When it comes to billing platforms and accounting systems, are they the same or is there even a difference between the two?
Some people believe they are the same thing. In some instances, they are. In others, they aren’t. Most utilities (telco, water and energy providers) will need a dedicated billing platform that is stand-alone but needs to integrate with their accounting system for reporting purposes.
Why billing and accounting are different
From my own experience, a billing system is a combination of software and hardware that receives usage information about a service instance, groups this information by customer to generate charge amounts based on contracted rates, produces invoices, creates reports for management, and records payments/adjustments made against a customer account.
Whereas I would define a finance system as a system that is set-up within a company to manage and report on financial information. An accounting system is used to to keep track of outgoing expenses and incoming revenue, as well as other activities. Basically, it keeps an eye on all data that affects the finances of a business organisation.
It’s important to understand the difference between the two. In some instances, accounting systems run a billing element, but this process is always very simplified. In the case of large-scale, individualised billing, such as with the utility industries, a more dedicated billing system that can handle different rating and charge structures is needed.
What these industries really need
Most accounting programs cannot handle consumption-based charges – for example, they aren’t able to take a consumption feed from a supplier or carrier and load it in to the system, and apply various different types or rating formulas to create charges to bill the customer for. Trying to create these complicated, time-consuming manual invoices out of an accounting system is like trying to nail jelly to the wall! For this reason, most companies within the utility industry need dedicated billing platforms.
Here’s an example: say you want to bill your clients per hour and you have 10,000 clients. Now, let’s say you have a system that tracks usage hours against each of those clients. If that system can spit out that information, then the billing system can load that file and apply the different rate multiplier that you have for each individual client set-up. A billing system can, and should, do all of this automatically.
Custom cloud-based billing can be fully customised to generate single, recurring and consumption-based charges, can perform this function automatically, and most importantly can do it on a large scale. It functions by using complex rating processes to generate accurate invoices on a consistent schedule with minimal error. Conveniently, billing systems can also interface directly with supplier data and CRM systems, automating the process as much as possible.
So, why re-invent the wheel and try to have billing system functions in the accounting system or accounting system functions within the billing system? The expression “horses for courses” is true to this extent.
There are some great finance and accounting systems on the market that do a fantastic job of reporting revenue, accounts in/out, and so on. For example, the XERO, MYOB and Dynamics accounting systems are all low-cost, function well and can cover off all financial needs – except for consumption-based billing and invoicing generation.
This is where Outworks comes in.
Specialists in integrating billing and accounting systems
We deliver custom-to-client billing software and services that eliminate costly bottlenecks. Using automation, we seamlessly integrate with existing accounting software and hardware to perform as many billing functions required on a case-by-case basis, such as managing data and ratings, updating feeds, rating tariffs and liaising with newly-empowered customers. Outsourcing these services vastly reduces overheads and boosts recurring revenue.
At Outworks, we can build interfaces into most existing finance and accounting systems, enabling you to get the best of both. We focus on what we do well, which is generating invoices and sending them to the finance system via API or flat file importing, with matching accounting codes, and more. You then run your reporting and processing directly from your accounting system, cutting out all of the complicated legwork.
The team at Outworks has more than 20 years of experience helping telco, water and energy providers maximise their accounting processes by moving seamlessly to the cloud. Get in touch with us now to start the conversation.