Buying a third party VS building your own billing software

When it comes to streamlining your billing processes, you face a critical decision: should you invest in developing your own in-house billing automation system or opt for a third-party solution? Each option has its own pros and cons, and your choice should be guided by your specific needs, resources, and long-term objectives. 

In this blog, we delve into essential factors to consider when choosing between building your own billing software or opting for an external provider. Our goal is to provide you with the insights needed to make an informed decision that seamlessly aligns with your business goals.  

Let's get started! 

Buying a third-party billing solution: Pros and Cons   

Investing in a buying a third-party billing solution offers significant benefits. A key advantage is immediate usability upon purchase, eliminating the waiting time usually associated with development processes. Thanks to 24-hour availability and regular software updates, new features are seamlessly integrated after installation. 

While off-the-shelf software may not meet all business needs, it has its own advantages. In particular, concerns about infrastructure maintenance and scalability are eliminated as these responsibilities are carried by the platform. 

Let's now look at the pros and cons of choosing billing and subscription management software: 

Pros: 

• Accelerated time to market: With instant usability, the software is ready to use immediately after purchase, allowing companies to get to market quickly without waiting for lengthy development processes. 

• Unburdening developers: Because the software is available 24 hours a day, developers do not have to wait for specific development or implementation periods, allowing them to focus on other tasks and projects. 

• Cost-efficiency: Regular updates and maintenance, included with the software, reduce the need for expensive in-house development efforts, resulting in overall cost savings. 

• Seamless maintenance: The platform takes care of infrastructure maintenance and scalability, so companies do not have to perform these tasks in-house. 

• Reliable partnership with suppliers: Choosing a vendor with a proven track record ensures reliability and peace of mind, as companies can rely on the quality and reliability of the software and services provided. 
  

 Cons: 

• Dependence on provider: Limited control over platform functionality can lead to increased dependence on the provider. 

• Limited customisation: Most platforms offer limited customisation options, limiting adaptability to specific business requirements. 

• High licence and implementation costs: The software may incur high licence fees and additional implementation costs. 

Building your own billing software: Pros and Cons   

Building your own software from scratch offers an important advantage: it gives you complete autonomy over every aspect and function. With this approach, you have 100% control and are not dependent on a third party. You have full ownership of the solution, allowing you to tailor it exactly to your organisation's unique needs. By developing a solution that specifically meets your requirements, you ensure that every aspect fits seamlessly with your business processes. 

While there are notable advantages to building your own software, it is essential to recognise the potential disadvantages as well. With that in mind, we're here to provide you with a concise overview of both the pros and cons. Let’s dive into them: 

Pros: 

• Customisation: You have the freedom to adapt the product to changes in your business at any time. 

• Independent price levels: You can independently set price levels tailored to your specific business model and customer segments. 

• Less dependency: By building your own software, you are less dependent on third-party solutions and have more control over your operations. 

Cons: 

• Development costs: The development process may be more expensive than initially budgeted, leading to budget overruns and financial pressures. 

• Maintenance costs: Ongoing maintenance and updates may require more resources and investment than initially planned, affecting long-term financial planning. 

• Time required: Developing a personalised solution may take longer than expected, delaying implementation and potentially affecting business operations. 

• Increased risk of errors and bugs: Complex development processes increase the likelihood of errors and bugs, leading to potential disruptions and costly repairs.  

• Limited Availability of Developers: Finding skilled developers with the necessary expertise can be challenging, limiting development capacity and lengthening timelines. 

• Opportunity cost of development resources: Spending resources on software development comes at the expense of other essential tasks and strategic initiatives, affecting overall productivity and growth opportunities. 

The 6 steps to consider when buying a third-party billing software

When purchasing third-party invoicing software, it is crucial to follow a structured approach to ensure that you select the best solution for your organisation. This process involves understanding your specific needs, evaluating potential options and making informed decisions to simplify your invoicing operations. Here are six essential steps to guide you through this process:   

1. Determine requirements and set priorities

Start by identifying your organisation's specific invoicing requirements. Categorise these requirements based on their importance to your operations and objectives. This step ensures that you focus on the critical functionalities needed for your invoicing processes. 

 2. Define the budget and timetable

 Establish clear budget constraints and timetable requirements for the implementation of the invoicing system. This step helps narrow down the options to those that are financially viable and can be implemented within the desired timeframe.

3. Analyse solutions in relation to requirements

Evaluate the invoicing solutions available on the market against your prioritised requirements. Evaluate the functionalities, scalability, integration capabilities and support services of each solution. This comparison ensures that you select a solution that closely aligns with your business needs.

4. Build a business case

Develop a comprehensive business case for the main competitors. Highlight the benefits, cost savings and potential return on investment (ROI) of each solution. This step helps decision-makers understand the value proposition of the chosen invoicing software.

 5. Proof of concept (POC)

Consider carrying out a proof of concept for the leading solutions, if possible. A POC allows you to test the functionality and performance of the invoicing system in a real-life scenario before making a final decision.

6. Select the solution and implement

Based on the assessment and the business case, select the most suitable invoicing solution for your organisation. Work closely with your chosen supplier to implement the system efficiently and minimise disruption to your operations. Ensure that the implementation process is aligned with the established budget and timeline requirements. 

Here’s are the questions to consider before purchasing a billing solution: 

1. Compatibility with infrastructure: Does the proposed solution integrate seamlessly with our existing infrastructure and systems? 

2. Implementation costs: What are the costs associated with implementing the billing system and does it fit within our budget? 

3. Speed to market: Can the system enable the rapid introduction of new, complex services or products so that we can remain competitive in the market? 

4. Customisation options: Is the system flexible enough to be configured according to our specific business needs, including product offerings, pricing structures and geographical considerations? 

5. Automation of billing cycles: Does the system support automated billing processes, such as event and consumption-based billing, to streamline operations and improve efficiency? 

6. Customised pricing options: Can we personalise pricing models and configurations to meet individual customer requirements and preferences? 

7. Scalability and adaptability: Is the system scalable to handle the growth of our organisation and can it be easily adapted or expanded to meet changing business needs? 

8. Support for different business models: Does the system support different business and pricing models to meet different customer segments and market requirements? 

The 3 steps to prepare for building your billing system   

If you are considering building your own invoicing system, make sure your business is well prepared by following these three steps: 

1. Create a requirements document 

Work with all departments to develop a comprehensive requirements document that will serve as a roadmap for the building process. Consider factors such as: 

• Expected number of customers in the medium and long term 

• Pricing structures, rates and business models to be supported 

• Need for contract design capabilities (e.g. one-off purchase/subscription models) 

• Required integrations with other systems (ERP, CRM, etc.) 

• Need for automated pricing (e.g. integration with a CPQ) 

• Languages, currencies and compliance requirements (country-specific) 

• Invoice templates or country-specific requirements for e-invoicing 

2. Determine what expertise and resources are needed 

Determine the internal and external expertise and resources needed to successfully implement the project. Consider these questions: 

• Do you need to assemble a dedicated internal team focused solely on this project? 

• Are internal development and IT operations teams available? 

• Do you need to bring in external developers or experts? 

• What additional expertise do you need? 

• Are there additional skills you currently lack (e.g. knowledge of billing systems)? 

3. List additional considerations 

Review additional considerations that will shape the development process, including: 

• Billing methods to be adopted (one-off sales, subscription sales, usage-based billing, hybrid pricing and sales models, variable pricing) 

• Required functionality for adaptability and flexibility 

• Required technical capabilities and possible external resources 

• Plans for long-term collaboration, cooperation and support by internal teams 

• Training plans for users after implementation 

Functionality: Make sure your solution is flexible and can adapt as your needs change. Avoid inflexible software and focus on building a solution that can evolve over time. 

Technical expertise: List the technical capabilities needed and whether you have in-house expertise or need to hire external expertise. 

Operations, monitoring and support: Plan the long-term collaboration of your team, list the resources needed and consider user training for seamless implementation. 

Building vs. buying: Invoicing Software - Side-by-Side Comparison 

Building your own billing software VS buying a third party: Which is better?  

When MSPs face the dilemma of building a billing system from scratch or purchasing an off-the-shelf solution, they are often torn between two options, each with its own advantages and disadvantages. 

Understanding your business needs is key. Custom software suits those valuing control and personalisation, while purchasing software is ideal for speed and convenience. 

For those seeking a third-party solution, CloudBilling emerges as an optimal choice. CloudBilling seamlessly integrates the advantages of both approaches, providing MSPs with flexibility and ease. 

Contact us for a free demo and experience for yourself how CloudBilling can improve your invoicing procedures and increase the efficiency of your operations.