Avoiding Failed Payments as a SaaS Provider
SaaS stands for Software as a Service. SaaS providers make their software available to users over the internet. Normally, SaaS platforms are paid in the form of a monthly subscription service. Failed payments will always have a negative impact on any business including an SaaS business. There are several ways that a business can look at to help avoid or reduce failed payments.
Make Sure You Have the Correct Picture
To make the correct decisions you need to understand your business’s stats and know what’s going on with your company. There are several things you can look for and think about to help avoid failed payments:
- Does a customer have a history of failed payments? If so why?
- Is the customer nearing the end of their subscription? Have they been contacted?
- Is any customer’s credit card nearing its expiration date? Have they been contacted?
- Has either a customer’s credit card expired or have payments past due? What are their reasons?
- Is your clients check count overdrawn? If they are a business, why?
Churn Rate and how to Prevent It
One of the things you as a business leader in an SaaS company need to understand is why your clients may churn. Churn rate is defined as the customer who has decided to end their subscription.
There are many reasons for this churning rate that can be rectified by the SaaS business. One of the reasons that many clients will churn is because of lack of use of the software. One of the biggest reasons this happens is lack of training on the software. SaaS companies can provide several forms of training to help encourage the use of the software. The simplest thing they can do is make a pamphlet that tells the user how to use both the important functions and the standard ones.
Another way that churn rates can be improved by having the correct picture is in keeping the software relevant to what your clients needs. Not keeping the software relevant will lead to a client becoming not happy with your service and support.
The most important thing to pay attention to is what your clients are saying. Clients needs may change over time and they will express this or they may recognize problems with your company that you need to address. It is important that you survey your customers every so often to determine what their current needs are and from that you can respond.
In many ways being proactive will prevent many of your failed payments. Many clients are not aware of when their cards will expire. Keeping that information in your database can be very beneficial to you.
Communication with the Client
Having up to date information on your clients gives you the ability to send the client a message (Pre Dunning Email) several weeks out informing them they need to update their cards information. Doing it two-three weeks out also gives you the opportunity to send another reminder closer to when the card is actually going to expire. All of these messages should be set to go out automatically when certain criteria are met.
These Pre Dunning Emails help deal with accounts that are not accessed frequently by the users. They serve as a reminder for the user to update their information. Dunning e-mails are sent out after there has been a failed payment. These emails need to be laser focused on what has happened and simple in nature. While reminding them to pay-up tell them about how your business has helped them.
Another way to prevent a failed payment is making your payment page accessible and understandable by a mobile device. People are more likely to have a mobile device on them then a computer. Therefore, you are more likely to see payments done by a mobile device then a computer.
Another option instead of using Dunning e-mail is to personally contact the subscription holder. By doing this, you put a human voice to your business. Human interaction has been shown to make people more comfortable then an automated system. This results in greater cooperation by the subscription holder.
Collecting from Subscription Accounts that are in an unpaid status
One of the more important things to do if a client fails to pay after a reasonable time is to hire a collection agency. Failing to make sure that you don’t receive the money you are owed can cause major damage to your company.
In many cases your company alone will not be able to collect what is owed you and hiring a dedicated collection agency may be your best option. Many times, when a client’s credit card expires, there is more than just then just a date that needs to be updated. Finding a client that owes you money by yourself may be hard when they have moved or changed addresses. Collection agencies have the training and technology to track down clients that have moved and are refusing to pay.
If your client is located internationally, collection agencies can also help. Collection agencies in international cases will most likely have a better understanding of other countries financial laws and regulations then most SaaS businesses would.