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ERPs for Recurring Businesses: Which is Best?
Curious about getting a new ERP system, but not sure where to begin? There’s a lot riding on the decision. The wrong ERP can disrupt a recurring service, bringing costly problems including billing errors and reporting delays. But the right ERP system can bring automated revenue recognition and billing and invoicing integration among other benefits. And the best ERP system consolidates everything into one system that keeps things ticking over for you.
Though running a recurring service can bring in plenty of rewards and stability, it still comes with challenges and complexities.
And this is especially important with your Enterprise Resource Planning (ERP) system. In fact, the ERP can make or break a recurring service, because it runs the operations of the company.
In this article we explore why an ERP is important for a recurring model, and what it needs to deliver optimal performance.
5 Examples of How a Bad ERP Disrupts a Recurring Business
There are multiple ways that a bad ERP system will mess up your business. Here are the 5 we see most often with our customers:
- Billing Errors and Revenue Leakage
Invoice mistakes are a nightmare. Not only are they expensive in themselves to rectify, but they have a knock-on effect. Inaccurate invoicing infuriates customers. It delays onboarding. When the system misses new terms or usage, it causes revenue leakage.
These issues are major, and they can make a dent in your finance and customer service departments. You get delayed payments. Halted cash flow. Disputes. Your creditors are ringing you. And churn.
- Bad Subscription Management
If you can’t manage the subscriptions, you’re going to miss out on a lot of growth and revenue opportunities. That’s because you’ll be so busy with all the manual processes, you won’t have the time to allow sales and marketing to draw in new customers and keep your existing customers excited by services and packages that keep them loyal and asking for more.
You also won’t be able to invest time in high-value activities like new product development and retention strategies.
A recurring service business MUST keep on top of its resource allocation. Without it, you’re suffering from scheduling inefficiencies, shortages, lost hours, decreased productivity, and boosted operational costs. And it impacts your customer base too – no one wants late or delayed services, especially if they were already scheduled or included in contract terms.
Not only do these types of problems impact your workforce, and put them into stressful situations, but they impact project management, how you use your resources, and whether your employees leave. All these issues cost a fortune to put right.
- Data Inconsistencies and Reporting Delays
In the recurring services industry, data is key. And more specifically, getting the most out of the potential of financial and customer data should be the foundation of the big decisions you’ll make.
But inconsistent, untimed, or siloed data will cause delays and reporting errors. It will delay your decision-making and impact your growth. The internal communication gaps can be costly, too. All of it can damage your revenue and management departments.
You’ll never be 100% confident in your numbers, or that the future-focused decisions you need to make will be the best and most-informed possible.
When you have inadequate customer service functionalities (especially when you’re scaling), you’re going to get poor customer experiences. That can make your churn rate skyrocket and damage your brand’s reputation.
Customers expect an excellent, customized CX that reflects who they are and what they want. If you can’t give it, they’ll go somewhere else. And the biggest consequence is that you lose a huge source of income because you have a 60% to 70% chance of up and cross-selling to an existing customer, while for a new prospect it’s just 5% to 20%.
These have far-reaching consequences that can be difficult to come back from. It’s the last thing you need when you’re building your recurring model business.
So how do you know if the ERP you have is good enough for your recurring operations and growth?
Necessary Traits of a Great ERP for Recurring Service Business
To get what you want, what do you need?
The best ERP systems recurring services must offer end-to-end subscription management capabilities. It needs to enable your seamless management of sales, revenue transactions, adopting evolving customer needs and behaviors at any point of the customer journey, and identifying the best variety of pricing models and subscription packages and terms.
You simply cannot scale without effective revenue recognition. A good ERP system will automate revenue recognition, ensure compliance with accounting standards across the countries you operate in, provide real-time payment term tracking, and provide reliable numbers for reporting and decision-making.
- Integration with Billing and Invoicing
Billing, invoicing, and payment collection need to be synced up to your ERP to close the revenue leakage and immediately stop the loss of all the money wasted on manual hours, invoicing errors and late payments.
The best system will monitor billing information with customer records and usage in real time, so that invoicing and payments are correct and on time. Customers love that too! That boosts your revenue in the long term but also keeps a steadier cash flow and happy customers, reducing or eliminating churn.
- Real-Time Analytics and Reporting
Real-time analytics are key to monitoring your performance and quickly identifying problematic areas and opportunities for more growth. With a strong ERP system, you’ll get advanced reporting capabilities that give you insights and actionable recommendations to help your strategies and decision-making.
- Scalability and Customization
If you want to grow and have the freedom to change and customize your offerings to customers, you’ll need an ERP that can easily scale your business (without putting additional pressure on your workers). It should also give you clear and fast adaptability to changing market demands and ensure that you stay on top of resource allocation. It’s the only want to meet customer needs and continue to grow without overextending your resources.
How You Can Get One Solution for Your Recurring Business’ ERP Problem
It’s important not to fall into the common trap of Frankensteining your ERP with lots of integrated add-ons. Because that scenario still has the manual labor and information silos that cause all the problems in the first place. Apart from that, the cost for maintaining integrations can grow exponentially.
The best subscription management software solutions optimize everything for you, while freeing up your time for high-value work, eliminating integration maintenance costs altogether.
When you centralize your subscription management, billing, revenue recognition, and customer offerings and interactions, the problems tend to be avoided in the first place. Automating the ERP responsibilities with one end-to-end solution not only saves you time and resources but also transforms the way your business operates. You get to enjoy:
- Fewer administrative burdens, because everything from functions like billing, invoicing and payments, customer service management, real time information flow between your teams, and all the data analysis you need for reports, forecasting, audits, etc.
- Selling opportunities with more attractive offerings, because the system crunches customer data to optimal identify the best personalized pricing, offering combinations, and even the time to offer them.
- Fewer invoicing and payment errors and delays because the automating and billing processes are integrating payment gateways that customers love. Because there are no more silos between Revenue, Customer Service, and Sales, delays and errors are drastically cut. All while remaining compliant. This brings in more stable revenue and boosts customer satisfaction and avoids expensive penalties.
And finally, you get the chance to do the work you were hired for – delivering a great offering, exceptional CX, efficient operations, driving business growth, and building relationships that last with your customer base.
Why not give yourself the chance to succeed with the best solution for your ERP needs?
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