Author: Griffin Parry, CEO m3ter
Billing is a key operational function in your business; without it, there’s no revenue or cash. When there are few customers, invoicing can be done manually. As companies grow, they automate billing to reduce manual work and eliminate errors. Errors in billing are bad news for several reasons:
- Higher volumes of customer billing queries are leading to increased effort by support teams.
- Erosion of customer trust, which increases churn and inhibits the expansion of spend and usage.
- Revenue leakage, meaning inadvertent under-billing. That’s money slipping through your fingers.
If your charging model is relatively simple, billing automation can be too. Since the rise of SaaS, software has typically been sold through simple recurring subscriptions. Today, various subscription management and billing tools make automating bill calculation and invoice preparation easy.
However, pricing often becomes more complex, largely due to the go-to-market strategy. Companies with a sales-led approach tend to have numerous unique pricing plans, as sellers tailor custom deals to win key accounts.
New business models also play a role, with software companies increasingly incorporating usage-based pricing, often to protect margins on AI-driven features. As pricing complexity grows, companies must watch for these key challenges:
- Contract Data Hygiene – Ensuring customer agreement terms are accurately reflected in billing systems, requiring a reliable CRM-to-billing connection.
- Usage Data Processing – Capturing and aggregating product usage data into the correct billing metrics.
- Complex Pricing & Billing Logic – Managing intricate pricing structures, including parent/child hierarchies, prepayments, and credits.
Does automating billing need to divert engineering resources?
In these cases, automating billing is far from a side project; it becomes a major engineering challenge. Companies worry about diverting key resources from critical functions, as every engineer assigned to billing is one less working on core product features.
At this stage, companies explore new middle-office solutions, requiring a major overhaul of their monetisation – or “quote-to-cash” – stack. However, this cure can seem worse than the disease, as it becomes a large-scale IT project that disrupts workflows across the business, from Sales in the CRM to Finance in accounting software.
But it doesn’t have to be that way. Solutions (like m3ter) integrate seamlessly with existing CRM, CPQ, and ERP systems, offering a cost-effective, low-risk path to modernising the monetisation stack. Instead of replacing core systems, they serve as an invisible enabler, handling complex usage metering and rating while automating data flows across systems.
Remember, your suppliers have the same challenges
Smart software companies use products from other smart software companies. So, don’t just think about billing as a seller; also consider it as a buyer navigating the billing process.
For example, if you’re focused on software testing, you likely use third-party tools like Tricentis or CircleCI, which often feature usage-based pricing linked to resource consumption. These vendors are concerned with automating their billing (and by the way, Tricentis is a m3ter customer). As a buyer, however, your focus should be on understanding and forecasting how your usage will impact costs. The good news is that smart vendors offer transparency into what drives their bills and pricing structures that provide predictability, such as usage bundles or commitments.
Applying AI to improve pricing and billing
“AI is the new electricity,” said Andrew Ng, co-founder of Google Brain and former chief scientist at Baidu. Pricing and billing is something you can ‘plug it into’. For example:
- Cost Analysis – Advanced analytics help allocate variable costs based on customer usage, offering insights into which behaviours drive costs. This enables per-customer gross margin estimates and provides a clear path to designing pricing strategies that reduce margin variability.
- Proactive Outreach – With usage-based pricing, it’s crucial to know when to reach out to customers. For instance, if a customer is nearing a usage threshold that triggers throttling or overage charges, proactive outreach can prevent unpleasant surprises. Similarly, if unusual usage patterns could lead to unexpectedly high or low bills, it’s wise to initiate a conversation. Advanced analytics that predict behaviours and identify deviations help ensure that usage-based pricing strategies remain customer-friendly.
Mastering test coverage when automating billing
This can be complex and resource-intensive. Key areas of focus should include:
- Validating usage data – Check for missing, duplicate, or corrupted data.
- Automating Order-to-Bill Connections – Ensure contract data is accurately synced with billing calculation systems to prevent discrepancies and errors.
- Introducing Anomaly Detection – Flag invoices that deviate significantly from previous cycles, enabling targeted manual review.
Focus on what matters
Do you want to spend your engineering resources fine-tuning custom systems to churn out invoices or focus on building what makes your product unique?
Just as platforms like Zapier and Workato have simplified integrations and democratised workflow automation, metering and rating platforms like m3ter make billing automation more accessible.
These solutions integrate seamlessly with existing ERP, CPQ, and CRM systems, providing an affordable, low-risk path to modernising your monetisation stack. Acting as an invisible enabler, they offer the data infrastructure needed to manage complex usage metering and rating, while automating data flows across systems.
