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Do you know that The KapLan Group research predicts that SaaS companies lose up to 40% of subscribers due to payment failures? Not just this, it affects their revenue as well, showcasing 26% lost revenue to billing and payment errors.
These percentages look scary, right? But what are the reasons behind SaaS companies’ failed payments? We will discuss this in our blog, other key challenges, and outline the prevention strategies.
Let’s get started!
Challenges in Salesforce subscription renewals
Here are a few challenges listed:
Failed recurring payments and involuntary churn
As we have discussed above, failed payments are a key challenge in subscription management in the SaaS industry. These payment failures occur due to multiple reasons:
- Expired cards: It might happen that the customer’s credit or debit card has expired, and they have not updated their new card details or alternate payment method. In this case, the payment will fail.
- Insufficient funds: When the customer’s bank does not have enough funds to process the payment, it results in a failed payment.
- Processor declines: The processor might decline the transaction for any reason. Be it a technical glitch, network errors, gateway misconfiguration, bank-related issue, suspicious activity flagged as fraud, or something else.
All these issues result in involuntary churn. The KapLan group study reveals that even 7.9% payment failure rate could put $790K of revenue at risk each year. Therefore, B2B SaaS subscription management firms face a persistent revenue leakage and customer loss when card declines and other automated payment failures occur. This is a top SaaS subscription model concern.
Billing errors
Business deals often involve custom pricing, usage tiers, and negotiated contracts. When done manually, this complex work is prone to billing and invoicing errors. The same study shows that 26% of annual revenue is lost to ‘revenue leakage’ that is caused by billing mistakes, uncollected invoices, or payment errors. In fact, over 40% of companies report active issues with revenue leakage. The more manual work, the more errors creep in.
SaaS finance teams need to invest heavily in accurate subscription billing and reconciliation. This is crucial, especially when they are growing quickly.
Global expansion and payment localization
Many SaaS businesses wish to expand globally. However, one challenge that persists with it is scaling their payment operations worldwide.
A Grow Cleverbridge report reveals that 96% of buyers expect to see prices in their local currency. While only 31% of sellers consistently localize checkouts. Therefore, this difference results in abandoned carts and lost deals, significantly affecting revenue.
Slow receivables and payment methods
SaaS companies often face slow receivables, as these are tied to traditional payment methods like bank transfers or cheques. These methods delay revenue realization, impacting business revenue significantly. As per Intuit QuickBooks’ survey, 73% of businesses are negatively impacted by late payments.
To recover from this, businesses need to adapt technology that supports modern payment methods like credit cards and payment links.
How to resolve challenges persisting in subscription renewals in the SaaS industry?
In order to resolve these challenges, here are a few prevention strategies that you can practice.
Subscription management software
There are several SaaS subscription management software that seamlessly integrate with Salesforce (one such application is ChargeOn). These software offer automated retry for failed payments, centralized transaction history, global scaling with multi-currency support, and even currency switch in a few clicks.
ChargeOn, as your modern SaaS payment processing software, integrates with Salesforce and supports Salesforce billing process. By leveraging such a platform, you can eliminate many manual steps that cause errors and leakage.
Revenue operations and system integration
Beyond the SaaS payment processing software, aligning CRM, order management, and finance is the key.
With all these systems together, you get a unified revenue lifecycle approach that ensures data flows seamlessly from quote to cash. With Salesforce, you get instant visibility into invoice and payment status.
Having all data in one platform, sales, finance, and support teams work from a single source of truth, reducing data entry errors and simplifying reconciliation.
Global payment service providers and orchestration
Find a solution that offers support for global payments, as they can solve currency, fraud, and connectivity issues seamlessly. Providers like Stripe, Adyen, or Braintree connect you to dozens of local networks with a single integration, support different payment methods and currencies, and often handle regulations and compliance.
Moreover, advanced orchestration platforms like ChargeOn automatically route each transaction through the best gateway or currency exchange. In fact, payment orchestration has been highlighted as a solution to many B2B cash-flow pain points.
Businesses gain efficiency with fewer declines, simpler PCI compliance, and broader market reach.
Benefits of implementing SaaS payment processing solutions in your business
Here are certain benefits that existing businesses have realized, and you can too!
- Increased revenue by reducing missed or failed payments
- Improved cash flow with more predictable and timely billing
- Reduced churn by managing renewals and upgrades smoothly
- Clean and unified transaction records improve decision-making
- Reduced revenue leakage caused by misalignment or delays
- Accelerates payments
- Enhanced team productivity by cutting efforts on manual workflows and automating them
- Expansion into global markets by supporting local and multiple currencies
- Boosted conversion rates with smoother checkout and fewer failures
- Reduced operational risk because of automation
- Minimized costs and declines by routing payments efficiently
- Improved customer satisfaction through flexible and fast payment options
So much of it and more! Therefore, now is the time to handle your SaaS subscription renewals without payment issues with ChargeOn.
