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How to avoid SaaS failed payments

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Last editedMar 20232 min read

SaaS failed payments can be highly disruptive to a business. At best, they create extra administration with its corresponding time and costs. At worst, they can disrupt a business’s cash flow and potentially lead to churn. Fortunately, there are steps businesses can take to minimise SaaS failed payments. Here is a guide to help.

Make sure you explain your billing and payment terms clearly

Have a strategy for making sure that your customers are always clear on how much they need to pay you, by when and how. 

If your SaaS pricing model involves metering for usage, it’s advisable to provide the customer with monitoring tools. You might also enable them to receive notifications when certain parameters (thresholds) are reached. 

This can help prevent customers from breaching their budgets and being unable to pay. This maintains positive relationships with customers. Customers who find themselves overspending may start to feel uncomfortable about using the service. They may therefore decide to churn.

Last but definitely not least, ensure that your customer service is up to standard. When customers contact you with queries, they and you need to be confident that they will quickly be provided with the correct information.

Implement automated payment processing

With automated payment processing, you take charge of setting up payments. The customer is notified that they will be taken and they do not need to take any action. This is more convenient for them. It also helps to maximise your chances of being paid in full and on time.

Furthermore, implementing and using automated payment processing can be done with very little effort. For example, with GoCardless, you have the choice of using the dashboard, an integration or the GoCardless API. Each option can be used for both standard and variable recurring payments.

With automated payment processing, all the customer has to do is provide their payment details. Have a mechanism for the customer to update them if they change. Even so, be realistic about the fact that updating payment details may not be high on a customer’s list of priorities. 

One way to minimise issues with payment details going out of date is to encourage customers to use bank payments. It’s very rare for businesses or individuals to change their bank details. Card details, by contrast, are regularly changed and most e-wallet transactions are backed by cards.

Encourage customers to contact you if they have payment issues

Obviously, you want customers to pay their bills, preferably in full and on time. In the real world, there are likely to be times when customers encounter genuine payment difficulties. Encourage them to contact you about them as soon as possible. When they do, work with them to find a solution.

Taking this approach is likely to be less work overall than having to deal with SaaS failed payments. It also maximises your chances of getting your money as soon as possible while maintaining a positive relationship with the customer.

How to deal with SaaS failed payments

When you do encounter SaaS failed payments, strike a balance between credit control and customer service. In general, the most sensible approach by far is to start with a light touch. This is respectful to the customer. It also gives you the most room to maneuver later if it becomes necessary.

To begin with, just reach out to the customer and ask about the failed payment. In most cases, this is either an administrative issue or an unresolved query about the bill. You just need to resolve the issue to be able to take payment. Since the payment is already late, you may wish to use an instant-payment solution such as PayTo.

If this doesn’t work or isn’t an option, simply retry the payment. With GoCardless, you can do this manually. Alternatively, you can use Success+, our intelligent retries system.

One or the other of these approaches will probably recoup the majority of SaaS failed payments. In the unlikely event that they do not, move to implement more overt credit control proceedings.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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