Most people understand the basic concepts behind billing. It is the process of determining an amount owed for a product or service, informing customers about their total bill, and collecting payments. It is a straightforward process that technology has improved through online and automatic solutions that enhance accuracy. However, these technologies are tools that help; they do not transform how business is conducted. This transformation is monetization, and while it relates closely to billing, the overarching role is much broader.
Billing is defined as the process of generating invoices to recover payment from customers. Billing procedures can be simple or complex, depending on the goods and services delivered that require payment. They generally include collecting information needed to put together an invoice, creating the invoice itself, and sending the invoice to the customer.
Billing software is a computer program that tracks billable products and services and automates the preparation of invoices or other documentation.
The takeaway: Billing is a business process that focuses on collecting transactional debts. Billing software is a tool to help this process along and can result in quicker payments and stronger cash flow.
The definition of monetization from the Merriam Webster dictionary is utilizing “something of value as a source of profit.” Monetization means to generate revenue from a service or product your business provides. Where billing is about retrieving the payment from a customer, monetization is about a process through which your business turns a profit.
Monetization software is the technology platform that is one component of a business’s overall practice to generate revenue. It should bring a data-centric mentality to connect your various information sources, which helps create insight from that data to drive growth.
The takeaway: Monetization is a business discipline that goes beyond billing to understand what drives customer value and turn organizational expertise into revenue. It is a business model transformation that helps companies tap into new opportunities to impact customer loyalty and reduce churn. This transformative quality is the main difference between billing and monetization.
Today’s digital economy has changed the way businesses work. The last decade has seen the concept of customer engagement rise in importance, and it now drives everything from customer service to the delivery of products and services.
Billing automation and process improvements may get more cash in the door, but they do not create an optimum environment for monetization. A monetization process touches a business’s core and is crucial for strategic growth. It leverages engagement with customers, prospects, and partners to help a business turn those relationships into profit-generating ones for an extended period of time. Contrast this with billing for a flat fee service relating to a one-time service or product provided to a customer, and it’s easy to see the benefit of a monetization relationship: it structures a relationship around ongoing revenue and service.
Businesses in the digital economy will be forced to reconcile their basic billing procedures with a new discipline for monetization – or they risk falling behind. Many businesses have already made the shift to embrace monetization, but it’s important to consider the short-term operational impacts of monetization before taking the leap. If you think you’re ready to explore how monetization can transform your business, check out this free PDF that explains the 10 most common organizational implications we at BluLogix have observed when working with clients as they shift to a monetization focus.
If you’d like to get in touch with any questions you have about billing or monetization, don’t hesitate to reach out.
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