SOFTRAX usage and consumption billing software extends the features of SOFTRAX Subscription Billing to provide support for even the most complex consumption and usage billing models.
Usage billing, also known as consumption or metered billing, is a recurring billing model where your customers pay for products and services based on their usage. The amount customers pay varies depending on how much they consume in their billing period. You track each customers’ usage and calculate the amount to invoice based on the terms of their contract. For example, you may charge by number of transactions performed, volume of data transferred, time a service used, or the number of users or devices connected. You may offer tier pricing where customers pay a price for each unit in a tier. Or you may offer cumulative (or volume) pricing, where customers pay a price for their total number of units consumed. You may also charge a minimum, a maximum, or overage charges, which can change from contract to contract.
How you recognize revenue for usage billing can become quite challenging because amounts billed vary each month. And because each customer’s profile is different. The ASC 606 and IFRS 15 guidance require that you estimate the consumption that will occur in the year and that you maintain variable consideration. For example, one customer who changes tiers within a billing period as their usage grows may earn a discount. And another customer may cut down their usage and fall to a different pricing tier. One customer may have a pre-paid plan that draws down and rolls over to the next period. While another has a post-paid plan invoiced in arrears. To be compliant with the ASC 606 and IFRS 15 revenue recognition standards, your back-office accounting team must correctly track and recognize revenue. This becomes especially challenging if you bundle training or implementation costs with the pay-per-usage service. You may then need to unbundle these costs and perform allocations against standalone selling price, or SSP.
An even bigger challenge of usage billing is that to perform allocations, you must know the total contract value, or TCV. However, on day 1 of the contract, the value of the usage billing line item is 0 because no consumption has occurred yet. You must estimate what the usage will be over the year to determine the value to use in the allocation calculation. You may also have to deal with contract modifications and need to adjust the consideration to be recognized. If you’re still using multiple spreadsheets, multiple vendors, and expensive customizations, it’s time to use one solution that reconciles total order value, usage billing, and revenue recognition.
The SOFTRAX Revenue Management System, or RMS, generates invoices for your usage-based billing and automates the revenue recognition. Our powerful policy-driven automation enables you to recognize revenue as usage occurs. In SOFTRAX RMS, you configure usage billing with price books, which determine your tiers and pricing rules. Your customers’ order details are imported into SOFTRAX RMS and billing and revenue recognition schedules are automatically created. Regular usage records are also imported and through automation with your price book, the amount to invoice is calculated.
As more usage records are loaded, the amounts to invoice are automatically updated. And previously calculated amounts are analyzed to account for tier price differences. You then generate and distribute invoices for your usage-based subscriptions. And through our powerful policy-driven automation, revenue recognition is automatically calculated.
RMS automatically calculates the remaining total contract value based on the actual usage that was billed. If contract combinations or modifications are needed throughout the life of the contract, RMS performs prospective reallocations of revenue or cumulative catchups as appropriate. You can also manage material rights and handle variable consideration. At any time, you can view a history of usage and amounts billed.
Because RMS stores data for the order, billing, AND the revenue recognition, usage-based billing is automatically reconciled with revenue recognition. You can easily understand how much of the full order value was billed, how much revenue was recognized, and amounts remaining in unbilled or deferred revenue.
Are you ready to explore how YOU can use SOFTRAX RMS for your billing and revenue recognition? Contact us at email@example.com to schedule a 30-minute consultation.
Support for Complex Billing
The SOFTRAX Billing Manager can easily monitor usage levels, including minimums, overages, and tiers.
Easy Contract Management
Contract details are the key to successful consumption and usage-based billing, and the SOFTRAX Billing Manager organizes those details, so you remain on schedule.
A Variety of Pricing Models
The SOFTRAX Billing Manager allows you to easily deploy cumulative and band-tiered pricing
The SOFTRAX Revenue Management System is a cloud-based SaaS solution that enables the best in usage and consumption based billing software.
This robust solution is built to handle the unique operations of metered billing, resulting in a seamless process for billing and revenue recognition.
Built for both simple and complex consumption-billing scenarios.
Gives you the ability to recognize revenue in the same system that is processing consumption billing.
Allows easy data capture and presentation for ASC 606 / IFRS 15 regulation compliance.
Provides support for aggregate, cumulative, and band-tired pricing.
Has the flexibility for contract-to-date, current-to-date, and transaction accumulation.
Extends automated updates of data-driven pricing across the system.
“Through an outstanding collaborative effort with the SOFTRAX team, we improved our use of the SOFTRAX features and functionality that will help Epicor grow and scale its install base and recurring billing.”
“SOFTRAX offers the flexibility to handle the various forms of complex billing and revenue recognition we require. SOFTRAX helps us maintain our controls at a system level, keep close times short, and avoid a need to scale human resources as our business has grown.”
“SOFTRAX is a win-win for us. We saw significant efficiency improvements within two weeks of go-live. We have dramatically increased our transaction volume through organic and M&A related growth without a need for increased headcount.”
“SOFTRAX helped us capture an opportunity to operationalize the new revenue recognition guidance with automation that advanced our existing process.”