2 min read
For subscription service providers, it’s not uncommon to sell multiple subscriptions to one customer. If you find yourself issuing several invoices to the same client each billing cycle, you might want to consider consolidated billing to streamline the process. So, what is consolidated billing, and what is the best way to consolidate bills? We’ll investigate the options below.
Consolidated billing explained
Consolidated billing simply describes the method of combining multiple transactions into a single invoice. It’s a billing tactic frequently used by subscription service providers. For example, imagine that you own a SaaS business that provides cloud storage, accounting software, data analytics, and payment processing. These services are frequently bundled into packages, so rather than issuing a separate invoice for each service, you could bundle them together into a single bill.
Consolidated billing doesn’t only apply to subscription services; it can be used by any business looking for a way to simplify the billing process and avoid issuing multiple invoices to the same customer in quick succession.
What is the benefit of consolidated billing?
The primary benefit of consolidated billing for customers is convenience. It’s a hassle to receive multiple invoices during the same billing period. What is the benefit of consolidated billing for businesses? There are several:
It prevents missed payments by reducing the chances that individual invoices are overlooked by an overburdened customer. Instead, all charges are combined into a single invoice for easier processing. Customers are more likely to remember a single payment due date rather than tracking down and paying multiple bills at once.
It organizes your accounts receivables. Conventional billing generates an influx of paperwork which your accounts receivable department must deal with. Consolidated billing makes the process more orderly and less chaotic.
It saves your business time. Even if you automate your billing process, creating multiple invoices for an individual customer every billing cycle takes time and attention to detail. Consolidating the process reduces the chance of error and oversight, boosting productivity.
What is the best way to consolidate bills?
As with any financial endeavor, it’s important to put a system into place to handle consolidated billing – but what is the best way to consolidate bills? This will depend on the nature of your business. Here are a few factors to consider:
1. Consolidate bills by date
It’s easy to consolidate recurring invoices when they share the same billing date, but this won’t always apply naturally. Many businesses opt to group all invoices together in a fixed billing period. For example, you could issue a consolidated invoice at the end of the month for all services rendered between the first and last day. For subscriptions, that might mean prorating the funds owed for one month to ensure the dates line up next month.
2. Consolidate bills by payment method
Another way to approach consolidated billing is through payment collection rather than date. If a customer pays one invoice with credit card and another with a bank transfer, this can get confusing in your billing system. It’s best to avoid consolidating invoices with different payment methods, since they can’t be paid in one single transaction. Consider streamlining payments into a single, automated platform for better consistency.
Is consolidated billing best for your business?
Consolidated billing tends to work best for businesses that issue a high volume of invoices. If you provide regular services for your customers or operate using a subscription model, you’ll need to take recurring payments. In this case, consolidated billing could simplify payment collection with less hassle and admin involved.
If you’re ready to take the plunge with easier recurring payments and consolidated billing, GoCardless provides a pull-based Direct Debit solution. It’s perfect for collecting invoices, subscriptions, and other recurring payments on time, every time.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.