Invoicing as a New Revenue Stream
Can SaaS businesses boost revenue by upselling existing clients with invoicing services?
SaaS businesses consistently strive to boost their revenue, yet often underestimate the effectiveness of upselling to their current clientele as opposed to the challenges involved in attracting new customers. An existing customer is five to seven times less costly than acquiring a new one, with upselling potential to increase revenue by as much as 43%. A simple yet effective strategy to increase earnings is to offer invoicing services to your clients using an automated system.
What Kind of Invoicing Are We Talking About?
This article explores electronic invoicing, or e-invoicing, which is increasingly becoming the standard for transactions.
E-invoicing operates similarly to traditional invoicing by facilitating the creation and distribution of invoices from suppliers to consumers. However, instead of paper, invoices are generated and sent electronically. This process is typically managed through online invoicing software or via an e-invoicing software’s API. E-invoicing software automates traditional paper-based invoicing, addresses pain points of accounts payable teams, integrates with existing business software, ensures global tax compliance, and streamlines the accounts payable workflow.
The advantages of e-invoicing over traditional paper-based methods include:
Furthermore, e-invoicing enhances financial operations through embedded finance, enabling businesses to offer invoices with integrated payment options. This feature allows customers to pay directly from the invoice using various methods, thereby boosting cash flow efficiency.
Why Would Clients Pay You For Invoicing Services?
E-invoicing offers significant cost and time savings, but why would a client choose your invoicing features and pay for them?
The reliability of new software can often be a concern. However, your clients are likely already familiar with and satisfied by your existing services, which may make them more open to adopting your invoicing system. Finding the right invoicing provider can be difficult, and since clients already use your software for features similar to what they need in invoicing, they can expect that the e-invoicing functionality will be similarly optimized.
To gain a deeper understanding, let’s explore each challenge clients face when searching for an e-invoicing solution separately.
Mandatory Electronic Invoicing
E-invoicing is increasingly becoming mandatory in various countries for all types of transactions, including B2G, B2B, and B2C. If your client is located in one of these countries, they are compelled to find an e-invoicing provider. Failure to comply with these regulations can result in significant fines and legal consequences.
Significant Money and Time Savings
Manual invoicing is time-consuming and prone to errors. For instance, processing a single manual invoice can cost between €6 to €50, often necessitating additional resources to correct mistakes. Manual data entry tasks in ERP systems can lead to duplicate payments due to human error, highlighting the importance of accuracy. In contrast, automated e-invoicing can cost less than €2.25 per invoice, reducing the risk of duplicate payments and making the benefits clear. However, choosing the right path requires careful consideration.
Building an Invoicing Feature
For most businesses, building an invoicing feature is not a viable option. Although it allows for complete customization, the development alone can span nearly a year, with additional time required to implement the specific regulations of each country where the business is active or intends to expand. This route not only requires a significant time investment but also incurs high costs, as it involves paying the salaries of several developers.
Integrating a Third Party Supplier
Integrating a third-party e-invoicing feature can significantly reduce time and costs, but selecting the right one is challenging. For less than the salary of one developer, you can secure over a year's worth of e-invoicing. Integration can also take less than a week, greatly reducing time to market. However, there are several drawbacks to consider. The invoicing software must support all the countries where the client's business operates, which can be difficult as most e-invoicing suppliers are local. The software also needs to meet the specific needs of your client's business, and often, the only way to ensure compatibility is through trial and error. Lastly, the solution must allow for customization and branding to maintain the client's corporate identity.
Integrating From You
The most advantageous option for your client might be to use e-invoicing directly from your dashboard. Since your client is already familiar with and utilizes your services, they are likely well-suited to meet his needs, and the same is expected of the invoicing feature. This approach not only saves time that would otherwise be spent searching for an invoicing solution but also reduces costs, as there is no need to pay the full price for a standalone system. Given that you offer the invoicing solution to multiple clients, the cost per client can be significantly lower compared to if the client were to build or integrate the invoicing feature independently.
E-invoicing and Tax Compliance
Building an invoicing feature or handling invoicing manually presents challenges in keeping up with the constant changes in e-invoicing and tax regulations, especially when operating across multiple countries. This requires significant resources and poses a risk of errors, potentially leading to time and cost implications. Conversely, integrating e-invoices into accounts payable systems helps ensure compliance with all tax and e-invoicing regulations. For specific country regulations, you can refer to this page.
Manual Errors
Mistakes in manual invoicing are quite common, with error rates often reaching 2-3%. These errors can range from incorrect data entry and miscalculations to sending invoices to the wrong customer. These inaccuracies not only result in direct financial losses but also consume significant time as staff must detect and rectify these errors. Additionally, such mistakes can lead to delayed payments and potentially even fines, compounding the financial and operational pressures on a business. Implementing e-invoicing software can enhance efficiency, enable faster processes, and provide a stronger record of transactions for better business operations and compliance.
How to Turn Invoicing into a New Revenue Stream?
Now that we understand our clients' needs, it's important to determine how we will generate revenue from the service. Typically, the service can be billed in one of two ways:
Subscription Based Billing
Assuming your business already operates on a subscription model, you're familiar with the benefits of a steady and predictable revenue stream. By adding invoicing capabilities, you justify an increase in the subscription price, given the additional functionality provided. If there's uncertainty about whether all your clients would utilize invoicing or be willing to pay extra for it, you could introduce invoicing as an optional add-on, allowing you to charge an additional fee.
For instance, if you provide a platform for mobile application development and your clients also require invoicing capabilities, they can access both services directly from you. For example, you could charge an additional 30€ per month for up to 2000 invoices, with each subsequent invoice incurring a nominal fee. This model simplifies the process for your clients and adds value to your service offering.
Usage-Based Billing
In sectors with variable consumption rates, like SaaS platforms, usage-based billing ensures customers pay only for what they actually use.
For those requiring invoicing services, the process of starting up and sending invoices is streamlined, without additional charges. The challenge arises when clients send a low volume of invoices monthly, leading to smaller profits per client but likely resulting in more sign-ups than a subscription model would. The advantage here is that early trust built with clients can lead to greater profits as their businesses expand and their invoicing needs increase, potentially outpacing earnings from a fixed subscription model.
Though less predictable than subscription-based pricing, businesses often issue a consistent number of invoices over time. If a usage-based model facilitates the onboarding of significantly more companies than a subscription model, it could prove to be more lucrative over the long term.
How To Choose the Compatible Invoicing Feature?
To turn invoicing into a new revenue stream, you're not only looking for the features your clients need but also additional capabilities. Before we delve into new features, let’s recap the essential ones previously discussed:
Now, let's explore the additional features that are necessary for your business.
White-labelling
Including invoicing as part of your offerings requires white-labeling, which is essential for reassuring your clients. White-labeling allows you to integrate the invoicing feature into your dashboard and present it as if it were developed in-house, complete with your own customization and branding. It convinces your clients that they can trust and adopt the invoicing solution you provide. Additionally, companies that offer white-labeling services typically encourage you to upsell the service to your clients as well.
Multitenancy
You cannot onboard clients to your invoicing feature if it lacks multi-tenancy support. Multi-tenancy architecture allows various users and organizations to use a single system for their invoicing needs while ensuring their data remains secure and inaccessible to others.
International Coverage
It's crucial for your invoicing feature to cover international tax and e-invoicing regulations. This capability ensures you can support clients globally and expand into new markets without concerns. Businesses that overlook this feature often find themselves needing to switch suppliers later, resulting in lost time and money, or managing multiple systems simultaneously, leading to equally challenging situations.
When referring to international coverage, we also include adherence to local tax and e-invoicing regulations that vary by country and change frequently. Localization is essential, whether your operations are within a single country or across multiple jurisdictions. This need arises because you may have to submit VAT return reports to governing authorities, sometimes in real-time. In addition to local tax and e-invoicing compliance, countries may also require features such as currency conversion, language support, specific date formatting and some certification.
About the Space Invoices’ White-Labelled API
At Space Invoices, we've designed the API with key principles in mind, adding features such as e-reporting, an invoicing app, and comprehensive documentation.
With our API, you will be able to:
For more information consider connecting with us and speak to one of our experts.
We are here to assist.
Earn More and Pay Less with Space Invoices’ Invoicing API
Neobanks, Fintech and B2B SaaS platforms looking to grow revenue can upsell their clients with invoicing feature integrated straight into their platform like it was built-in house. With lower costs you have the space for higher margins or more clients as you can easily compete with other service providers in the market.
The invoicing feature is usually billed in one of two ways:
For more information on using Invoicing as a New Revenue Stream check out our Invoicing API or contact us via live chat.
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