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Finance

How complex billing is changing your business. For good.

Tabatha Buessing
Posted on  
April 18, 2022

Do you ever ask yourself, “How did we get here?” It’s not a question most people like having to ask, yet I feel like I hear it all the time from startups.

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“We should have done XYZ earlier”

I can hear them in my sleep.

Just kidding. That would be weird… 😅

I can’t say I don’t understand though, because I do. I’ve experienced a bit of it myself.

Being first is hard. Staying first is harder.

You’re growing quickly. Probably at a bootstrapped or recently funded company playing six different roles. It’s fun at this stage. You like your jobs. You like the people. Hell; you even love the customers. And your product is solving a need. A real need.

But there are a few problems. And “few” might be putting it kindly.

Because as revolutionary as your new app for electric car owners is, that innovative business model is anything but traditional.

I mean, no one has charged for this before. Until you, of course.

It’s hard being the first to the finish line. The first through the wringer. The guinea pig, if you will.

Ask any market disruptor and they’ll tell you it feels like going through a shredder sometimes.

Being first is tough. Even if it’s amazing.

And first for finance teams? Ha. We’re  so used to this chaos, all we’ll ask is to be invited to the table in time to pay the bill. On time. Maybe.

Startups aren’t alone in this.

Any business after enough time (if you’re lucky enough) will run into what we call variable engagement, or the inevitability that the relationship with your customer will change at some point if you decide to grow.

And what business doesn’t want to grow?

*Crickets*

My thoughts exactly.

Change is inevitable, and that’s a good thing for your business

Every time you change your business and billing model (which you will, many times), you’re likely adding or changing the variables by which you engage (financially) with your customers.

Sometimes we hear this called usage-based billing or usage-based pricing. Other times we hear event-based billing. Or a fan favorite: the mighty subscription. You name it, we’ve seen it. You probably have, too, a thousand times over.

And so billing, the financial foundation of all customer relationships, is all but basic these days.

Sometimes this is by choice (usually during the good times). Maybe you’re trying on a new subscription model. Perhaps you’ve calculated that seat-based pricing would help you reduce revenue leakage by over 10%. Or a new feature is giving you an exciting upsell opportunity you want to capture. Fun stuff.

Other times it’s because of need. Example: Pandemic. Enough said?

Then there’s the other, other times. The most frequent reason. Demand. Driven by customers or competition or some random energy in the universe that suddenly requires everyone to receive their packages overnight (I see you, Bezos).

Whatever the reason may be, change is something you can bet on.

What is it they say, again? The only constant is change?

And one’s ability to adapt to said change – this crazy thing we call variation – deeply influences a business’ chance of survival, let alone success.

Complexity is the new normal

None of this is probably news to you. Nor to our customers. Business is complex?

“Duh, Tabatha,” I can hear you say in my sleep at night  🙄 Okay that was a real joke.

The most frequent, initial response we see to this challenge at Zone is, somewhat ironically, complexity. Complex answers for complex problems, right?

We thought so, too, at the beginning.

Four years into building ZoneBilling, we’re not sure anymore. In fact, we’re more than not sure. We’re for sure.

The best answer to complex problems—what we define as a change in variables—is not really complexity. Especially with scale.

Why?

Because complexity is a given. It’s a duh 🙄 

Convenience is difficult to create, we all know.

So the question isn’t if your business will become complicated. The question is, “when?”

Or even better, perhaps we should be asking ourselves: when is it too late to realize we’ve become complicated?

Finding that line is not only how businesses survive.

Constantly moving above it is how businesses will thrive in the future. Assuming they know how to balance it.

The true cost of unbalanced complexity

Because of this inevitable complexity, FinOps teams are often conducting sophisticated processes at high volumes through siloed systems via manual workflows. Yes, we said “manual” in 2022. These disparate systems can understandably lead to errors and inefficiencies. And to some degree, some businesses might be able to tolerate this.

We were so curious what the threshold for ineffectiveness was, we decided to ask 100 technology leaders what they thought.

The results? Um…it’s probably better if you look for yourself.

Errors

First, we wanted to understand how frequently errors showed up during financial transactions with customers, mostly via invoices or billing statements.

Our (crappy) assumption was that reduction in errors—given the consequences—was a top priority, at minimum, for most finance and IT teams.

And as per usual with assumptions, we were wrong. Out of 100 technology leaders, 46% acknowledged an error on a transaction in the last 12 months.

“What’s one error in the grand scheme of things?” you might ask. It’s a valid question. As long as it’s the only error you know of.

And that’s what really scared us: another 24% doesn’t even know (yikes).

But hey. Errors are just one piece of the proverbial pie. You could survive a few errors as long as you’re still getting paid every time, on time. Right?

*Gulp*

Invoices

Maybe. Equally curious, we also asked how long it takes to get an invoice out the door. We didn’t love that answer either.

More than a third of respondents admit it takes longer than a week. And that’s not even counting the time the customer needs to process the invoice and payment on their end.

If you’re an electricity company, sure. I guess.

But not the coolest electric car app on the market.

Or Spotify (damn are they on it when you forget to update to your new card information).

Excel

This is where it gets spicy. And kind of comical.

To do all this mathematical magic, you’re probably like the 95% of us who are still using spreadsheets to manage some aspect of all of this.

Or, maybe even most of the process.

As much as we love the program, surely 37 years of human existence can find a more helpful way than cells to build something.

Then again, that’s how nature has done it for billions. Heh 😅

So before we pointed the finger at the spreadsheets, which so many of us tend to do, we asked a bigger question.

Why won’t we change?

Sure, change is hard.

But is it so hard that it’s instead worth spending multiple days reconciling hundreds to thousands of records between billing and revenue systems when there are other ways?

According to 45% of those surveyed, yes. Today’s way is just fine for tomorrow.

And perhaps, it’s because change isn’t just hard, but ripe with challenges like disparities in data, availability of talent, and lack of trust in anything but…Excel?

Is change really the answer?

So maybe we don’t need to change. Maybe that’s the answer.

Because when all is said and done, sure you have a few errors. Perhaps you’re not getting paid the right amount or very quickly.

But it’s not all bad, right?

You’ve still launched your killer car app and you’re at least charging people (and cars). Most of the time. On-time-ish. And maybe you’re not really sure if your rev rec is right, but you’ll get there. One day. Hopefully before the first audit.

And if not, you’ll figure it out when you get there. At 8pm on a Friday night just as you're about to leave for your daughter's dance recital that you cannot miss.

Yeah. You could grow that way.

That, “We’ll worry about tomorrow, tomorrow,” kind of way.

Sure, it’s chaotic at times. Sure, you’ll have a systems hairball at some point so tangled you’ll stumble back to Excel (arguably still one of our favorite tools at Zone) and it’s beautifully basic yet seductively elaborate ability to do all the things.

Sure, your data will be a mess and your audits will suck.

And you’ll embrace it. Because that’s how startups are, aren’t they?

Or, you could do it a little differently.

You could take a chance on change.

You could answer that guaranteed complexity — the inevitability of variation — with something better than just complexity in return.

Something even better than the devilishly handsome software of a spreadsheet.

As sexy as that spreadsheet is, it can’t keep up with your customers any more.

Because at the end of the day, as complicated as it may get for you, it's still just billing for them.

Billing based on what they need.

What they want.

When they want it.

And that's always evolving.

So why not run your business that way?

Curious to know how we’re building a borderless billing system to unlock growth at Zone? Click here.

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