For SaaS providers and managed service providers (MSPs), subscription billing is the lifeblood of the business. Predictable recurring revenue is attractive, but managing it effectively requires more than sending invoices. You need accurate revenue recognition, proactive dunning processes and visibility into churn to keep your growth sustainable.
Microsoft Dynamics 365 Business Central offers a robust platform for subscription-based businesses. With recurring billing, dimensions and Power BI integration, you can track key metrics like ARR (Annual Recurring Revenue), MRR (Monthly Recurring Revenue) and cohort health while staying compliant with accounting standards.
Why Subscription Billing Needs More Than Invoicing
Subscription businesses face unique challenges compared to traditional product sales:
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Revenue Recognition Compliance: SaaS and MSPs often bill upfront for services delivered over time. Recognising revenue correctly under IFRS 15 or ASC 606 is critical to avoid compliance risks.
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Churn Management: Losing customers erodes recurring revenue faster than new sales can replace it. Tracking churn and cohort health is essential for forecasting and retention strategies.
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Cash Flow and Collections: Late payments disrupt cash flow and increase operational costs. Automated dunning helps reduce overdue invoices and maintain healthy receivables.
According to Gartner, subscription-based models will account for over 75% of software revenue by 2030, making scalable billing and analytics a strategic priority.
How Business Central Supports Subscription Billing
Business Central provides the tools to manage subscription lifecycles efficiently. Here’s how:
1. Recurring Invoices Made Simple
Business Central allows you to set up recurring sales invoices for subscription services. You can define billing cycles, amounts and start/end dates, ensuring invoices are generated automatically without manual intervention. This reduces administrative overhead and improves billing accuracy.
2. Revenue Recognition That Meets Standards
With deferral templates, Business Central enables you to spread revenue across the service period rather than recognising it all upfront. This ensures compliance with IFRS and GAAP standards and gives you accurate financial statements. For example, a 12-month SaaS contract billed annually can be recognised monthly using automated schedules.
3. Dimensions for Deeper Insights
Dimensions in Business Central let you tag transactions with attributes such as customer segment, product line or region. This makes it easy to analyse subscription performance by cohort, track profitability by service type and identify trends that impact churn.
4. Dunning for Better Collections
Business Central’s dunning functionality automates reminders for overdue invoices. You can configure multiple levels of escalation, from gentle reminders to formal notices, reducing manual follow-up and improving cash flow.
5. Power BI for ARR, MRR and Cohort Health
Integrating Business Central with Power BI unlocks advanced analytics. You can build dashboards to monitor ARR, MRR, churn rate and customer lifetime value. Cohort analysis helps you understand retention patterns and identify at-risk customers early.
Practical Steps for SaaS and MSPs
To get the most from Business Central for subscription billing, follow these steps:
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Define Your Billing Model: Decide whether you’ll bill monthly, quarterly or annually. Configure recurring invoice templates accordingly.
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Set Up Deferral Templates: Align revenue recognition with your service delivery schedule. Test templates to ensure compliance.
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Apply Dimensions Strategically: Use dimensions to track key attributes like customer tier or contract type. This will make your reporting far more actionable.
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Enable Dunning Workflows: Automate reminders to reduce overdue invoices and improve collection efficiency.
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Build Power BI Dashboards: Visualise ARR, MRR and churn metrics. Include cohort analysis to monitor retention trends and inform customer success strategies.
The Payoff: Predictable Revenue and Better Insights
By combining recurring billing, automated revenue recognition and advanced analytics, Business Central helps subscription businesses achieve:
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Accurate Financial Reporting: Compliance with accounting standards and clear visibility of deferred revenue.
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Improved Cash Flow: Automated dunning reduces overdue invoices and accelerates collections.
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Lower Churn: Cohort analysis and retention metrics enable proactive customer success strategies.
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Scalable Growth: A single platform that supports billing, accounting and analytics as your business expands.
As Microsoft states, “Dynamics 365 Business Central empowers organisations to manage subscription models with precision and agility.” For SaaS and MSPs, this means turning recurring revenue into a predictable, profitable engine for growth.
Ready to Optimise Your Subscription Billing?
If you’re managing subscriptions manually or struggling with revenue recognition, now is the time to explore Business Central. Start with recurring invoices and deferral templates, then unlock deeper insights with dimensions and Power BI.