The software industry has moved to a subscription model to provide cost-effective resources to businesses. Today, you don’t need a huge upfront investment to access some of the top digital solutions in the market. Rather, you can pay-as-you-go and pay in small chunks over the course of your usage.
However, very few of those enterprises track or automate their SaaS payments.
As a result, they waste their IT budget and end up overspending. In this blog, we will explore how to manage your subscriptions efficiently to improve productivity.
Challenges of Subscription Payment Management
Most businesses don’t have an idea of how much they are spending on SaaS. Many leave the monthly payments on auto-mode and never bother to track their expenses. As a result, they are not aware of where their money is going.
Waste and overshooting your budget are expected consequences that haunt businesses.
Some organizations depend on manual methods that seriously lack efficiency. They waste half of their workweek on repetitive tasks that you can automate.
According to McKinsey, 50% of existing work processes can be automated. However, there are other disadvantages businesses experience due to the mismanagement of subscription payments.
It’s very easy to forget what you are paying for if you aren’t tracking it. The same applies to payments you regularly make for your software.
You might continue paying for tools or apps that you don’t use anymore. However, you are not aware of them as you don’t track your payments.
Some businesses subscribe to the most advanced plan on the list. Unfortunately, they don’t even use half of the features bought with their hard-earned money.
Moreover, enterprises often pay for more users than actually use the app.
Technology is advancing at a great pace, giving way to newer technologies. The software you’re using today may become redundant or provide less value over the years. Yet, businesses continue to pay for them as they are not aware or don’t make an effort to change.
Why is Subscription Payment Management Important
Why should you manage your payments?
The question should come as a no-brainer. We manage our payments to ensure we know our debts and stay away from overspending. The same applies to your business. Plus, you can look forward to a plethora of benefits.
All the cons of SaaS payment mismanagement we discussed above end up draining more cash from your business. You are paying for resources that you don’t use, need, or utilize fully. A big part of your IT budget is going to waste, and you have the power to prevent it.
Proper management of payments helps you optimize your investments for more returns.
Centralizing your expenses and tracking your payments saves time. You don’t have to check your email or your payment history to see your expenses. Automation can help you save more time and add to your productivity.
Paying for what you need delivers value and brings more ROI. You can eliminate redundant apps and shift to advanced options available in the market. Your business will be able to unleash innovation and gain a competitive edge.
Now, let’s learn how to manage your SaaS payments like a pro for more productivity.
How to Manage Subscription Payments like a Pro
1. Vendor Analysis
Businesses today use 137 apps on average to manage operations and processes. So, you are also making payments to more than a hundred services. The right place to start managing your SaaS payments is the list of your vendors.
Here’s what you need to do:
Evaluate Your Subscriptions
Take a hard look at your subscriptions and determine what you need. Many apps you are paying for may be redundant or not useful anymore. Assess every software and make a list of those you need for your business processes.
You may need to involve your employees and consider their feedback too.
Track SaaS Spending by Department
A single person may not always be in charge of making subscription payments. Individual departments, teams, and even users can pay for services they use. It’s your job to track all SaaS spending for each department to know where your budget is going.
Additionally, you may need to track payments from users if they are allowed to buy what they need. The idea is to get a complete breakdown of your SaaS expenses.
Determine What You Need
Tracking your subscriptions and expenses will reveal all your SaaS spending. Now, work out the apps that are delivering value and helping you manage your workflow. Ask your employees if they are still using the apps on your subscription list and whether they are still helpful.
Use the insights from your findings to create a list of apps you need. Cancel payments from all other apps that you don’t need anymore.
You will see savings being generated instantly in front of your eyes with every click on the ‘cancel subscription’ button!
Create a Spreadsheet
We will talk about using digital tools to track your SaaS payments automatically later. But we would also like to talk about the old-school way we used to handle things.
Using a spreadsheet to track your software payments every month is the easiest way. It can work best for small and medium businesses that use only a handful of apps.
You can record your payments and get complete visibility of where your money is going.
2. Payment Management
Now comes the turn to manage the payments you make. How you pay your money can also impact your costs and savings. Let’s take a look at some of the most common ways of paying for SaaS:
Flat fees are highly popular among businesses. You pay a fixed sum every year or spread across the months. Some vendors also charge a monthly flat fee for availing their services.
Flat fees are a good way to enjoy affordability if you are satisfied with the services. You don’t need to worry about price changes and can easily manage your payments.
Should You Pay Annually or Monthly?
Most vendors give a discount when you pay for the whole year. If you are sure you need the software, paying annually can be an ideal method to save money.
Monthly payments are good when you know your requirements might change. You can easily upgrade or downgrade your plans and pay based on your requirements.
You pay for each user that accesses the app. This subscription model is good for small teams where only a few people need the software. It can also suit some types of solutions like a CRM used mainly by the sales or marketing teams.
Pay-per-user can turn out to be costly for enterprises that have hundreds of users.
Some apps may charge you based on the features you use. You can pay for what you need and save money by avoiding extras.
Pay-per-use can be a suitable way to cut costs when you have limited needs.
A small seller using an eCommerce solution can pay as they go for savings and convenience. They may not need the features to manage unlimited stores as they begin their business. Functionalities for one store are enough to start out.
Tiered subscription plans are quite common. The more you pay, the more features and capabilities you get. It can be a good alternative to the pay-per-use model and suit the needs of a growing business.
You can scale when required and pay less when you don’t need all the features.
Choose a payment method that suits your needs. However, not all vendors may offer you a choice of payment methods. In that case, you will need to look for alternatives.
Who Pays What
As we noted above, one person may not be making all the SaaS payments. You need to zero-in on all stakeholders who are paying or have permission to pay for subscriptions.
The job is easy for small teams where you can quickly know who uses what. Big teams will need to step back and start with each department in our vendor analysis step.
Additionally, include all payments in your spreadsheet to keep track of your expenses.
Formalize New Subscription Request Approval
Some processes should always be formalized for transparency and accountability. Set up a system where everyone in your organization needs to record their subscription requests.
Your copywriter may need a new proofreading tool to make their work impeccable. Such requests should be routed to a single authority that is in charge of approvals.
Let everyone in your organization know about the new rules. However, don’t make it sound as if you are discouraging them from recommending resources. Convey the need for management, and everyone will understand.
You will be able to reduce unnecessary spending and track your SaaS expenses efficiently this way. Ensure you enter all new subscription payments in the spreadsheet you’re using to manage your expense.
3. Centralize Your Payments
Making payments on the fly is not the best way to manage your subscriptions. You will lose visibility and track of where your investment is going. So, a centralized payment system is the way ahead for efficiency and productivity.
Pay from One Source
In most cases, the finance department makes the payments for subscriptions. However, the payments may be made by multiple people handling specific departments. You need to pay your subscriptions from a single source or pass all payments through one authority.
The process will help you centralize your payments and track all expenses efficiently. You will know where your money is going and which tools you are using. Additionally, you will have someone who you can directly approach in case of any queries. You don’t have to go around asking your employees in each department what they are paying for.
Routing your SaaS subscriptions from one source will also help establish accountability. Your whole payment process will be more transparent, and streamlining workflow will be easier.
Needless to say, you will even save considerable time in human hours that you can spend productively to grow your business.
Record Payments on the Spot
Keeping records of what you are paying for is vital for centralizing your payments. Enter payment data as soon as they are made on the spreadsheet you are maintaining. Treat this document as an essential resource to track subscriptions and your IT budget.
Your business bank account or credit card statement can help you save manual data entry. You can get a ready report of your regular SaaS payments, provided you use a single card or account to pay.
Many businesses also use digital payment solutions that we will discuss in a while. You can automate your data entry and improve the accuracy of your records.
Whatever you choose, a ready record of your expenses is the need of the hour.
Create Detailed Reports
You can pay your subscriptions every month, year, or even quarter, based on your preference. No matter which frequency you select, create a report every month to include your expenses.
Generally, businesses will use a mix of payment methods, as not all vendors offer the same options. That means some payments will be monthly, while some may occur in a few months.
You should create a report for your payments that covers your monthly expenses. The document will be your guide to refine your IT budget and optimize your spending.
Small and medium businesses shouldn’t find it challenging to centralize their subscription payments. It’s all about making your payments from a single source and recording your transactions.
Enterprises may need significant efforts or use an automated solution to cut down complexity in the process.
4. Stay Updated for More Savings
Technology is changing at an incredible pace with each passing day. As a result, the apps or software you use become outdated or redundant over the years. Yet, many businesses choose not to update themselves and end up losing money and productivity.
Here’s how to sail the boat safely over troubled IT waters-
Check for New Plans
Software providers update their plans frequently to add new features or help businesses save more. Your provider may or may not update you with the new plans. However, that doesn’t mean you have to keep paying the same rates.
Check for new plans for all tools you are using on a subscription-basis. Before that, review your needs to find out if they are the same or have changed. You can use the findings to assess the new plans to discover more ways to save.
You may see you don’t need a few features or as many users you did when you subscribed. Your vendor might have a new plan with fewer features that suits your bill.
On the contrary, increased needs mean scaling to an advanced plan. Interestingly, such plans can help you save as they offer more features at affordable rates. Big businesses will surely benefit from advanced plans that serve the growing needs of an enterprise.
Don’t forget to change your current plan if you find something better or more affordable.
Replace Redundant Subscriptions
Not all tools can keep up with the advance of technology. Some of them will become redundant and lose their value in a few years. On the other hand, some vendors might constantly update their offerings to provide you with the latest technology and innovation.
It makes no sense to pay for software that doesn’t deliver any value to your business. A periodic check on your needs and what you have is a must to provide products that customers want.
Stop paying for tools that you don’t need or aren’t serving your goals. Replace them with newer alternatives to stay ahead of the competition and save money on SaaS payments.
5. Use a Subscription Payment Management Tool
Modern technology is all you need to streamline your subscriptions and create more savings. We talked about using a spreadsheet to track your payments. However, that’s still a manual process that needs human intervention and labor.
A digital payment management tool can help you record transactions on the fly. Let’s check out some common features of a payment management tool to give you a better idea.
The biggest contribution of a digital solution is automation. You will not need to record each payment manually in a spreadsheet. Your tool will automatically create a record of all transactions as they happen.
You can easily incorporate the data into your accounting software for efficient bookkeeping.
Automating your processes can help you save time and money. According to KPMG, automation can bring down your costs by 40% to 70%.
Recording your payments on-the-fly gives you real-time visibility into your SaaS expenditures. You can see payments as they happen and get greater control over your IT spending. The data will also help you assess your performance against a range of metrics.
As a result, you will be able to make informed decisions that lead to better outcomes.
Reporting and Analytics
Using a payment management solution eliminates the need for creating manual reports. You can track your expenses on-demand and in real-time with just a click.
Additionally, you will be able to create a plethora of reports to serve your needs. You can set up your tool to generate monthly, daily, or yearly reports.
Software providers can customize your payment solution to meet your business needs. You will be able to track what you need without any challenge.
Best of all, you get advanced analytics as a perk of using an automated solution. Analytics helps you generate vital insights and understand your position better.
You will also be able to make decisions that bring the desired results.
The above are the basic functions of a payment management tool. You can get more advanced features in your tool to help you manage your payments efficiently.
Advantages of Payment Management Tools
Single Source of Truth
Using an automated payment management tool is the best way to centralize your SaaS expenses. You can automatically record payments in real-time and get a ready database of expenses. There is no need to fall back on any other resource to manage your expenditure.
Any automated tool lets you bring your workflow under control. You can eliminate inefficiencies and speed up your payment process.
Additionally, you can integrate your payment tool with your other apps. You can connect your ERP to your payment tool and unify data from several channels. This also creates the potential for automating additional processes that take up human hours.
Moreover, you can reduce duplicate tasks and save more time and money. You can also integrate your accounting software with your payment tool for automated bookkeeping.
Your payment management solution will be a real-time tracker of your SaaS spending. You will be able to track payments by projects, teams, departments, and more. Additionally, the data is far more accurate as you don’t have the possibility of human errors.
A payment tool can give you a granular view of your IT budget. You will be able to optimize resources and tune your expenses for the best results.
A payment management system is a sound investment for large businesses and enterprises. Small businesses can use free tools or use manual methods if they have only a few subscriptions.
The way to manage your subscription payments like a pro is first to track all your current expenses. You can then review your needs to see if you are using the right tools. Switch to better and affordable solutions that meet your needs and record every payment.
Maintain a spreadsheet and create regular reports to stay on top of your subscriptions. You can also use a payment management tool to automate your processes and gain real-time visibility. Plus, you will be able to centralize your payments better and boost your productivity. Ultimately, your IT costs will also come down.