Automation is the name of the game in fintech in 2022 and beyond

Published On : 04/26/2022

By Tarmo van der Goot, VP EMEA, Chargebee

As subscription businesses are looking to scale up operations, their finance teams will be eyeing opportunities offered by new markets, different pricing models and fresh product families, while assessing the potential risks in a fiercely competitive market. In 2021, it was estimated that organisations were using no fewer than 110 SaaS applications per year, compared to just eight in 2015. Not only that, but customers of such services are not afraid to tweak or abandon subscription plans altogether, leading to increasing churn rates. 

The pressure is on for these businesses to impress their customers, and for their finance teams to enable nimble decision-making. Yet, lack of automation remains one of the leading constraints on growth in the SaaS sector, as seen in the dependence on manual data entry via spreadsheets. 

Financial automation can ensure SaaS businesses aren’t left behind in the race to meet the demand for their services in 2022 and beyond, and there are three major areas they should focus on to succeed: billing, accounts receivable and account reconciliation. Embracing automation of these processes can arm finance teams with the tools they need to drive sustained growth – and it all starts with how billing is processed.

Fast-track market expansion through billing automation

Automated billing can feel like moving from darkness to light, as finance teams can immediately start automating tax management, payment processing and collection as well as payment retries. Crucially, billing automation can help businesses tackle common challenges that often accompany fast-paced growth and market expansion, such as managing diversifying product families, payment methods and pricing models.

The typical SaaS business model can entail a lot of add-ons, coupons, price points, alternative currencies and various billing frequencies. These are difficult enough to juggle manually, but when companies seek to add fresh revenue streams, managing new product families becomes a losing battle without the help of automation. Intelligent billing software can help companies categorise and configure the different elements of product families to reduce the time and effort that goes into their upkeep and scaling, enabling teams to speed up new product delivery, even when new currencies and payment methods are involved. 

Accepting payments in foreign currencies is a key consideration when moving into new geographies, but setting up the process usually requires countless hours of manual configuration. Similarly, new markets often come with their set payment methods and gateways, yet businesses cannot afford to hit the brakes on their expansion efforts to manually work out the solution. Nor can they afford customer churn due to declined payment cards at the point of sale. Automation – in the form of dunning management and multi-currency support – helps ensure firms can stay agile and flexible while also remaining compliant with the various tax regimes of their chosen markets. 

Finally, new markets come with new and exciting opportunities, and companies should be able to experiment with different pricing models and price changes to capitalise on these. But managing multiple pricing models can become increasingly time-consuming for finance teams, requiring them to pore over large amounts of data on spreadsheets for hours. By automating billing, this is no longer required. With technology simplifying complex billing calculations, the finance team can flexibly experiment across subscription workflows with zero developer dependency, and identify ways to evolve the revenue model in order to pre-empt market changes.

Maintain a steady cashflow by automating accounts receivable

As any finance team will know, cashflow is the lifeblood of a business, and it won’t function unless accounts receivable (AR) are collected on time. In many cases, manual accounting or poorly-executed part-automation of such processes can lead to errors, creating backlogs in collection. 

Automating the process of collecting payments helps firms know which customers to charge, when and how, and what to charge for specifically. Imagine the complexity involved when a customer opts to change their subscription plan from one quarter to the next and then multiply this by the thousands. As businesses grow their customer base, this is too much for manual effort to handle. 

SaaS vendors will notice a tangible difference when automating AR, because automation solutions typically offer up a dashboard providing useful and up-to-date information, as well as helpful notifications, reminders and emails that ensure a smooth cashflow. This can diminish the risk of a build-up of bad debt over time and enable businesses to make rapid financial assessments and decisions as they go after new customer segments.

No room for error by automating account reconciliation

Account reconciliation may seem basic, but inaccurate manual reconciliation can expose companies to a whole host of risks, from cashflow leaks to fraud and fines. It’s all about ensuring the numbers stack up, comparing internal financial statements with external ones from banks and elsewhere. Over the years, it has become a pain point for firms, due to the sheer number of disparate sources that have to be reconciled over many long hours.

Not only time-consuming, this process is also riddled with human error. Even one mistake can lead companies to overspend or find themselves coming up short when having to pay salaries or suppliers. Errors in account reconciliation also make it considerably harder for firms to detect fraudulent activity in their midst, as this can be masked by mistakes in manual number-crunching. 

When a rapidly-growing business has a ledger bursting at the seams, finance teams may struggle to fully process the data as it comes through, allowing mistakes to crop up and sending the business backwards. As a company’s footprint and headcount grows, eliminating this risk factor becomes of paramount importance.

Automating account reconciliation helps minimise the risk of human error by allowing companies to configure rules based on the customer’s preferred payment method and currency, so that gateway accounts can be automatically assigned without the need for human intervention. Automation has the added benefit of allowing companies to assign roles and delegate more effectively, creating a more straightforward audit trail and speeding up approval processes.

Automation spurring growth in 2022

Fintech is in the midst of a digital revolution, which will continue to reshape the economy in the years to come, and the argument for automation grows louder and louder by the day. As more and more businesses rely on some form of subscription service to operate, SaaS providers have a huge market opportunity, which can only be maximised if common issues of financial management are resolved. 

Automation plays an undeniable role in keeping the wheels turning, allowing new products and services to be unveiled, while allowing existing subscription services to be continually improved upon to better-reflect the changing needs of customers.

Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.