How to make periodic invoicing as efficient as possible

Whether your organization works with subscriptions, contracts, or licenses, you have to deal with recurring invoicing. Handling this is tedious and extremely error-prone. Furthermore, if recurring invoicing is not running smoothly, it leads to cash flow deterioration. We would be happy to provide you with tips to make recurring invoicing as simple and efficient as possible.

Opt for a fixed-price model for all customers when billing is periodically

Especially for organizations with a high level of customer friendliness, it is often tempting to offer a per-customer price agreement and set different prices for different customers. However, this compromises your organizational interests and unnecessarily complicates management. Therefore, opt for a fixed-price model rather than multiple prices. Should you wish to offer a better price to a specific customer, it is better to provide a discount. This also makes indexation much simpler.

Periodic invoicing: make a conscious choice about your pricing period.

Whether you invoice monthly, quarterly, or annually usually depends on the organization. Furthermore, each type of contract or customer may prefer a different period. It is important to consider this not only commercially but also financially. Annual contracts, for example, ensure greater cash flow, but the disadvantage is that revenue must be spread over the entire year, which entails significant work for the finance department. On the other hand, monthly contracts result in monthly invoicing and accounts receivable management, for which direct debits are advisable.

Think carefully about the start date.

It may not be the first thing you think of, but it is advisable to consider the start date of a contract consciously. For example, is it permissible for such a contract to start halfway through the year? Or is there a fixed time when all contracts are renewed, even if they started earlier? Here too, flexibility comes across as customer-friendly, but it does lead to more administrative work. After all, when are which contracts due for invoicing? And have all invoices actually been sent out? For the sake of simplicity, a fixed, predictable renewal date is desirable.

Determine how you will index for periodic invoicing.

Furthermore, it is also important to make a conscious choice regarding how you will index. 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 important here as well to structure this as uniformly as possible, so that securing contracts is not made unnecessarily complex.

Ensure insight into profitability.

It may sound very logical, but ensure that you have insight into profitability at all times. This is only complete if the costs of the contracts are linked to their revenues. Therefore, link all activities and purchased items to the contract type. And as you have hopefully understood by now, uniformity and standardization generally enable you to offer these contracts more cheaply and simply, which in turn improves profitability. Read more about our solution here.