The Battle for Billing: Should It Reside in Your ERP, CRM, or a Standalone System?

Preface: My Unique Perspective on Billing in the Tech Stack

Having spent years in both finance and sales roles, I bring a unique perspective to the discussion of where billing should reside in a company's tech stack. My journey began with a degree in accounting, followed by several years working in back-office finance and accounting operations. During that time, I gained hands-on experience with the systems that manage core financial processes.

From there, I transitioned into a presales consulting role, where I helped companies evaluate and select ERP systems that best fit their needs. My next role took me deeper into the sales side as an Account Executive working primarily within CRM systems. Eventually, I moved into a sales leadership role, where I was responsible for implementing go-to-market strategies and solutions.

Throughout my career, I've touched nearly every component of the Quote to Cash process. This breadth of experience has given me a deep appreciation for how each part of the process functions and why it’s essential to have systems that work in harmony. Because of this, I’ve developed a strong opinion on where billing should reside to maximize efficiency, accuracy, and financial control.

The Case for Billing Inside Your ERP System

As companies grow and evolve, the question of where billing should reside within a company's tech stack becomes increasingly important. There are three primary options for managing billing:

1. Inside your ERP system
2. Inside your CRM system
3. Inside a standalone application specifically for billing.

Each of these approaches has its own set of pros and cons, but ultimately I believe the most effective place for billing to reside is within your ERP system. Here’s why.

Option 1: Billing Inside the ERP System (Recommended)

Your ERP system, such as NetSuite, is designed to manage core financial processes like your general ledger, chart of accounts, tax, subsidiaries, currencies, banking, and financial reporting. Billing is intricately tied to accounting processes, so separating billing from your ERP can create numerous challenges.

Pros of Billing inside the ERP:

• Centralized Financial Management: The ERP is where your general ledger, debits, credits, tax, and currencies are managed. Billing inside your ERP ensures that this critical financial data remains centralized, accurate, and easily auditable.
• Integration-Free: By handling billing within your ERP, you eliminate the need for complex integrations of financial data with external systems, which can lead to reconciliation and data issues.
• Alignment with Revenue Recognition: In today's regulatory environment, standards like ASC 606 and IFRS 15 require businesses to recognize revenue based on performance obligations. By keeping billing within the ERP—where revenue recognition is also managed—companies can ensure tight alignment between these two processes. This reduces the risk of errors and simplifies compliance, making it easier to meet financial reporting requirements and maintain accuracy. (It's important to note that I also recommend managing revenue recognition inside the ERP for optimal efficiency.)
• Financial Reporting & Audits: Since your ERP system is typically the one that gets audited, keeping billing in the ERP simplifies financial reporting, audits, and tax filings.

Mis-Conceptions:

• Limited Core Billing Functionality: Not all ERP systems come with advanced billing capabilities as part of their core features. However, many ERP platforms have extensive partner networks offering solutions that are built directly within the ERP environment. For example, tools like ZoneBilling for NetSuite can easily address these gaps, providing robust billing functionality seamlessly within the ERP.

Option 2: Billing in the CRM System

Many businesses argue that since their sales, customer success, account management, and support teams operate inside the CRM, billing should also live there. This argument often stems from the fact that CRMs like Salesforce handle quotes, contracts, product master lists, and customer relationships.

Pros of Billing in the CRM:

• Sales Team Visibility: Sales teams can view customer contracts, invoices, and billing history directly within their CRM, potentially enhancing their ability to cross-sell, upsell, and handle renewals.

Rebuttal: While sales team visibility is certainly important, this alone doesn’t justify moving billing into the CRM. These benefits can still be achieved through a bi-directional integration between your CRM and ERP. In fact, this is the most common integration within the Order-to-Cash process. By syncing contract, invoice, and payment data from the ERP into the CRM, sales teams get the visibility they need, while ensuring your financial records remain accurate and compliant in the ERP. This approach delivers the best of both worlds without compromising financial integrity.

• Single View of the Customer: By managing both sales and billing in Salesforce, companies can create a 360-degree view of the customer. This helps businesses manage relationships better, as all customer interactions—whether sales, billing, or support—are centralized.

Rebuttal: While this might sound like a great solution for sales teams, it's important to also consider the needs of the Finance and Accounting departments. The good news is, both sides can benefit. By synchronizing contract data between Salesforce and your ERP system, you can ensure that sales has access to the information they need, while accounting maintains accurate and compliant financial records—something critical for business operations.

Cons:

• CRM Is Not a Financial System: CRMs are designed for customer relationship management, not financial management. Turning your CRM into a financial system introduces complexities around compliance, foreign currency calculations, and revenue subledger management, and many other complications.
• Disconnection from Revenue Recognition: Even if you manage to handle billing within the CRM, you still need to consider where revenue recognition will reside. Is this something that will require another system, or is it already part of your ERP system (where it ideally should be)? If revenue recognition is inside your ERP, it has yet to be proven that billing and revenue data can be accurately synchronized between different systems without heavy customization or manual effort. This introduces potential integration challenges and custom setups, increasing the risk of data discrepancies and creating a more complex architecture.
• Audit & Reporting Concerns: Having auditable financial data living in your CRM gives accountants and auditors headaches. Financial systems are meant to be tightly controlled and secured, which is often not the primary focus of a CRM.

Option 3: Standalone Billing Systems

Standalone billing systems have become increasingly popular, especially for subscription-based businesses or those requiring specialized billing functionality.

Pros of Standalone Billing Systems:

• Specialized Functionality: Standalone billing systems are often designed for different business models, such as B2B or B2C, as well as specific industries, including SaaS, healthcare, telecommunications, utilities, and more. These systems offer tailored and specialized solutions to meet the unique billing requirements of each business type and sector.
• Cost-Effective Interim Solution: Since standalone billing systems are separate from full ERP platforms, they can be a more affordable option for growing businesses. Many companies that aren’t ready to invest in a full ERP solution, such as those using QuickBooks, choose to adopt standalone billing systems as an interim solution. This allows them to manage more complex billing needs as they scale, while deferring the significant expense of transitioning to an ERP system until they are ready for that next step.

Cons:

• Integration Complexity: A third system in your tech stack adds a layer of complexity when it comes to data integration and reconciliation between your CRM, ERP, and billing tool. You'll need to ensure that customer data, product lists, and other critical information stay synchronized across all systems.
• Disconnected Revenue Recognition: Since billing is handled outside your ERP, revenue recognition becomes an even bigger challenge, requiring additional customization and integration between systems. While some standalone billing applications do offer revenue recognition solutions, not all of them do. This can result in having to manage revenue recognition separately, increasing complexity and the need for careful synchronization between systems.

Why Billing Should (Usually) Live in the ERP

After examining the three options—ERP, CRM, and standalone billing systems—it's clear that for many companies, keeping billing and revenue recognition as closely connected as possible is crucial. The ERP system is typically the backbone of financial operations, offering a single source of truth for accounting, reporting, and compliance. By managing billing within the ERP, you simplify data flow, reduce the risk of errors, and ensure that your financial reporting is accurate and aligned with regulatory standards.

That said, there are always exceptions. Certain business models or operational needs might make a CRM, standalone billing system, or even a custom-built solution a better fit. For example:

Billing in a CRM: This can be the right option for companies that prioritize customer experience and require sales teams to have instant visibility into invoices, contracts, and payment history. Businesses with simple billing and simple revenue recognition needs, such as B2C subscription services, might find that a CRM offers sufficient billing functionality integrated with customer data and renewals.

Standalone Billing Systems: Companies with highly specialized or complex billing processes, such as telecom or utilities, may benefit from standalone systems that are purpose built for their industry. Additionally, businesses that aren’t ready to invest in a full ERP system might choose standalone billing tools to scale their operations while deferring the larger investment.

Custom-Built Solutions: For organizations with highly specialized billing workflows or proprietary business models, a custom-built solution may be necessary to meet their unique needs. However, it's crucial to carefully assess just how unique your business model truly is before pursuing this path, as custom solutions can be the most expensive option to build, implement, and maintain over time. What may seem like a unique challenge might be solvable with existing systems, so proceed with caution to avoid unnecessary complexity and costs.

While ERP is often the best choice for most businesses, it's important to evaluate your company’s specific requirements before deciding where billing should reside.

Why ZoneBilling?

For businesses using NetSuite, ZoneBilling offers the best of both worlds. It provides an enterprise-grade billing platform built directly inside NetSuite’s ERP system. This ensures that billing, revenue recognition, and financial reporting are all seamlessly integrated. Plus, by adding ZoneBilling to your NetSuite account, you maintain a simple two-system architecture—your CRM (Salesforce) and ERP (NetSuite)—eliminating the need for multiple complex integrations and data reconciliation.

Ultimately, billing should reside inside your ERP system to maintain financial accuracy, streamline processes, and minimize integration challenges. With tools like ZoneBilling , you can turn your ERP into a powerful billing platform, keeping your financial operations clean and efficient while allowing your CRM to focus on what it does best—managing customer relationships.