Subscription-based business service providers have seen a whopping rise in the growth with more than 100% from 2011 to 2016. Customer’s preference is now diverted towards services and products.

Artificial Intelligence and Machine Learning are gaining popularity in the subscription-based business services and hence it proves to be promising news for Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS). Simultaneously, it also showcases the vital stats for optimizing recurring billing systems to generate increased revenue from the sales. Inducing machine learning in the recurring payment software of any invoicing system has shown the substantial result in not only in higher sales, reduced payment transaction failure but also has enhanced customer service.

Machine Learning In Invoicing System

Applied machine learning in the invoicing system can be checked through the recurring billing feature via automatic debit of any subscription charge, at a specific interval of pre-decided date and time. This makes sure that the customer doesn’t default on the payments and can enjoy services without any interruptions. Furthermore, it can also be used to increase the number of transactions.

At the end of a service cycle, the billing software generates an invoice and attempts to debit the amount. For example, if the said transaction is failed due to any reason whether, from the customer’s end or the bank, the system will register it as an error and will re-try after a while to collect the subscription or service payment. Usually, the system generates a message specific to the failed transaction and asks customers to either update payment details and furthermore attempts a new request. For the next attempt which is termed as “retry schedule”, there is no assurance whether the transaction will be successful or not. If it goes through, you retain a customer but if it fails then not only you lose a sale but also affects your revenue as well as customer relationship due to disruption in services.

Machine learning can be introduced to redesign the subscription billing model. A working system can be established to evaluate and determine the transactions that went successfully in the second attempt or retry schedule. Once you have a huge collection of transaction data whether successful or not, you can analyze and determine the transactions that are most likely to succeed with machine learning.

Custom Subscription Packages

When offering too many services under one cap, makes your package very expensive for the customers and hence might drive away the sale. Machine learning can help you by browsing and purchasing trends of the customer. You can also club your higher-selling services and create a unique subscription package which will increase your sales, enlarge customer base and generate higher revenue.

Set an Optimum Price

Machine learning proves to be crucial in subscription billing services and can gain maximum benefits by targeting a particular audience. It can help you to set up proper prices for products and services. To decide the optimum price of subscription service, you’ll need to analyze 3 factors such as market demand, market saturation, and buyer preference. Now you can apply machine learning and artificial intelligence to comprise data and establish a correlation. This will help you to come up with a price that will get you gain maximum customers.

Concluding Note:

A cloud-based invoicing solution such as Moon Invoice, can help you optimize your business process and all of your accounting processes and moreover, it also benefits you in multifarious ways.

All this might sound expensive, but in reality, it is not. The online invoicing application from Moon Invoice comes with a 7 days free trial period to give you first-hand operational experience and functionality feel of the app. So, we do not see any reasons for you to hold back from giving this much-awaited momentum to your business.

Recurring Payments Vs Recurring Invoices

Recurring Payments	Recurring Invoices
Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved.	Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves.
A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this.	A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies.

Pros and Cons of Recurring Invoices

Pros	Cons
You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered.	You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created.
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly.	It could be difficult to cope with recurring invoices if a transaction fails for any reason.

Net 45	Invoice is due in full within 45 days with no early payment discount offered
2/10 net 45 terms	2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/15 net 45 terms	1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days
1/10 net 45 terms	1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/7 net 45 terms	1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days

Category	Net Method vs. Gross Method	Explanation
Calculation Approach	- Applies tax credits first; reduces taxable income before computing tax liability.	- Doesn't apply tax credits; computes taxable income without considering tax credits.
Tax Credit Eligibility	- Allows for greater likelihood of tax credit eligibility due to reduced taxable income.	- Limits tax credit eligibility because taxable income hasn't been reduced yet.
Itemized Deduction Requirement	- Lowers threshold requirement for itemizing deductions due to decreased taxable income.	- Raises threshold requirement for itemizing deductions due to higher taxable income.
Advantages	- Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits.	- Results in higher taxable income compared to net method.
Disadvantages	- May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits.	- Increases taxable income and may result in higher overall tax bill.