the combination of hardware and software, which collects service usage information, divides it into groups according to accounts or customers, and then helps manage these accounts. The system can create financial reports, record payments, and generate invoices.
Regardless of the way you are paid, be it cash or wire transfers, you need a billing system to keep all the data in one place, analyze it properly, and avoid financial errors.
Billing systems like enterprise billing software Kansys usually can do everything, from calculating payments to generating statements.
4 Elements of a Billing System
Each billing system should have several key elements to work properly.
1. Data Collection
To make sure the system can track customer’s orders, it requires you to create a profile. It should have such information as:
- Billing address
- Terms of payment
- Customer’s name
- Billing details
It also documents third-party payers like insurance companies. You need to verify all the data before putting it into the system.
The system should also have access to product and service information, such as price, quantity, and other important details.
A high-quality billing system doesn’t just wait for you to input information. It offers suggestions so you know which data to share.
2. Billing Codes
Most billing systems create code systems for categorizing products and services. It can help the program track financial transactions especially if your company works with a high volume of products.
These codes are also useful for analytics. Instead of dealing with a huge volume of information, a system assigns a code and works with it. Codes can identify the services performed, supplies, devices, equipment, and much more.
3. Payment Tracking
The key function of any billing system is to track payments. When you send an invoice, you expect a payment to come on a certain date. When that doesn’t happen, the billing system can alert the staff about the problem or sent an automatic reminder to the client.
Without payment tracking, late payments can fall through the cracks, thus affecting the company’s revenue.
The system can also add past-due fees to the invoices and resend them to the clients. This payment tracking optimization can help your staff save a lot of time.
Billing systems work with sensitive information you collect from your clients. It could be processing credit card info, credit scores, social security number, and more. The data is highly confidential. Any breach of the system could result in serious consequences for your company.
That’s why billing systems must have exceptional security to ensure data privacy. The software provider must issue regular updates to take care of any possible loopholes.
What Can a Billing System Do?
Besides helping you collect information and track invoices, a billing system can have a variety of important options, such as:
- Invoice management – you can create and customize your invoices as well as set up an invoice-sending schedule.
- Online payments – you can set up and manage online payments. This can speed up the payment process and provide additional customer data to analyze.
- Expense management – you can analyze cash flow, losses, and profits within one program. This can prevent errors and speed up the management process.
- Client management – you can manage your clients (and vendors) in one place. This data can be used for other programs that simplify your business operation.
- Multiple language/currency – if you need to send invoices oversees, the system can help you create them in different languages and currencies.
Billing systems work by collecting important information about your clients and vendors and processing it to help you with creating invoices, tracking payments, managing expenses, and much more. Such software can streamline your business operations and save you time and money.