Whether your organization works with subscriptions, contracts, or licenses, you have to deal with periodic invoicing. Handling this is generally quite boring work and also highly error-prone. And if periodic invoicing is not running, it also leads to a worsening cash flow. We are happy to give you tips to make periodic invoicing as simple and efficient as possible.
Go for a fixed price model for all customers
Indeed, it is often very tempting for organizations with a high customer-friendliness level to make a price agreement per customer and to fix different prices. It is only true that your organizational interests suffer as a result, and you make management unnecessarily complex. Therefore, opt for a fixed price model instead of all different prices. If you want to offer a better price for a specific customer, it is better to give a discount. This also makes indexing much more manageable.
Make a conscious choice about your pricing period
Usually, it depends on the organization whether you invoice monthly, quarterly, or annually. It is also possible that each type of contract or customer wants a different period. It would be best if you thought about this commercially and financially. Annual contracts, for example, provide a more significant cash flow. Still, the disadvantage is that revenues have to be distributed over the entire year, which also entails the necessary work for the financial department. In addition, monthly contracts ensure monthly invoicing and debtor management, which is wise to use direct debits.
Consciously think about the start date
It may not be the first thing that comes to your mind, but it is advisable to think about the start date of a contract consciously. For example, can such a contract also start in the middle of the year? Or is there a fixed moment that all contracts will be renewed again, even though they have started earlier? Here too, flexibility comes across as customer-friendly, but again, there is more administrative work. After all, when are which contracts due for invoicing? And have all invoices been sent out? Therefore, a fixed and predictable moment for extension is more than desirable for simplicity.
Determine how you will index
It is also not unimportant to consciously choose how you will index. For example, will you work with a percentage of the price? Or do you have a fixed price list for the periodic elements you sell? Since indexation often coincides with the contract period, it is again essential to organize it as uniformly as possible so that the guaranteeing of contracts is not unnecessarily complex.
Provide insight into profitability
It may sound very logical, but ensure that there is always insight into the profitability. But, of course, this is only complete if the costs of the contracts are linked to the revenues. Therefore link all activities and purchased items to the type of contract. And as you have hopefully understood by now, in general, uniformity and standardization ensure that you can offer these contracts cheaper and more manageable, automatically improving profitability.