Getting Started with
Subscription Billing Software
A Definitive Guide


A process that dates back to about 3000 BC, when the Mesopotamians used the cuneiform script on clay tablets to record transactions. And since then, it has remained an integral component of a business.

Apart from the obvious function of getting the cash register clinking, billing also plays a pivotal role in customer relationships. It ensures that the customers get to know what they pay for, when, and why.

And in a business where it gets promoted from a one-off affair to a recurring event and is assigned the moniker of "Subscription Billing", it becomes all the more noteworthy.

For a SaaS business, a billing software is like the hub of the subscription wheel that holds the multiple spokes (like subscription management, billing, invoicing and accounting, payment processing, fraud management, et cetera) together, ensuring that the wheel keeps spinning smoothly and steadily, so that your SaaS vehicle can efficiently climb the mountain of growth.

And this crisp guide is all about helping you do just that - get on the right billing launchpad.

First, we need to get a couple of terms out of the way.

The relationship between Subscription Billing, Recurring Billing, and Subscription Management.

What is Subscription Billing?

Subscription billing is the process of billing customers for their subscriptions, on a recurring basis. At its core subscription billing comes down to identifying:

  • Who needs to be billed
  • What subscriptions/products they need to be billed for
  • How much they should be billed
  • When they need to be billed
  • How to collect payments
  • How subscription data needs to be reported for analytics and accounting

What is Recurring billing?

Recurring billing is the process of billing your customers (aka subscribers) a specific amount on a recurring basis, as opposed to one-time billing. Anything that ranges from magazine subscriptions to music apps to CRM solutions, generally sport a recurring billing model.

For a SaaS, this involves managing the pricing model (tiered, volume-based or metered), the billing cycle (weekly, monthly, etc.), automatically sending invoices and handling collections.

What is Subscription Management?

Subscription management is the process of managing your subscribers, and their preferences across their lifecycle. A subscription management system stores your product catalog, their prices, your subscribers’ data i.e. their subscriptions, any add-ons, history of their transactions, and billing cycles.

For a SaaS, this includes the managing of trials, grandfathering in the event of a pricing change, trial-to-paid upgrades, downgrades and cancellations across the entire subscription lifecycle.

As you can imagine, recurring billing and subscription management go hand in hand.

You’ll see in the later sections that subscription billing can have far-reaching consequences across your revenue operations all the way down to revenue recognition.

What does a Subscription Billing Software really do?

The primary (and the obvious) attribute:

Enabling and streamlining the billing process for you, and thereby giving you the ability to realize the fruits of your labor - the labor of acquiring and serving your customers.

In less dramatic words - collecting payments from your customers, through a flexible range of payment options (credit cards, debit cards, PayPal, Amazon Payments, ACH, wire transfer, checks, cash, etc.).

The not-so-obvious, but equally significant attribute:

Managing and where possible, automating, the operational side of subscription management and billing i.e.

  • Checkout (trials, freemium, compliance)
  • Subscriptions (pricing models, customer portal, grandfathering)
  • Billing (logic, schedule, calculations - prorations, discounts, credits, taxes)
  • Invoicing (format, who-to-invoice, transactional emails)
  • Collections (payment methods like paypal, amazon pay, dunning/transaction recovery)
  • Accounting ( integrations, reconciliation, A/R, Rev Recognition, Deferred Revenue)
  • Analytics (accurate real-time saas metrics, reports)

You’ll notice these are tasks that would otherwise require a developer(s) to dedicate considerable effort in first setting up and later, maintaining the codebase. By providing these capabilities out of the box, the subscription software can turn an inconvenient hassle into a business advantage to drive growth.

To give you a sense of the broad capabilities of subscription billing software here’s a comparison as seen in G2Crowd

Subscription billing platforms work on top of payment gateway(s), triggering charges to a customer’s card or bank as dictated by the billing logic that’s configured within.

Subscription Billing Platform vs Payment Gateway

Jeff Bezos, Founder, and CEO,

That quote right there would pretty much justify the "why?". Customer experience is of foremost importance for any business, and this only gets amplified for a SaaS business, where concerns like "Churn" and "Customer Retention" take the foreground.

With capabilities that minimize friction across every stage of a subscriber's lifecycle, your subscription management and recurring billing system should help you provide a stellar subscription experience.

To help small businesses out, some payment gateways have also built out basic modules for handling subscription management. And while there’s merit in getting started with the same product for both gateway and recurring billing, growing businesses soon outgrow the modest billing capabilities of a gateway. From an economics point of view, the payment gateway market is much larger than the subscriptions market and it’s genuinely hard for them to specialize in subscription billing.

From a strategic point of view, there is another fundamental advantage that a billing software has over a gateway. Recurring billing systems are designed to be integrated with multiple payment gateways and payment methods. This helps in two fundamental ways:

  1. Market expansion by offering multiple payment methods
  2. Reducing the risk of being locked-in with one payment gateway

Here’s our 3-page guide that shows the differences between a gateway and a subscription billing software.

When it comes to your subscription business, a payment gateway focuses on receiving payments and a subscription billing system focuses on managing your subscriptions (who are also your customers).

In essence, the subscription billing solution makes your payment gateway smarter, and smarter is better.

Should I Build my Own Subscription Billing System or Buy One?

A couple of arguments to ponder about, when taking the Make or Buy decision:

For good reason, business growth and recurring billing complexity go together. What could start off as a simple CRON job will get more complicated over time, slowly at first, and faster as you scale. Every additional subscriber, pricing change, upgrade and downgrade request will add to the code complexity exponentially.

Running an in-house billing system is like running a second product within your core product.

Developing the solution, testing and releasing the application, fixing the bugs, ensuring security, providing ongoing support and maintenance - you’ll need to be ready to spare resources for these as they come up.

Beyond operations, there’s the compliance part.

Starting from payment related PCI DSS compliance requirements, to ASC 606.

Using an accounting software doesn’t speed up anything unless the data that’s received by it is formatted correctly, following revenue recognition ASC 606 norms.

What Should You Look for in a Subscription Billing Platform?

A good subscription billing solution goes far beyond just being ‘software’. For a product/service that’s as influential in your business growth as it is, service-level indicators are just as important as feature-level indicators. Let’s look at each separately:

  1. Product capabilities
  2. Service capabilities

Product Capabilities Expected of a Subscription Billing Platform

Subscription Management

From the moment a user hits your checkout page to forever after, ‘change’ will be a constant in their lifecycle. There are changes that are a reflection of their evolving preferences - upgrade, pausing or canceling their subscription. And there are changes brought about by your business preferences - a pricing change, discount coupons, trial and freemium experiments and so on.

To handle the volume of such changes across a growing volume of subscribers, you need a system that’s equipped for today and tomorrow.

Here are some questions to keep in mind:

  • Can it support subscription plans that vary based on pricing, contract length and include benefits or add-ons?
  • Will you be able to manage trials and offer promotions/free trials for a configurable duration?
  • Does it support recurring, everyday business operations(refunds, write-offs, manual overrides, etc) with search/sort filters for customer accounts and invoices?
  • Does it allow you to manage coupons, discounts, and promotions easily?
  • How easy is it to take actions like re-activating or canceling a subscription?
  • Does the solution support customer self-service?
  • Can the emails be customized to reflect your brand?
  • Does the email module support language localization and segmentation?
  • Can you track upgrades, downgrades, and new sign-ups that come in through email campaigns?

Here’s a look at the feature-set you want to see in a subscription management system.

Scale Subscription Management with Effortless Ease

Recurring Billing

Recurring billing can snowball from a harmless CRON job into a messy patchwork of code that needs continual tweaking and a roadmap all for itself.

Furthermore, since billing is inherently tied to pricing, you want a recurring billing system that can adapt as your pricing evolves. True, it sounds like insurance; but this is insurance you will certainly cash multiple times through the lifecycle of your product.

Here are some questions to help you grade the maturity of a platform:

  • Can the recurring billing solution support one-time, recurring and usage-based charges? Will a single plan be able to include one or all of these charge types?
  • Will you be able to set up a varying (weekly, monthly, quarterly) subscription payment schedule?
  • Does it support the delivery of invoices across channels like email and web?
  • Does it provide a payment term for your customers to pay you back (NET terms)?
  • Can the invoices be customized to include client branding?
  • Are there configuration options for generating a line item or an invoice? (e.g. as purchased, set monthly or yearly date)
  • Does it support manual adjustments to invoices and their line-items?
  • Does the system allow for flexibility based on fixed/customer/subscription-specific billing dates?

Here's a rundown of the product level capabilities you should expect:

Say Goodbye to Messy Recurring Billing

Recurring Payments

This is the module that puts money in the bank - the collections module. Subscription billing systems integrate with multiple payment gateways and support a host of payment methods - credit cards, wallets, bank transfers, offline. If you have a largely self-serve subscription business model, it’s likely that you’ll need to support multiple gateways. On the other hand, if you have a strong sales-driven model, you’ll need support for wire transfers, cheques, and other offline payment methods.

  • Does it let you customize your checkout page with PCI compliance?
  • Does it support multiple payment providers?
  • What payment methods does it support?
  • Does it support payment method tokenization and migration?
  • Does the system support intelligent payment gateway routing for varying scenarios (location/ invoice amount/product-based)?
  • Does the system support fraud detection and prevention mechanisms?
  • Can it enable offline payments?

Here are the feature level capabilities you should be looking for

The Smartest Way to Automate Recurring Payments

Dunning Management

Dunning process is the term given for payment retry in the event of a payment failure. It’s estimated that over 20% of a subscription business’ revenue churn is involuntary churn due to payment failures.

A few of the many perks of having this feature are: not having to manually check accounts for declined charges, automatically retrying failed payments at the time they're most likely to go through, letting the customers know about declined payments, and easily keeping a track of all of these actions. This is especially true for subscription businesses with a high volume of transactions.

[Here’s our extensive guide on 23 tactics you could employ to reduce involuntary churn.]

Here are some questions to keep in mind while evaluating the dunning feature:

  • Is there an automated process to retry failed payments?
  • How does it ensure payment retries are attempted at times it’s most likely to succeed?
  • Can the system automate in-app and email reminders for subscribers whenever their payment methods are about to expire?
  • Can these dunning emails be customized and their schedules configured?
  • Does the system support hosted and in-app payment pages that allow subscribers to update their payment information securely?
  • Does the system support different retry cycles for soft/hard declines?

We see that involuntary churn hurts the most when you have a relatively low ARPU product (Average Revenue per User), serving a large customer base. If that sounds like you, check out our extensive guide with 23 failed payment recovery tactics you could be using today to reduce involuntary churn.

On a feature level here are some features to look for:

Make Way For Revenue Opportunities With Smarter Payment Recovery

Accounting and Taxes

As the source of truth for billing and payment information, the recurring billing system takes the responsibility to seamlessly sync with your accounting system. Everything from plans, add-ons, discounts, coupons, credit notes, and even ad-hoc charges need to get correct mapped.

You’ll also expect your billing platform to automatically calculate tax based on the region you are selling into - be it US sales tax, Australian GST or EU-VAT.

[EU-What? Here’s our easy guide on how to tackle EU-VAT]

Compliance with GAAP and/or IFRS are just as important for accurate deferred revenue reporting and revenue recognition.

Some questions that will help you judge a recurring billing system:

  • Will the system let you apply and manage taxes based on destination or where you’re registered?
  • Does billing information map seamlessly into your preferred accounting system?
  • Does the system handle sales taxes automatically - including calculation and verification?

Feature-level capabilities you should be looking for:

Drive accuracy to your subscription accounting. To the dime, every time

Reporting and Analytics

As the system that collects revenue, you should expect deep analytics and a wide range of reporting capabilities from your subscription billing platform.

Starting from reports on checkout abandonment, SaaS metrics like MRR/ARR/Churn and all the way to deferred revenue reports your billing system can potentially drive major business decisions. As such it should provide reporting accuracy along with diagnostic capabilities to dive deep and analyze.

Here are some features you should expect from a mature system.

  • Operational Reports - Cart Abandonment
  • Finance and Audit Reports
  • Subscription metrics
  • Churn reports
  • A/R aging and Deferred Revenue reports
  • Cohort visualizations
  • Revenue reporting based on various dimensions - acquisition channels, geographies, coupons, subscription segments
  • Customizable dashboards for various levels of scrutiny
Your subscription metrics tell you stories. Get the power to read them, with Chargebee


Billing systems don’t work in isolation and as a core component of your revenue operations tech stack, it needs to have robust integration with a variety of business software:

  • Accounting and Finance software - Quickbooks, Xero, Sage Intacct, Oracle Netsuite
  • CRM - Salesforce
  • Helpdesk - Zendesk, Freshdesk, Intercom, Groove
  • Analytics - Baremetrics, ChartMoful, ProfitWell, Google Analytics
  • Taxation - Avalara
  • Customer success - Natero
  • Marketing - Mailchimp, Klaviyo, Refersion, ReferralCandy
  • Collaboration - Slack, PieSync
Checkout Chargebee’s wide range of integrations

User Access Level Controls

Subscription management and recurring billing solution is not a single-function system. With so many different roles in your organization using it in many different ways, where does the solution rank in terms of user-level access and internal security?

Here are some questions to help you grade:

  • Is access to the back office controllable with configurable roles and permissions?
  • Does the system allow user-level privileges?
  • Is the solution able to set up data-level security for each user?
  • Is it possible to set up action-level privileges for each user?
  • What login security is supported by the billing system? Single sign-on? Multi-Factor Authentication (MFA)?

Compliance and Security

Needless to say, compliance and security levels expected of a recurring billing system should be nothing short of best-in-class.

  • Is the system PCI-DSS Level 1 compliant?
  • Is the system SOC1 Type 1 compliant?
  • Does the system undergo constant vulnerability scanning?
  • How reliable is the billing provider’s approach to data storage?
  • How do they handle GDPR, PSD2 regulations?
  • Does the solution mandate two-factor authentication for all its administrative operations?
  • Can the billing provider explain what measures are taken to ensure network security?

[While we are on this, how are you shaping up for PSD2? You might want to check out our must-read guide around SCA and PSD2 for subscription businesses.]

See All Features of Chargebee

Service Capabilities Expected of a Billing Software

Beyond product features, you’ll want to work with a vendor that’s able to go above and beyond the boundaries of the software. This is especially true for a subscription billing software given how sensitive the data it handles is.

Here are some questions to help you assess relationship indicators:

  • Do they provide dedicated support that’s hands-on with your team till the onboarding is complete?
  • Do they offer specialist consultation - in the form of a customer success team perhaps - during your relationship?
  • If you choose to switch billing solutions, will they port sensitive data securely and map it to another provider (Credit-card Data Portability)?