Recurring billing: 7 mistakes to avoid

56 billion euros! That's the staggering amount of unpaid receivables in France, according to estimates by credit insurance specialist Coface. The first lever for avoiding late payment concerns the invoice itself. A poorly prepared invoice will be poorly paid.

In a subscription-based business model, invoices are much more numerous than in a non-recurring business. This is why you need to be particularly vigilant when it comes to drawing up invoices, and consider this document as a communication tool between you and your customer.

Subscription sales create a long-term, long-distance customer relationship. It must be based on trust. A poorly drafted invoice will damage this relationship, especially for pay-as-you-go models where transparency is essential.

So, what are the billing mistakes you shouldn't make, and how can you avoid them? Let's take a look at some good billing practices.

Mistake no. 1: not itemizing costs

It's essential for customers to have a full breakdown of all charges shown on their invoice.

This is particularly important when using a pay-as-you-go billing model. In this type of model, customers want to pay for what they have used, but no more. The impact of their consumption must be clearly visible and understandable in the bill. Billing customers on a pay-as-you-go basis only makes sense if the model is valued in the bill.

Depending on the complexity of the offer, the pay-per-use model can be difficult to implement. For this reason, a subscription-based sales management platform will accompany you right through to the billing model, to make it fluid and attractive.

Mistake No. 2: Not providing access to invoice download history

Although the retention period for invoices is regulated by law, most customers don't keep their e-mails, let alone their invoices. This is particularly true of small businesses, who run out of invoices every year at balance sheet time...

Offering a downloadable invoice history is a very popular solution with customers. Thanks to the use of a subscription-based sales management platform, the invoicing history is complete:

• All invoices are available for consultation,
• All invoices can be downloaded in PDF format.

Mistake 3: not clearly specifying invoice status (issued/due, paid?)

Subscription sales create a whole new customer relationship, where the invoice is recurrent, usually every month, and where the invoice is often the only document linking you and the customer. It must be free of ambiguities or inaccuracies, particularly concerning payment status.

The customer must be able to understand the position of payments and the exact nature of the invoice at a glance:

• An invoice may be "issued": this invoice has been issued and must be paid, and the invoice amount is "due".
• An invoice may be "paid": the amount due has been debited. The amount debited according to the payment method entered was successful.
• The account balance may be "Nothing to pay": the account balance is sufficient to cover the required balance or to pay the amount due indicated on the invoice. No additional charges have been made to the payment method entered. No amount is due.

Clearly itemizing charges makes it easier for customers to keep track of what has been paid and what payments are due. Together, these communication tools create a more reactive, ongoing and constructive relationship between a brand and its users.

Mistake 4: Not automating the representation of payment failures

In the case of failed payment procedures, the start of the dunning process can be unpleasant, even vexatious, and lead to unsubscribing.

Thanks to an automated dunning process, payment representation - sometimes multiple times - is automatic and, above all, discreet. This guarantees a good relationship with the user, and is also an excellent way of preventing non-payment. This platform-specific reminder process recovers up to 15% of payment failures.

Mistake no. 5: not sending invoices automatically by e-mail

As regulations evolve towards transparency and dematerialization, this is becoming indispensable and, little by little, compulsory.

Automatic e-mailing of electronic invoices is mandatory. It must be possible to consult the invoice from the billing history and from the customer's e-mail address.

Mistake no. 6: omitting regulatory elements

The invoice is proof of a commercial transaction. It has an important legal value.

It also serves as accounting evidence, and as a basis for exercising VAT rights. To be valid, invoices must include a certain number of compulsory details, on pain of a fine.

⚠️ Reminder of mandatory information

Numerous items must be mentioned on an invoice, including :

• name and address of parties,
• date of sale or service,
• quantity and precise designation of products or services,
• payment due date and penalties for late payment.

Sources: Service Public and Bulletin Officiel des Finances Publiques-Impôts

In addition, as part of the fight against tax fraud, the 2016 Finance Act, applicable from January 1, 2018, stipulates that all VAT taxpayers selling to private individuals must have their transactions certified, i.e. everything to do with cash receipts. Businesses must now use certified invoicing software and cash register systems.

It is therefore no longer possible for companies to issue invoices using word processing, spreadsheet or other non-compliant software. All companies unable to prove that they are using software that complies with the 2016 Finance Law may be fined €7,500 and required to equip themselves.

Error no. 7: applying the wrong tax to a foreign customer

VAT errors are common, and generally fall into one of two categories. Either companies simply forget to indicate it, or they indicate the wrong rate. If you mistakenly indicate too high a VAT rate, the amount you receive will be owed to the tax authorities. What's more, if you issue an invoice to a company in another EU country, it's the recipient of the service who has to pay the tax - provided this information appears on the invoice.

When customers are not satisfied with their invoice, they have the right to dispute it, resulting in late payment and an invoice correction procedure. This is especially true if the customer is a major account.

Using a subscription-based sales management platform not only removes any ambiguities or uncertainties about invoicing terms and conditions, but also ensures full regulatory compliance and reduces payment times in the event of failure. It's a comprehensive, high-performance solution that optimizes customer relations over the long term.

Points to remember

While acquiring a subscription customer is a crucial step, it's the quality of the relationship that will turn them into loyal customers.

Key points to remember when billing your subscription customers with a subscription sales management platform:

• No more errors: the invoice is always correct
• Anti-VAT fraud certification
• Adaptable to pay-per-use billing and multiple associated offers
• Automatic, discreet display of payment failures

The entire invoicing process is optimized to improve customer relations and avoid recurring late payments.

Sponsored article. Expert contributors are authors independent of the appvizer editorial team. Their comments and positions are their own.