Usage-based billing allows companies to bill customers based on their use of a product, which means as usage varies, so does the amount charged. Customers of utility companies are accustomed to usage billing, also known as metered billing, for electricity, water and gas, for example. But today, more and more SaaS companies are implementing usage billing as part of their contracts with customers.
Because the charges vary each month, depending on how often the product is used, recording usage billing manually in QuickBooks and Excel can be quite complex and time-consuming. Sage Intacct usage billing, an add-on to the cloud-based financial system’s contracts module, supports your company’s need to track and invoice usage accurately and efficiently.
Setting Up Usage Billing
Intacct’s contracts module allows you to set billing according to the terms of the contracts with your customers. For contract line items, you can add fixed amounts or usage amounts. Price lists can be set up to support different pricing models, whether you’re using range billing that sets a price for a certain number of units or tiered billing, which defines pricing brackets by quantity.
These price lists will be reflected in the bills produced for your customers. Tiers of use can be split into invoice lines, with invoices showing the included units and fees to make sure customers have a clear understanding of the charges.
In Intacct, you can define how and when these amounts are billed. After you set the billing frequency, which determines how often the usage quantity will recur, Intacct will reset the usage numbers based on monthly, quarterly or annual billing. Renewals are also handled automatically.
Salesforce and Usage Billing
The most effective way to employ usage billing is to pair Intacct with Salesforce, an industry-leading cloud-based CRM. The seamless integration between Salesforce and Intacct allows the two systems to share information. A common view of orders, pricing, contracts, billing and payments means everyone can see the same data, which is updated in real-time since both are based in the cloud.
When a deal is closed in Salesforce, the order data goes right into Intacct. In Intacct, a revenue schedule is created and an invoice is generated. One software company using both Salesforce and Intacct found they could produce a usage-based invoice in as little as five minutes.
The Benefits of Usage Billing
Using Intacct for usage billing can help your company:
Simplify the Billing Lifecycle: With Intacct, your company can reduce the time spent on manual billing. For instance, one company cut the time it took from orders to processing by 50 percent.
Reduce Billing Errors: With usage billing, your company ensures greater accuracy for pricing based on terms and usage, whether you’re managing monthly, quarterly or annual billing schedules.
Easily Review Data: With Intacct’s contract billing management, you can closely examine numbers from the past and present, as well as seeing projections for the future. Overall, the visibility offered by Intacct allows your company to make more accurate forecasts. With dimensional reporting, detailed reports can be produced for executives and investors who can use the data to make informed decisions.
Be Prepared to Scale: By automating usage billing, your company can quickly respond to an increase in customer demand. Up-to-date numbers also provide actionable insights for leaders and potential investors.
Meet Regulations for Revenue Recognition: Intacct’s contracts module was developed to help companies comply with the ASC 606 requirements.
To find out more about how usage billing with Sage Intacct can benefit your company, schedule a call with one of the experts at RSM today.