As your subscription business evolves, there are a million things you need to do to keep up with the growth. Lots of it is exciting, and, dare we say it, fun: digging into real-time data to see what’s moving and what’s not (and what customers are using, or not). Brainstorming with your dev team to help them design product tweaks that your customers are asking for. Going to conferences to stay on top of industry trends and best practices for the Subscription Economy.
But even though modernizing your billing systems isn’t the most glamorous thing on your to-do list, it is one of the most important.
Here’s why: Recurring billing is complex and presents many challenges that billing for a one-time purchase does not. With a legacy or homegrown billing system, you could be leaving money on the table with every transaction.
A potentially worse scenario? You fall behind on key compliance needs around PCI, SOX, and even audit requirements. This means your whole business could be at risk.
But how do you know if your billing system is going to get you in trouble? We’ll take a look more in depth below, but first let’s level set with a quick look on the two main types of compliance your billing system needs to adhere to.
The Payment Card Industry Data Security Standard (PCI DSS) refers to payment security standards that ensure all sellers safely and securely accept, store, process, and transmit cardholder data (also known as your customers’ credit card information) during a credit card transaction.
Any merchant with a merchant ID that accepts payment cards must follow these PCI-compliance regulations to protect against data breaches. The requirements range from establishing data security policies for your business and employees to removing card data from your processing system and payment terminals.
Many companies take PCI-compliance for granted — but if you don’t have it, you’re in serious trouble because it means you’re not storing your customers’ data in a compliant way.
SOX is industry shorthand for the Sarbanes-Oxley Act of 2002, legislation passed by the U.S. Congress to protect shareholders and the general public from accounting errors and fraudulent practices. Modern billing systems make it easy to stay in compliance with SOX no matter how often a customer updates or modifies their subscription.
The following 5 questions will guide you as you evaluate whether your existing billing system is up to the important task of compliance.
1. Can your billing system operate without manual intervention?
All of us are creatures of habit, and if your existing payments infrastructure has been working “well enough,” it can be tempting to stick with it rather than investing the time and money into sourcing, implementing, and adopting a subscription-savvy system.
While there may be familiarity when it comes to using homegrown tools, these billing systems are typically patched together, disjointed, and more reliant on manual process that widen PCI scope and leave you vulnerable to operational and compliance risks.
When you move to a solution that does everything in one unified system, you also reduce the errors that are a byproduct of manual workaround systems, helping you more easily meet operational and compliance requirements.
2. Does your billing system provide ready access to the accurate data you need?
Most legacy billing systems behave as simple admin applications: sending out bills and processing payments. Without more robust automated workflows for more complicated subscription billing situations (refunds, credits, prorations, etc.), you’ll quickly slam into a workflow and reporting challenge that can knock you out of compliance.
Modern subscription billing systems are designed to be integrated and unified, giving you instant access to the data you need to stay in compliance while you grow your business.
The best way to protect your business and your customers’ data is to evaluate your existing manual processes, establish a security plan that follows PCI-compliant guidelines, and educate your team about best practices in cybersecurity.
3. Does your billing system have robust reporting capabilities?
If you’re still running billing reports on spreadsheets, you have a problem. That’s because the more human hands (and brains) that get involved, the more room there is for error. You shouldn’t need to pull from multiple sources to create the billing reports you need to keep compliance auditors happy.
Plus, if you consistently have to export data from three different systems and then run a VLOOKUP just to get what you need, you’re going to have a very unhappy, stressed, and overwhelmed finance team!
What you need is one system — with everything that you need readily accessible to create any report that you need.
4. Does your billing system enable user administration for system data access?
One issue with some systems is the lack of user administration tools. The more users with access to your systems, the greater the compliance risk. In reality, there should only be a few users who touch your billing system: those responsible for billing and those who own administration of pricing and packaging.
You should be able to control how many people have access to the system, granting and un-granting access through a single sign on (SSO) for security. And you should be able to see system activity, e.g. who made changes to an account, what do they do, when did they do it, and how does that impact on their account.
5. Does your billing system give you confidence in your “audit-readiness?”
If you’re a growing company that’s maturing and looking to go public or nearing a major financial event, at some point your executives, investors, board members, and, eventually, shareholders are going to have an increased level of scrutiny on your numbers, so it’s essential that you have the ability to both quickly access the numbers and have total trust in the accuracy of those numbers.
If you answered no to even one of these questions, you have a billing system compliance gap that needs addressing sooner rather than later. Modern billing systems will help you significantly increase efficiency, reduce error, add financial transparency, and, of course, give your customers the experience they demand—and deserve.