Problems Software Subscription Companies Face Collecting Payments

 Software Company Debt Collectors

Getting What’s Owed to You can be Problematic for any SaaS


A problem a good deal of software subscription companies face is the inevitable situation of defaulted subscriptions. This can prove to be troublesome at best but could actually result in the complete failure of the business to expand or exist. Software subscription start-ups can and oftentimes do experience a multitude of recurring billing challenges. Managing a variety of optional features to include sign-ups, upgrades, downgrades, and flexible billing frequency, can be difficult to carry out, but are all an integral part of operations. Tracking invalid payments and addressing issues with billing systems appear to be the most effective and efficient way to manage without effectively wasting human resource man-hours. Man hours better spent on improving and implementing the core structure of your products and/or services.


The bottom line will dictate growth success and more importantly, profitability. Recognizing defaulted payments isn’t enough. The lifeblood of your business needs to be continuously flowing in. When someone uses your service and tries to get out of paying for it, they need to be accountable. You can’t walk into a grocery store and open a bag of chips. Eat the chips and leave the empty bag on the shelf without paying for it. Contractual obligations are in place so the client cannot use or consume your product and then refuse to pay. Time spent collecting and waiting for that money can break the proverbial camel’s back when you have already lost sending you and your business into the red. 




B​e certain to use multiple payment entryways accepting major credit cards and try to get a secondary payment account set up in case the first one doesn’t work. The big online payment platforms like and PayPal should always be accepted. The bottom line is the more payment entities you accept, the more flexibility you give the clients in payment, the more clients you will attract and the better chances you will get paid. PayPal with its customer-based dispute policy can prove to be problematic. People out there would use this to enjoy the product without paying and many times they get away with it. If you don’t accept it, you may lose a small fortune in revenues from clients who will go elsewhere where PayPal is accepted. A debt collection service may prove to be more effective before matters get to the stage of dispute. You can limit the amount of credit you are willing to extend and offer incentives to clients who pay on time as another way to keep your cash flowing. Passive or involuntary churn occurs in a software subscription service oftentimes without the client knowing it. Payment gets refused because the credit card they initially used is expired or maxed-out. The client goes into default status and the relationship terminated. This could have been prevented with a secondary card or by re-billing the card within days after being declined. The same thing happens to checking accounts where the funds are insufficient at the time the billing occurs but made good within a day or two. Re billing would result in payment rather than loss. Without the re-billing in play revenue leakage can result and re-billing will plug the leak, save the client, and gather continued revenue. Other reasons for churn are the client isn’t happy with the product. You still don’t get to eat the chips and leave the bag. Sometimes the client doesn’t understand how to use the software, becomes frustrated and gives up on it. Communication and understanding your customer’s needs can be key in avoiding churn in these instances. Lastly, sometimes the client goes out of business.




You’ve set up credit checks to assure your clients can and will be responsible and pay on time. Contracts defining terms, rates, and all the other variables have been defined so your customer knows their obligations. Everything appears to be in line but still the payments are excessively late and sometimes nonexistent. Now what? A good resource to have can be a debt collection agency.  There’s no sense in adding insult to injury so the best idea is to find an agency that works on a commission basis. This means they will not get paid unless they recover the debt owed. Companies like that tend to be much more efficient in achieving results as they have a stake in the outcome equal to yours.


These agencies can set up communications with your clients and in some cases can not only recover your loss but win them back obtaining a double positive. This will save you and your business valuable time and resources spent trying to recover losses where the end result may be making a decision to either take the loss or spend time going through the legal process in a system often moving at a snail’s pace with little or no result at added cost to you.