Explore the Best Billing System Example for Operations

Billing system example for Operations

hey everybody Mark here techto techto is a revenue operation software provider uh we have a platform that manages every every step of the the customer Journey including billing uh we're going to talk a little bit about uh improving billing operations in our webinar today so in the tech World building is pretty complex uh we don't really have uh discrete products um that you can stick on a shelf the nature of the products uh are at least the customers that we serve very much dependent on human beings delivering those products to create value for the customer um the very nature of the subscription um pricing models that we're dealing with today means that our customers need to prove their value year after year after year with customer and that I think has a big impact on uh how you Bill uh for your services and your product and so no doubt there's a lot of variables in play uh when you're dealing with billing uh at a software company or a service delivery company you we've got a bunch of different pricing model constraints you know we have uh different products for different currencies uh you know you have pricing model changes over time you have various subscription terms uh some complications you know related to when subscriptions start do you start on go live you start when the software is installed you start on the order date is that term going to be annually multi-year monthly how does the renewal process uh work uh invoicing terms as well um you quite often get into monthly payments that have a different price than let's say the annual uh and then you get into scenarios that on multi-year deals do you invoice annually or all upfront and of course when you're dealing with upsells and renewals get a lot of complications around co- terming so it's let's say a customer bought 100 units um and then halfway through their subscription they bought another 50 units does a customer want to have two uh renewal dates or do you want to co-term against the first renewal date and what price are you selling a product uh the second time around is it the contracted price or the the list price lots and lots and lots of complications um in around trying to to manage uh subscription revenue and subscription billing and then of course you still are dealing with service spilling and so we have projects that might be time material based where you have a set rate or a rate specified by a contract uh number of hours and uh Bas basically collecting those uh hours each month and getting an invoice at the door and of course you've also got uh models that are more Milestone based so fix price projects have billing Milestones you know when do you release the Milestone how's that Milestone get at the door um on an invoice and of course lots of other variations you get into manage Service delivery and so essentially Building Services models more like a subscription model or you may be productizing your services so you're you're bilding all those Services up front lots and lots and lots of variations what we're going to talk about today is how to manage all that now the typical issue that a lot of companies are facing with uh with regards to billing especially as say scale is that it's highly manual process a lot of inaccuracies and really the best way to deal with it is just adding head count to the counting team and certainly that's one one approach um and we like to present another option um with some automation but really the some of the stuff that you're trying to guard against you know are scenarios like sending out renewals that are not the correct amount so many times we've seen renewals either not getting out the door at all or missing an entire up sell mid year or not including the cola uh or contracted rate increases um you know you're quite often dealing with forgot uh forgotten billing Milestones um again we've seen this a lot of times too where a customer is doing a project the project manager doesn't let accounting know that the $50,000 billing miles St you get out the door the accounting realizes it's too late but by that point the customers got an issue with the project and that $50,000 is at risk on the opposite you get into situations where you might be over recognizing Services Revenue so let's say on a fixed price project um and let's say the progress is 30% but you want to recognize closer to 100% of the revenue you've already collected but the project goes south and now you're dealing with a credit situation you know I've lived that scenario and it's not something you want to do um of course you get other issues related to time material invoicing like how long it takes to get time material invoices at the door you know get the time entries in get them approved get them reviewed get them keyed and send out the door it's not unlikely organizations take 10 10 days or so each month just to get invoices out or imagine being able to do that in a day now what we're going to show today is a um couple platforms one is Tech stack um so we call techto a revenue operations platform uh that's fancy talk uh basically what it is is what CRM is supposed to do so it manages every step of the buyer Journey uh your buyers are prospects you wi opportunities those opportunities get closed by the sellers that opportunity generates an order an invoice turns on a uh project to be implemented um project is managed goes live turns over to support and then you got a customer succcess motion dealing with renewals and upsells and all that kind of stuff everything on one platform so we're going to show that and then we're going to show something called business Central which is Microsoft's financial management platform so it's the when you hear about Dynamics 365 and all the growth um the vast majority of that growth is coming from business Central it's um by far the market leading financial management solution for mid-market companies and so Tex has a very strong integration um between um all the revenue operations piece and the accounting financial management piece now everything we do is Microsoft based so texo built on something called Power Ops has a deep connectivity to the business Central and fully integrates to all the stuff you're using today so you see all the little icons are logos down there but Outlook word excel SharePoint teams powerbi and of course co-pilot so why don't we get started with a demonstration and I'll cover off some some key pieces of functionality right on so this is techto let's start our journey with the idea of a product library or a product list so here I have a bunch of products in our database we have 48 products you know you may have a dozen products 100 products a thousand products it doesn't matter we have customers that have uh over a million products uh they're a box uh hard hardware company uh that mied services and subscription Revenue but had tons and tons of products in their Library um so let's say I want to look at a specific software product and let's say I'm going to pick on this cyber risk product so effectively what we do is we set up all the stuff that we can sell to customers as products that could be software it could be Services it could be manag services and again it could be hardware and the very nature of the product type kind of drives a lot of really important things and I'll show you what I mean in a quick sec so when setting up a product you can have descriptions so here's a description of the software product called cyber risk it's a user-based uh pricing model in this case and I can set up uh Price Books those Price Books are um effectively mapped to uh Priceless so here you can see I have my cyber risk as a one year 2E 3 year and 5 years subscription all for the US so this product is only sold in the US or against the US pricing model um but again here you know if you had a Canadian UK Australian dollar uh New Zealand uh you know Euro whatever currencies you want across whatever products and of course you can have different product prices set depending on the term so we we obviously see that a lot where 5year price is a lot better than a one-ear price Etc uh here I'm just going to open up the uh 2ear uh subscription product so we have the price for that we can capture our costs this is great for uh vars who who have a cost of sale on the transaction so we can calculate the gross profit on any given opportunity or order uh we identify this product in in this particular case as a subscription product which drives a lot of other kind of uh settings so one is determining when the subscription should start so texto allows you to do um a few different things you can create a subscription that starts um on the opportunity close date or the order date in the case where the sellers let's say want to close an opportunity at the last day of the month but by the time accounting rolls around and gets is ready to get an invoice out to Door um they you know might take a few days so you may defer that into the subscription start on the order date but we also get situations where a specified date is negotiated or we get into situations uh where um the subscription starts on a project Milestone so let's say the software um deployment or the go live uh of a project so we can set all that kind of stuff up uh you can also specify um how long the renewal uh notice is so on a twoyear term here I'm telling the system hey wake up 60 days before the end date of the order generate a renewal and we can talk about that another time but we automate the renewal process so that nobody forgets that there's a renewal coming up for a customer and by uh setting it up a fair amount of time in advance it gives the customer success team and the account managers time to get a read on the customer um you know book whatever meanings are required to get that renewal secured and you're doing all that before we generate a renewal invoice um because quite often a lot of companies the strategy is well let's just stick the renewal invoice out see what happens but um you know naturally it's much better to really manage the renewal as an opportunity and this is what drives that now for invoicing as well there's a bunch of different options for invoicing um you can configure it to uh this product to uh invoice on the close date um or do not invoice and then you can do that on in advance monthly annually and quarterly so this is a 2-year subscription in advance means that you're going to do an invoice for two years all up front monthly is monthly quarterly quarterly and annually what that refers to is out a two year you're going to do one year and then one year so that's our product so once you get your products uh configured and price books are set up those products are now available for uh users or sellers to add to Opportunities so here I have an opportunity for Lift uh they want to buy the Cyber risk product that I just looked at so you can see here they've got um a 2-year subscription that's the exact product we just looked at and here um in this case because there was only one option available to the seller the only option is to start the subscription on the close date but here you can see that I can do it in advance monthly or annually or quarterly for uh invoicing so the seller can specif ify uh what the customer's preference is okay and so you can see that this product has been added to the opportunity it's a ARR of 60k it's a 2-year deal so the total amount of 60 * 2 is 120 you can see that we calculate all the money Fields correctly right so you've got uh ARR is 60 the total amount is 120 on the opportunity um we're able to separate if we had any services on here as well that would show us here and it's very easy to generate a uh quote document order document proposal document uh with one click as well you can email it directly from the system it's not the point of this webinar so I'm not going to do all that for now I'm just going to close this deal and the seller can add the contract that was signed U click win now this deal is uh read only it's um uh inactive and what happens is that the opportunity being closed we're ready to create an order now you could have the seller on close have the system automatically generate a an order right away um now more practically there's typically an accounting review so seller closes a deal somebody in accounting or sometimes a deal desk function will review the deal to make sure everything's cool so contracts attached contract terms reflected in the order all that kind of stuff um but they'll get a notification uh in teams that hey good news got to review this order make sure everything's good they come in here click the generate order button and now the order is generated so if I go to the account uh lift you can see now that this account is a customer thereout the implementation stage um I've got my one opportunity so I have no open opportunities here but if I go to one I one opportunity um that generated an order so that order will show the end date so that everybody in your organization knows exactly when lists renewal is coming up and how many of what products they own at what price so you can actually drill in here and get a little bit more information um including all the history so if let's say Lift over time is piling more and more users on um over time you can see all that order history and then we also set up the uh Revenue uh recognition for each month so you know here on a $60,000 um Revenue a year um that gets spread fairly evenly except for the first month and the last last month um so in the first month because there's you know 10 of 30 days 31 days in May um we're only getting a third of the revenue um or two-thirds of the revenue recognition for the month um so that's all set up until the last month where there's only a third of it so all that gets set up um and then of course we have the invoices generated so the software um invoice gets generated 60k again this is a 2-year deal but we only doing one year UPF front and so that uh invoice is ready to be sent to the accounting system business Central which I'll show you um a little bit about that in a quick sec now a lot of customers are are they ask you know why do we kind of set up the revenue deferred revenue and all that kind of stuff for the subscription and the reason it's very very important when you go to some of the powerbi reporting we Prov provide you know one of the key metrics for most software and service organizations is how much of your revenue is recurring how much of it is contracted each month and that's called uh ARR um annual recurring revenue and tracking annual recurring revenue is not always straightforward um so what tchack does is by tracking all this Revenue information that gets sent to the accounting system we can tell an organization exactly what their AR contracted or run rate is what their annual growth is uh monthly growth we can see what the ARR recognized ARR is per month by product by customer so here you can see all the customers that are running that specific product now that becomes extremely valuable as well because we can start also getting into some concepts of average customer value and average uh and customer lifetime value uh so we can analyze that kind of information over time we can see when I talk about renewal opportunities we can see which opportunities uh renewal opportunities are coming up when so here's kind of the lumpiness that I have in February for renewals and I can see here uh in February 2024 that I had uh $1.8 million of ARR renewing with customers that have weak health which can tell me that I have to do some work to make sure I secure those renewals we can also see what the renewals look like by product very very valuable information when you want to make business decisions and we can you know go go into great depths around analyzing this kind of information um and you want to know how much of your uh your AR is live so here I have um 12 million dollar of ARR over 104 customers that are not yet live which if I was a CEO of this company I would be really really nervous and so this information becomes really easy to get at and then of course we get into some of those key retention uh numbers so being able to calculate gross retention which we used to just call retention um but now the concept of gross versus net and where net is basically yeah okay I'm going to lose in this case 55% of my customers but the ones that I keep I sold them a heck of a lot more so my net retention is 148 so typically you want to keep this number over 90 and this number anywhere between 110 and 120 you're best in class but my demo database obviously is a mess um but you can see at least the information's there uh so back to our story um back to our story we have lyt here is a brand new customer let's check out our accounting system so I'm going to fly over here to business Central um business Central again is Microsoft uh financial management platform specifically for SNB businesses um as great as we think our technology companies are in the grand scheme of things 99.9% of technology companies fit into an SB category um by virtue that it has most organizations have less than a thousand employees um so uh this is the platform that Microsoft provides to manage um financials for these kind of companies and so in our model here we we had um the sellers doing a bunch of work to secure a new customer lift so in the old days what would happen is they'd ring the bell walk the contract over to accounting accounting looks at the contract goes to their accounting system re Keys all the information so they set up the customer U now that the customer is added and the contact is added now they need to create an invoice for that software order so uh effectively text act does all of that for you automatically so um I see here that I have in the text St integration I have a customer to review tile and if I click uh see more you can see here that I have LT so lift has been added uh to this customer to review list and so a few things few reasons we set it up this way there's always a little human intervention right you want to make sure you have the customer applied to the right posting groups uh which drive a lot of the downstream Financial transactions GL level transactions you want to put tax uh sales tax information um on this customer might be a credit approval process whatever so whatever your process is for adding a customer but at least that has been presented to the accounting team and all they need to do is fill in all the necessary information makes life really easy now what I'll do is actually save that for our demo um I'm actually go to a customer that um has uh has been set up already and I'm going to show you how some of those transactions flow back and forth and so here I'll go to our customer customer list okay and I think I'm going to pick on um Steinway and so if we look here I have Steinway that's been set up I haven't posted any transactions that's why you're not seeing a lot of stuff but I I have three uh sales invoices for Steinway so what I'm going to do is go in and show you how this invoices from Tech stack flow over to business Central um and I'm going to actually um segue from kind of software invoices over into ser service invoices and show you that flow so let's go back to uh text stack okay and so um the point of our uh conversation today we're not going to show you a lot of the kind of project functionality and how to manage projects and all that kind of stuff um we're just going to talk about billing but a key source of billing um and where a lot of the volume comes from with our customers is Services inv voicing so I'm going to show you two scenarios so in Tech stock we have a bunch of areas in our software um so we have you know Marketing sales delivery which is that project management piece we have help desk um which again another conversation another time and we have Revenue so in our Revenue section is where we see all of our recognized Revenue um and where we see our invoicing information so here's a quick uh homepage or dashboard that shows all the time material invoices over uh other number of customers that we have and I can also see all the Milestones over the number of customers that we have so the two types of service invoices that I'm going to show you here the first one is a Time material invoice so the scenario here is um you know we have a project setup a resource assigned to the project um that resource enter time that uh project manager approve the time and now it's ready to be invoiced so when it's ready to be invoiced what happens is it'll a show up into this view so typically somebody in accounting or some sort of you know uh Professional Services Revenue kind of rooll usually accounting though um we'll look at all of this just review that everything looks right so they'll um make sure the right rates are applied or uh make sure that um you know let's say certain um time entries don't exceed uh budget um um you know Mark something as non-billable uh or unmark something as non-billable or send uh even though the project manager approved it they could send this back to the resource um to get revised maybe descriptions required whatever uh I'm going to skip all of that and I'm just going to Simply rubber stamp this transaction and so here I have um a couple Steinway uh in uh time entries here I've got a $180 8 hour and a 5 hour both at the same rate 160 bucks I'm going to grab those two I'm going to throw on an invoice so here I could reject or approve I'm just going to um invoice these time entries okay so these time entries have been invoiced so they'll disappear from this list and when I go to the invoices section here okay so here I have still updating so I'll just give it a quick refresh and so here I have my uh invoice that's generated for Steinway okay and as you can see my invoice lines um combine the 8 hours and 5 hours naturally right you don't necessarily want to um uh you know show all all that detail as invoice lines however we do provide a supporting document that shows all the details of the the time entry as well uh when you print the document um but that invoice is ready to be sent over to business Central you can see the business Central sync status so it's ready to sync but hasn't been synced yet um so that's a time entry invoice being created uh the other invoice that we uh create is a milestone invoice so this is the scenario where a project manager says you know what we've um finished this important Milestone on the project I'm going to Market as complete when those Milestones get marked as complete they show up in this View and and they are available for accounting to go through the same process so basically ACC accounting would be able to see all the mile uh billing Milestones across all the projects in the organization when they're expected uh to be approved so you can see all the ones that are in the past all the ones coming in the future I can show you that view but uh for the sake of time uh we we're just going to do the transaction but the all the ones that are ready to be invoiced appear in this list there's only one again same same motion right so you go in Click the ones you want to approve click this button invoice selected Y and so that'll disappear and when I go to my invoices section I'm going to get a second um um second Steinway invoice here so I have the 2081 which is a Time material and I have the Steinway billing Milestone that I just approved here as well and those two are ready to go okay so it's great now that they've been generated in um techstack let's see BU a central and we'll go back uh to this customer so here's Steinway before we had three that you'll recall now we'll see that we have five invoices um for Steinway including the um um two from the date today one for 2080 and one for 12,000 um so in summary what um we kind of reviewed uh was how techto works as um you know we call it Revenue operations but call it a supercharged CRM uh the very nature of uh technology work is that a lot of the front office functions Drive the revenue process Downstream so we show an opportunity getting created uh one closed when it's closed we generate the invoices we generate the uh subscriptions the software in invoices can um and new customer can be mapped to business Central the software invoice be mapped to business Central we then took it a scenario where uh projects so either time material or fixed priced Milestones that are released are released in techto where all the PMS kind of live and all the resources live and that information is sent to accounting in the um in the accounting system and so we saw that deep integration so what's the net effect you're never going to lose Milestones you don't need 10 days to close the month um as long as your time your resources are entering time timely you can get uh invoices out the day out the door in a day imagine the impact of saving 10 days on 30 um uh for invoice and revenue collection um and you're never going to miss a renewal or mess up a renewal amount so with that um I want to thank you for spending 30 minutes with me today um if you have any questions we're easy to reach uh you can hit me at the email address on screen or hit our website and with that I hope you have a great day