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Buy, Don’t Build. 4 Reasons Building an In-House Billing Platform is a Bad Idea

B2B companies today are fast moving and complex. Technology advancements, competitive pressures and changing market conditions have made GTM motions much more complicated. Mixed revenue streams, bespoke contracts, usage business models and complex pricing, are only part of the ‘Revenue Spaghetti’ reality for B2B companies. Sooner or later, Finance and Product leaders know that they will need to grow out of the ‘starter pack’ - spreadsheets or basic billing systems. 

The problem is that billing systems in-market haven’t caught up with B2B complexity and cannot meet the complex needs of companies today. Generic or ‘starter’ billing solutions can’t support rapid expansion into different markets and business models without causing operational bottlenecks.

As a consequence, some teams feel they have no choice but to build in-house. Almost always, this would fail. Teams will hugely underestimate the requirements a billing system entails, the resources needed, and the growth scenario. One VP Finance at a pre-IPOt company who built an in-house solution told us:

“No one understands why we have 4 FTE engineers doing billing, and why billing is on our product roadmap, a Sales Tech company”.

Overlooked Considerations

While B2B scale-ups may be tempted to build an in-house billing system to solve their own complexities, it's almost never a good idea. Before you build a custom solution from scratch, here are some risks you might have overlooked:

  1. A System to Grow Into - As your business grows, will your solution be flexible enough to accommodate growth - new pricing models, expanded market segments, and additional revenue streams?
  2. Resource Drain - Did you realistically  assess the resources (tech, time, budget, and manpower) required to build, maintain, and manage an in-house solution?
  3. Opportunity Cost - Is it worth the opportunity cost of not focusing these resources on your core products, customers and market? 
  4. Core and Peripheral Expertise - Do you have the in-house knowledge to tackle all the surrounding implications, such as Tax, Accounting, Cash, Integrations, etc? 
  5. Integrations are Key - are you able to integrate with the ecosystem systems, mainly CRM and ERP, to make your organizational data consistent across teams and systems? 

The Case Against Building Billing In-House

In our experience, it is nearly impossible for companies to build an efficient and scalable billing and revenue solution on their own. Here’s why.

When You Scale, Your Mistakes Scale

When building an in-house billing system, you're taking on the risk of making it error-prone and causing real damage. We’ve seen it happen more times than we could count. Whether it's sending your customer the wrong invoice, miscalculating your pricing, tracking faulty data, or any of the other hundred things that can go wrong in a complex B2B tech scale-up. Once you figure out you're in over your head, you can find yourself on the fast track to an endless cycle of technical debt.

Your Time-to-Market Matters

Software teams usually underestimate development resources needed to automate billing. After all, how hard can it be, it’s just calculating price and creating a PDF? Obviously that is not the case in modern businesses, where billing, cash, and revenue events need to be in sync. We usually find there is a gap here between Product and Finance teams, even a bit of kingdom building in some cases.

More importantly, when your developers are working on your in-house billing system, they're not working on your actual product. Suddenly, your time-to-market slows down, hurting the customer experience and your competitive edge. While your competitors are shipping value to customers,  your developers are still knee-deep in coding a billing system.

It’s (a lot) More Costly Than You Think 

Now’s time for some number crunching. Remember, the development cost isn't the final price. Inevitably, maintaining a billing system over time comes with its own set of costs: fixing bugs, maintaining stability, supporting the growing complexity of billing logic, scaling across geographies, keeping up with security policies, adhering to tax and payments compliance, and so on. Before you know it, your $50K budget balloons into a $200K yearly spend. 

You Have Skills, But Not the Right Ones

When it comes to building your own billing system in-house, there are some skills and expertise you just can't do without. Having a clear understanding of your business model is not enough. Billing systems have many moving parts: contracts, pricing models, invoicing, usage tracking, and revenue recognition, to name a few.

You have to make sure you have all the pieces, and that they all work together in harmony. Ultimately every single company we spoke with that started with an in house system, eventually switched to an external one. 

If You Can’t Build, Buy. 

Instead of wasting resources building your own billing system, invest a fraction of that in finding a billing system that's right for your needs.

Buying the right billing system can:

  1. Save you money– building your own billing system costs a lot more than buying one).
  2. Reduce your time to market – why would you pause your GTM timelines to wait for in-house billing features? 
  3. Provide better quality – your company needs a professional billing system (and your core product needs developers).   
  4. Reduce risks – billing systems handle sensitive customer information. Don't take that on you.
  5. Eliminate maintenance – maintaining a system is just as hard (and expensive) as building one.

Received - Your B2B Billing Solution 

If you are a B2B business - you need a B2B billing solution. Received adapts to your specific needs and complexities, giving you a custom system without the hassle.

Received enables companies to manage bespoke B2B contracts with multiple products, various pricing models, and customized terms while automating tasks that were once manual headaches: invoicing, reconciliation, revenue recognition, and much more. 

By removing manual work and providing flexibility, Received improves the cash cycle, streamlines back-office operations, and eliminates human error, all while offering the scalability needed to grow. 

Learn more about Received.