Subscription-based businesses provide simple and hassle-free experiences for customers. A key tool used by these organizations is subscription billing management tools. Also referred to as recurring billing, it creates a balance between convenience for customers and predictability of revenue for businesses. The best way to forecast profitability for a subscription-based business is by building a financial model.
There are two types of forecasting that can be done with financial models: top-down and bottoms-up.
A top-down forecast focuses on the overall market and considers your company’s place in relation to its competitors and how much of the market you control.
A bottoms-up forecast focuses entirely on products and services done by your company. A bottoms-up forecast considers clients, suppliers, production capacity, and many other facets of your business.
Expenses & Revenue Forecasts
Expense and revenue forecasts should be run periodically to ensure proper business sustainability. NetSuite Planning & Budgeting offers financial planning solutions that provide forecasts for a variety of simulated situations to help users make better-informed decisions. These tools allow companies to see and analyze the difference between current and projected results and what any changes to the business could mean for the bottom line.
Profit & Expendables
It is important when creating financial models to compare profit to expenses. UsingNetSuite Planning & Budgeting for financial management can help track costs as compared to overall profit. Profit, expendables, budgets, and other financial information can be shared through easy-to-use reporting tools company-wide.
Updating Via Metrics & Benchmarks
A good financial model is one that is updated when new information is available. When subscription metrics and benchmarks are updated the overall financial model needs to reflect this. This can allow for better allocation of funds during periods of growth and slowing.
Implementing a Recurring Revenue Platform
There are many pros to operating a recurring revenue business. Using NetSuite to manage your front and back-office processes improves customer retention by providing a real-time view and interactions with customers. Long-term business relationships are cemented by streamlined business processes like automated billing cycles and renewal periods.
When integrated together, NetSuite, 360 Subscription Billing, and NetSuite Planning & Budgeting make it easier than ever for growing companies to manage recurring revenue with powerful and scalable cloud-based tools for business management, subscription contract automation, and forecasting and budgeting. This software trifecta provides clear and actionable insight through automation, synchronization, and compliance—the stuff financial dreams are made of.
It’s time to leave the manual labor and disjointed, siloed business processes where they belong—in the past. Get connected with one of our experts to discover the potential.