How to Automate Your Billing Process: A 6-Step Guide to Efficiency

Automation not only makes the entire billing workflow more efficient - no errors, faster payment, and accurate record-keeping but also addresses key issues such as:

• Missed online purchases due to unavailable payment methods
• Revenue loss from unpaid invoices
• Heavy operational burden on your team

Setting up a billing automation system is the only phase when a manual investment is required, other than that it's easier than syncing data between CPQ and billing.

The whole process is a simple ride- understand your requirements, choose the right software, and let the system do the work for you.

For all the information in between, we are here for you. 

Learn in this blog, everything about automated billing and the process of billing automating. 

TL; DR

• Automated billing streamlines your entire billing process by taking over all the manual intervention requirements. It builds contracts & invoices by processing all complexities with zero errors and also takes care of payment reminders, accounting, and reporting. 

• The process with automated billing software is short and fast. It includes four steps- data Integration, generation of invoices, payment processing, and documentation. 

• Billing automation systems help businesses scale their billing efforts, become more efficient, and allow your engineers to focus on core product work. 

• Before it is important to know which billing automation software is best for your business. Explore our comprehensive SaaS billing software buyer’s guide to find the right fit.

What is automated billing?

A billing automation system is used to simplify and automate functions related to billing, such as invoicing and payment collections. The solution helps businesses improve efficiency and speed up the billing process by auto-generating invoices and streamlining collections, approvals, and provisions.

A billing automation solution is a must for B2B businesses with complex pricing and custom billing needs as it creates invoices for different pricing models without any restrictions.

For example, a usage-based pricing contract does not hold all the information needed and businesses need a developer or a data analyst to keep track of these numbers. 

With automated billing, you do not need anyone except the automated system to take care of it. It will create accurate invoices in any complex situations while complying with all negotiated terms. 

Who should automate billing?

What’s the ROI of billing automation?

1. Labor cost savings

• Manual invoice processing averages $12–$16 per invoice.
• Automation reduces this to $3–$5 per invoice.
• For 1,000 invoices/month, this equates to $84,000–$156,000 saved annually.

2. Error reduction

• Manual processes have error rates up to 2%.
• Automation reduces errors to approximately 0.8%, minimizing costly corrections.

Scenario:

• Company processes 500 invoices/month.
• Manual processing cost: $12/invoice.
• Automated processing cost: $4/invoice.
• Monthly savings: (500 × ($12 - $4)) = $4,000.
• Annual savings: $4,000 × 12 = $48,000.
• If the annual cost of automation is $15,000:
  • ROI = (($48,000 - $15,000) / $15,000) × 100 = 220%.

How does automated billing work?

Most companies have in-house metering systems (a data storage system for creating invoices). The data from the metering systems is moved to spreadsheets or custom-built software and sent to finance people. They manually read contracts, find relevant data from these spreadsheets to create invoices, and send them to customers.

This process meets challenges such as 

• Increased risk of fraud and errors
• Inefficient customer service processes
• Challenges with scalability
• Long process and high costs (because of extra hiring)

However, the process with a billing automation system is better and more efficient. 

Here's an overview of how the process with billing automation software works:

Step 1: Data integration

A billing automation system first collects and verifies all the required and relevant information and stores it in the system. 

This includes extracting 

• Pricing terms from contracts
• Product data from the product catalog
• Usage data from the metering system. 

It then integrates with the company's existing databases, including CRM, ERP, and payment gateways, and ensures that all data required for accurate billing is collected before generating an invoice. 

Step 2: Generate and send the invoice

The software automatically generates an invoice based on the purchasing information, and the commercial terms outlined in the contract. No matter the contract's complexity, the system always creates invoices instantly and with 100% accuracy. 

Invoices are then sent directly to customers via email (as PDF attachments or links to hosted web invoices), or pushed by third-party systems integration.

Step 3: Payment processing and monitoring

It offers flexibility in payment methods such as your clients can choose

• Bank transfer 
• Debit/ Credit cards 
• Digital wallets
• Cryptocurrency 
• BNPL (Buy now, pay later) or others for payment. 

The system will match the payment gateway to respective invoices and continuously monitor the payment status. It tracks whether payments are made, pending, or overdue. It also sends timely and personalized automated reminders and notifications to clients to follow up on overdue payments. 

This monitoring helps maintain a clear picture of the company’s cash flow and financial health. 

Step 4: Documentation and record keeping

The software ensures all transactional details are meticulously recorded in the company's financial records, integrating billing and metering data with accounting systems. It helps increase visibility as you can view client payment information at any given time for data-driven insights. 

Benefits of automated billing software

Let’s look at the benefits billing automation software provides to companies closely:

1. Time-saving and ensures efficiency 

The entire billing process with automated billing is simple and short. It eliminates the need for: 

• Manual data scraping 
• Creating multiple invoices separately
• Repetitive data entry
• Moving data across various tools
• Rounds of proofreading
• Manual follow-ups 

The system does it all efficiently by leaving no room for errors because of its robust data integration. This spares some good hours for your engineers that they can use to focus on core product work. 

One of the successful automated billing systems examples is Squadstack.

SquadStack, an AI-driven sales outsourcing platform, started its journey with an in-house billing automation system. On facing limitations, Squadstack opted for Zenskar's automated billing system which helped their engineers save 120 hours/quarter, and the finance team saved 180 hours a month. 

2. Enhance customer experience

The complexity of B2B buyers' journeys has increased due to multiple decision-makers being involved, resulting in the inclusion of a variety of benefits and conditions that are specific to each of your clients.

It’s a challenge even for your team to keep track of every negotiated term and promised offering across vast data of your several clients. 

As one AP worker said in a 2022 IOFM survey:

Your clients will also not appreciate frequent back-and-forth communication, even if it's necessary for executing the billing process accurately.

The billing automation system provides a positive experience for your clients as you are sending invoices timely that are accurate with no complexities and interruptions. It also provides different payment options and customer payment portals. 

3. Simplify data management and accommodate scalability

The software centralizes all billing-related information in a single, cohesive system that is stored securely and is easily accessible. It eliminates the need to work with multiple tools to maintain proper journal entries in ERP. 

It will also accommodate your business growth. If your billing process becomes more complex because of an increasing number of transactions or price experimentation, the system will support all billing scenarios without any inefficiencies. 

4. Reduce billing errors and ensure compliance

Automated billing software applies logic-driven rules and validations consistently, ensuring that each invoice is accurate and compliant with tax regulations and contract terms. This significantly reduces back-and-forth with clients and saves your finance team from embarrassing corrections or audit headaches down the line.

5. Accelerate payment cycles

Late invoices lead to delayed cash inflows. When your billing process is held up by approvals, data syncing, or spreadsheet gymnastics, your DSO (Days Sales Outstanding) stretches unnecessarily.

With automation, invoices go out promptly — sometimes the same day a service is delivered or a milestone is hit. Faster invoicing means clients receive payment requests without delay, and many systems integrate directly with payment gateways to encourage instant settlement. The result? A much shorter cash conversion cycle and improved working capital.

6. Improve financial reporting and forecasting

Automated billing systems offer real-time reporting on recognized revenue, deferred income, aging receivables, and customer-level metrics. They sync cleanly with ERPs and analytics platforms, enabling faster and more confident financial decision-making.

7. Scale effortlessly with business growth

As transaction volume increases or your pricing becomes more dynamic (usage-based, tiered, custom terms), keeping billing accurate manually becomes a nightmare.

Automated billing systems are designed to handle complexity — whether it's onboarding 100 new customers a month, experimenting with new pricing models, or supporting multi-country operations. You can grow without needing to double your finance headcount or rework your tech stack.

How to automate your billing process? 

It’s easy and involves only 6 steps:

1. Find the right billing automation software

To find the right billing automation software, keep your eyes on some non-negotiable features including:

• Integrated payment options
• Accounting software integration
• Easy-to-use interface
• Customization options
• Integration with other software
• Analytics & reporting
• Contract builder
• Customer portals
• Automated invoice emails & payment reminders
• Usage data insights

Recommended read: 9-Point Checklist to Choose the Right Billing System for Your Business

2. Integrate with existing accounting software

Once you have decided on the system, integrate the billing automation system with your accounting software. Integrating it will ensure your team is not making extra efforts to record journal entries as per your preferred methods. It will automatically perform actions for you. 

3. Set up electronic invoicing

Manual invoicing is outdated and a hassle, use electronic invoices for your billing process. Automated e-invoicing will generate and send accurate invoices timely saving you plenty of time. E-invoices are accurate because the system pulls data from all the relevant integrated resources. 

Another benefit of e-invoicing is that it gives a digital record, which makes these invoices easy to track. 

4. Schedule billing reminders

Automated billing software allows businesses to use automated reminders. This feature enables businesses to schedule and automatically send payment reminders targeted to clear delayed and overdue payments. It eliminates the need for manual intervention for follow-ups. 

5. Launch a customer payment portal

Set up a self-service customer payment portal, allowing customers to pay invoices, track due dates, and manage their accounts online. This improves customer convenience and reduces the workload on your accounts receivable team, leading to quicker and more frequent payments.

6. Create reporting dashboards for billing performance

In manual billing, maintaining and updating billing records is a tiresome process. Automated billing software offers reporting dashboards to monitor billing performance and key metrics in real-time. 

Questions to ask vendors to choose the right billing automation tool [checklist]

1. Payment gateway integration

• Does the system support multiple payment gateways (e.g., Stripe, PayPal, Razorpay)?
• Can it handle various payment methods (credit cards, ACH, digital wallets)?
• Is there support for multi-currency transactions and real-time currency conversion?
• Does it offer a secure, PCI-compliant payment processing environment?

2. Streamlined billing

• Can the tool manage different billing frequencies (monthly, quarterly, annually)?
• Does it support usage-based, tiered, and hybrid pricing models?
• Is there functionality for automatic proration during plan changes?
• Can it handle mid-cycle upgrades/downgrades and apply charges accordingly?

3. Tax compliance

• Does the software automatically calculate taxes based on customer location?
• Can it integrate with tax engines like Avalara or TaxJar for real-time tax rates?
• Is there support for generating tax-compliant invoices for different jurisdictions?
• Does it provide detailed tax reports for filing and audit purposes?Invoicera

4. Dunning management

• Are there automated workflows for handling failed payments and retries?
• Can you customize email notifications for payment failures and reminders?
• Does it offer analytics on churn rates and recovery success?
• Is there support for multiple dunning strategies based on customer segments?Recurly Documentation

5. Invoicing templates

• Can you customize invoice templates with branding elements (logo, colors)?
• Does the system support multiple languages and currencies on invoices?
• Is there functionality to include detailed line items and tax breakdowns?
• Can invoices be automatically sent upon payment or on a scheduled basis?

6. Security and compliance

• Does it implemens two-factor authentication, access controls, and secure data storage?
• Does it comply with industry standards such as PCI-DSS, GDPR, and SOC 2?
• Does it maintain comprehensive audit trails?
• Is it regularly updating security protocols to address emerging threats?

7. Globalization support

• Can it handle transactions in multiple currencies with accurate exchange rates?
• Does it accommodate regional billing requirements and languages?
• Does it support international payment methods and compliance standards?

8. Customer support and implementation

• Can support provide dedicated onboarding, training, and documentation?
• Can the CS team offer multiple channel support (e.g., chat, email, phone) for proactive resolution?
• Does the team offer sandbox environment or free trials for testing?

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Why Zenskar?

Let’s start this by saying we have the most flexible billing automation solution. Zenskar enables sales teams to create complex contracts with no code and automate generating invoices irrespective of the complexity of contracts. All because of our system integrations with >200 sources of data. 

We adopt a decoupling approach to metering and billing means billing and metering modules are independent systems and do not impact each other. This is important because

Along with it:

• Zenskar is the only billing automation software with support for subscription-based pricing, usage-based pricing, and everything in between. 

• Zenskar's Contract Builder provides a drag-and-drop builder interface that enables users to customize and create reusable templates for their contracts. 

• Zenskar offers an in-built communication module that gives you everything you need for collection without the need to integrate an email tool. 

Curious to learn more? Book a demo, and we'll show you how Zenskar can perform billing automation for you.