The days of the flat-rate billing method are numbered. Consumers want flexibility and control over their purchases, and businesses are getting closer to providing that. But the way subscription billing is done needs to change too: it can be inefficient, difficult to track and manage, or even impossible for some companies. Here’s how subscription billing can make recognition easier.
The days of the flat-rate billing method are numbered
The days of the flat-rate billing method are numbered. Today’s customers want more value, better service, and convenience—and a subscription model is the answer. With subscriptions, you can increase your revenue by providing customers with what they want and when they want it without breaking their bank accounts. You can also provide them with better services that are personalized based on their needs and preferences and not on predetermined packages.
Recurring revenue models are becoming more popular
As the subscription model becomes more popular, it’s important to consider what this means for your revenue recognition process. Subscription-based revenue models are more predictable and easier to manage daily. This is because you’re selling something that has an established recurring value and can be sold repeatedly over time.
In addition to making it easier for you to predict revenue, the subscription model also makes it easier for you to forecast future sales and manage expenses related to the product or service being sold. It also helps with managing cash flow by providing reliable income streams from which payments can be made throughout the life of each paid subscription period.
Finally, having recurring revenue streams reduces your overall risk because it gives stakeholders confidence in their projections over time as well as increases their certainty about how much they’ll receive from services rendered every month, quarter, or year depending on how often payments are processed under each contract agreement.
Types of subscription billing
With subscription billing, you’re billed regularly (typically monthly or annually) until the end of your contract term. The most common types of subscriptions are:
Pay-As-You-Go (PAYG) Services: These allow customers to pay for services on an as-needed basis rather than committing to an annual contract. For example, if you have an app that helps people find local events, they may pay on a per event basis rather than paying hundreds of dollars upfront for full access to all events in their area for 12 months straight.
Subscription Models: In this model, customers typically pay a flat rate each month in exchange for access to products or services that are limited in some way (such as being available only during certain hours). For example, if you want unlimited rides on public transit within city limits but don’t want to commit exclusively by purchasing one ticket automatically every month without fail or risk having them expire before you can use them, then signing up for this kind of subscription might be right up your alley.
Conclusion
For most companies, the future is subscription billing. It makes sense from a financial point of view and it’s also much easier to manage than flat-rate billing. With recurring revenue models, you get an accurate representation of your income without worrying about missing out on any payments. Plus, if you automate this process by using software such as Xero or QuickBooks Online, then your finance department won’t have to worry about double-checking every invoice before sending it out.
