What is Billing and Revenue Management (BRM)?
Businesses handle their billing cycle by using activities, processes, technologies, and methods. This is called billing and revenue management (BRM).
With cloud-based billing and automated revenue tracking, BRM helps businesses correctly charge customers for the goods and services they sell and collect money from their accounts.
Setting up billing plans, making invoices, receiving payments, and balancing accounts are all part of BRM, which is mostly the job of the finance operations team.
It includes front-end processes that help with customer service and sales and back-end processes that ensure accounts are balanced and handling costs are kept as low as possible. Technologies like CRM, order management software, and accounting system integration make this possible.
“BRM” is a term often used in the communications business. Still, it is also essential in energy, utilities, software, professional services, education, healthcare, and any other field that deals with complicated billing.
BRM systems work with many business models, like B2B, B2C, and B2B2X, so that they can be used in almost any recurring billing field.
Synonyms
- BRM software: software that automates and optimizes billing and revenue management processes.
- Revenue cycle: In healthcare, the start-to-finish process of admitting patients, billing for services, and collecting payments.
- Revenue management analyzes, forecasts, and optimizes a company’s revenue from sales.
What billing and revenue management are for
BRM includes many steps, some of which are unique to each company. However, these steps can be grouped into five main functions: billing and charging, managing balances, managing customers, and gathering business data and reports.
Putting in Charge
When a business does its selling function, it decides what goods and services to charge customers for, how much to charge, and whether it is possible.
These steps are usually what the basic process looks like:
- A customer does something that can be billed for. In the utility business, this could mean energy use. In telecom, it could be internet use or calling other countries.
- When a customer charges online, their action sets off a usage request. This is a request sent to the BRM system in real-time. The system decides if the event should happen or not. For example, a cell phone company might instantly reject a customer’s request to use their service if they have already used their monthly data.
- Billing software records and figures out the result of the action that the customer is paying for. To make a correct report, the length of the event, the amount used, or some other factor is considered.
- The BRM system gives the customer’s billable move a price. It does this through rate tables or based on conditions that have already been set, like giving discounts to regular customers and special deals to new ones. There may be fees for using the product, fees that happen over and over (like membership fees), or both types of fees.
- The price is added to the bill or account balance for the customer. There are a lot of charges that add up to the total amount at the end of the month.
Many businesses, like telecom service providers, offer different price plans and track usage at different rates. This is why automation is an essential part of BRM software (and the charging process as a whole).
Getting paid
Invoices are made, sent, and paid for as part of the billing process. The backend billing method for a BRM system usually goes like this:
- The billing system is what makes the invoice info. A customer’s monthly charges are put together in the BRM system and sent as an invoice. There are also several choices for summary billing, such as a single consolidated bill. It can even be set up to send out different bills for different types of products or groups of customers.
- The bill is sent to the customer via email, mail, or other contact method. The billing system should be able to connect to CRM and send alerts through the correct route.
- The bill can also be sent straight to the credit card provider. When customers set up automatic billing, the system safely stores their credit card or bank information.
- The customer pays the bill. This can be done in person, over the phone, through an online payment site, or any other way that works for the business.
Keeping the balance
If a person owes or gets money back at the end of a billing period, that amount is their balance.
The balance management system has to change the customer’s account to show the new amount when a payment request is sent.
It’s also important to keep track of any changes, like credits or savings from sales.
The following are some tasks that are part of balance management:
- Refunds for times when a service wasn’t available
- Fees for equipment that isn’t returned
- Credits for sales or reward programs
- Handling payments (like credit cards and bank transfers)
- Checking customer accounts to make sure billing and statements are correct
- Setting up payment plans and keeping track of payments over time.
Balance management is related to billing, but it also includes tasks like recognizing income and ensuring that payments are correct after they have been made.
Taking care of customers
Customer management is all contacts with customers that don’t happen in the billing system. Some of these include bills, service availability, and customer questions.
Customer management for most businesses means:
- Making business decisions and Fixing billing mistakes
- Taking care of billing issues (like refunds and chargebacks)
- Educating the customer (for example, by going over payment rules, deals, and rate plans)
- Providing customer service support • Managing customer attrition (preventing customers from leaving due to billing and payment processing problems).
Many businesses use technology to improve the customer experience by giving customers an easy-to-use user interface (UI) that lets them handle their accounts or pay bills online.
A well-designed customer management portal can make it easy for customers to see their bills, track their usage, and ask for changes to their rate plans. This can increase customer happiness and lower the costs of running manual billing processes.
Information and reporting for business
Reporting and business intelligence (BI) involve gathering, studying, and showing data to make better decisions.
BI tools give you data like invoice-to-cash analytics that help you see how well your billing processes are working and customer trends and usage habits. BI dashboards show data in a way that is easy for executives and investors to understand, like charts, so they can figure out success metrics and find places where things could be better.
A BRM system should give you records that show how people pay, how they use the system, how often they leave, how much money they make, and information from different types of customers.
Why BRM is Good for Usage- and Subscription-Based Business Models
BRM can handle a lot of different ways to make money, but it works best for businesses that charge for subscriptions based on how much they use their services.
Some of the benefits of BRM for companies that are based on subscriptions or usage are:
Make business processes workable
Finance and RevOps tasks are automated and streamlined by a BRM system. Customer success and support programs are improved, and the system helps executives plan for the bigger picture.
Every team in a company can learn more about what customers like, how they use the service, and how they pay for things if they get a steady flow of customer data.
When billing is automated, billing teams don’t spend as much time dealing with disputes, phone calls, and payment problems.
Automating billing processes can make them more efficient, reduce mistakes, save time, and lower customer disputes. This is especially true for usage-based billing, leading to many more payment disputes.
SaaS Solutions in the Cloud
The main benefit of cloud-based software is security—94% of businesses say their online security improved after moving to cloud-based systems.
Cloud-based options are the safest and most reliable way to store sensitive customer data, like personal data, credit card numbers, and financial information.
Another significant benefit of going to the cloud is that data is always available. With a cloud-based BRM system, businesses can easily view customer information anywhere with an internet connection and any device.
Companies have a single source of truth for payment information that all departments can use because it is easier to access and integrate. This cuts down on manual tasks and gets rid of data silos.
Different ways to bill
The TechCrunch State of Usage-Based Pricing report from 2021 shows that 45% of SaaS companies used usage-based pricing (UBP).
The data show that businesses often use UBP along with regular subscription pricing. Half of the people who use UBP have subscription plans based on usage, and the other half have price models primarily based on usage or pay-as-you-go.
Businesses use BRM systems to give customers various bill choices, like pre-paid and post-paid plans, payment plans, and discounts so that they can meet their changing needs.
Companies can also use the system to try new pricing strategies or rate plans with two groups of customers to see which ones make them happier.
Automation of Accounting
BRM systems work with many accounting tools to make the whole process automatic, from creating invoices to recording payments in the central ledger.
For businesses, this helps them:
- Stick to financial rules like ASC 606 and IFRS 15
- Stop making mistakes by hand that are caused by double-entry
- Find income leaks early on
- Simplify the accounts receivable process
- Manage billing cycles with less time and effort
Businesses can be sure that their bills and financial reports are correct when they automate tasks instead of doing them by hand, which can cause many problems.
Scalable for Processing Large Amounts of Data
Some companies would be unable to run without payment software like BRM. Take the case of telecom as an example.
When customers sign up for fixed-rate or usage-based plans, telecom service providers must keep track of their payments and amounts, charge customers based on how much they use, and run credit checks to decide when to cut off service. You need a system that can handle tens or hundreds of thousands of requests and deals daily (or every hour).
BRM systems can grow with a business, making it easy to handle billing tasks no matter how many deals are happening.
Types of Businesses That Use BRM Software
Billing and revenue management software is used for many different pricing methods, such as tiered pricing, usage-based pricing, subscription fees, metered billing, and pay-as-you-go plans.
Because of this, more and more businesses use it to handle customer deals. These include:
- Telecommunications companies
- Online stores
- Healthcare providers
- Media and entertainment
- Cloud service providers
- Software companies
- Utility companies
- Educational institutions
Process of Putting BRM into Action
Putting BRM into place across the whole company is a necessary but difficult task that requires careful planning and preparation.
How to Pick a BRM Answer
Before companies use BRM, they should list their unique needs, goals, and requirements. After that, they can figure out how BRM fits into those steps.
For example, some businesses may need an integrated system to handle different payment situations. In contrast, others may place more value on being able to grow or integrate with third-party apps.
Companies can try and compare solutions to find the best one for their needs once they know them.
How to Use and Change the BRM
BRM can be used differently based on the business, the industry, and other parts of its tech stack.
Here are some examples of workflows and changes that can be made to BRM:
- Integration with CRM. When you connect to CRM software, your customer information is synced between sales, marketing, and billing. When customers buy something, CRM and BRM systems store their information in a single database to find it easily.
- They are adding an API. Companies can use APIs to add web apps to their current payment system. On top of that, they help them make the system fit their specific workflow needs by adding custom fields, reports, invoices, and connections.
- They are keeping track of revenue. When a customer is charged for the service plan or amount of usage they chose, BRM automates revenue recognition and adds the money to the general ledger.
- They are making predictions. Businesses can use the many reports that come with BRM platforms to learn more about their customers, billing cycles, and pricing strategies. With this new level of revenue intelligence, it’s easier to make correct and detailed forecasts.
Putting BRM together
After picking the right option, businesses need to ensure it works with their current systems and plan when to start using the new one.
Because it’s so complicated, most companies choose a phased deployment process to ensure it works for everyone.
Companies keep working with their vendor for updates and support after the system runs to ensure it works at its best.
