Dominik Mayer Product & Technology
Basel,
Processes
Subscription billing in Business Central: Automate invoicing for rent, licenses, and subscriptions
Many Swiss SMEs rely on recurring revenue for a substantial part of their income: rent, maintenance contracts, software licenses, and service subscriptions. The monthly invoicing process varies from one company to the next. Some keep the terms in an Excel spreadsheet and enter them into their ERP system. Others copy the previous month’s invoices and adjust them. What almost all of them have in common is that someone has to do the work every month.
This is not a one-time task. It comes around every month, and the workload grows with every new contract. Since 2024, Business Central has included a dedicated module for this: Subscription Billing. This article explains what it can do, which businesses can benefit, and what implementation involves.
Dominik Mayer Product & Technology
Basel,
The starting point
Why manual billing gets more expensive with every new contract
Two common scenarios
To make this concrete, we will follow two example businesses throughout the article:
- A property management company rents office space and parking spaces to business tenants. Its contracts have fixed terms, notice periods, and occasional rent adjustments.
- An IT service provider buys software licenses from a vendor and resells them to its customers at a markup. Charges are calculated per user, sometimes with additional usage-based fees, and user numbers change regularly.
The same principle also applies to maintenance contracts, service subscriptions, or equipment that is sold once and then comes with a recurring service fee.
Knowledge that stays outside the system
For a company with ten tenants, monthly billing takes about an hour. With fifty tenants on different billing schedules, with index-linked rent adjustments and service charges, it can take a full working day. With a hundred tenants, the task keeps one person busy for several days a month.
Every exception needs attention, too. One tenant pays for a parking space annually, another quarterly. For a third tenant, a rent adjustment takes effect next month. A fourth has given notice, and the final invoice needs to be prorated. Each of these exceptions is recorded somewhere: in a spreadsheet, a note, a calendar, or the head of the person who handles invoicing.
Billing then depends on knowledge that is not in the system. When that person is on vacation, things get difficult. When they leave the company, some of that knowledge leaves with them. Missed price adjustments or catch-up charges often go unnoticed for months, if they are noticed at all.
Rent and maintenance contracts
Set up contracts once and automate monthly invoicing
How Business Central records contracts
Before looking at day-to-day billing, it helps to understand how Business Central records contracts in the system. This explains why so much can be automated later.
For each customer, you create a customer contract in Business Central with one or more lines. In the property management example, a tenant might have two lines: one for the office and one for the parking space. Each line has its own terms: price, invoicing frequency, minimum term, renewal terms, and notice period. The office can be invoiced monthly and the parking space annually in advance, both under the same customer contract.
You do not have to enter these terms again for every contract. Instead, you create a template once for each offering, such as “Office rent, monthly, fixed for 5 years, annual renewal after that, 6 months’ notice.” Each new contract inherits these values. The work shifts from something you do every month to something you do once during setup.
The billing run: Set it up once instead of retyping every month
At the property management company, the start of the month currently looks like this: the finance team works through the tenants one by one. For each tenant, they create an invoice or copy the previous month’s, check whether the amount is still correct, update the service period, and check the total. Then they move on to the next tenant. Along the way, they check the calendar for rent adjustments and the notes for anyone who has given notice. At the end, the question remains: did every tenant get an invoice, and did anyone get two? With fifty tenants, that takes a day when nothing else gets done, and the same work comes around every month.
With subscription billing, Business Central creates a billing proposal covering all lines due across all customer contracts. The finance team can see at a glance what will be billed, make corrections where needed, and create the invoices in one step. Rent adjustments and contract end dates are already taken into account because they are stored in the system.
The price and invoicing frequency are separate. You can agree on an annual rent and still invoice it monthly, with Business Central calculating the monthly amount. The service period appears automatically on each invoice. If a customer has several contracts, they can be combined on a single invoice.
Instead of spending a day retyping invoices, the finance team reviews the billing run. This takes little more time for fifty tenants than for ten.
Dates you no longer need to track in a calendar
Recurring contracts come with dates to track: minimum terms, renewals, notice periods, and price adjustments. Today, these are often held in a calendar or spreadsheet, and someone has to keep an eye on them.
In Business Central, these dates are attached to the contract line. The system uses the contract term and notice period to calculate the last date by which notice must be given, and moves that date forward after every renewal. When notice is received, you can immediately see how long the contract will continue to run and enter the end date. After that date, Business Central stops invoicing.
Price adjustments can also be entered in advance, for example when the rent increases after the fixed term ends. From the month in which the change takes effect, Business Central automatically bills at the new price.
Licenses and resale
Customer and vendor contracts linked together
For the IT service provider, every license sold has two sides. There is a contract with the customer, who pays a price per user per month. There is also a separate contract with the software vendor, under which the IT service provider pays a purchase price for those same users.
Today, the two sides are handled separately. Sales creates customer invoices, while purchasing checks the vendor’s invoices. When a customer adds a user, both sides need updating. If the number of users billed does not match the number of licenses purchased, the IT service provider either pays for licenses it has not billed to customers or bills customers for licenses it has not purchased from the vendor. To find out what a customer contributes to the bottom line, someone has to compare customer and vendor invoices in a separate Excel report.
Both sides in one system
In subscription billing, Business Central records both contracts: the customer contract and the vendor contract. When a license is sold, it automatically creates both sides: a line in the customer contract and a line in the vendor contract. Both contract lines remain linked to the same license. Purchase invoices are generated from the vendor contract in the same way as customer invoices.
The customer’s cost center or project is also carried over to the vendor side. A report by cost center or project therefore shows directly in Business Central how much each customer brings in and what they cost. The separate Excel report is no longer needed.
Usage-based billing without retyping
Some licenses are billed not only per user but also by actual usage, for example per document processed. The usage figures come from the vendor, and someone often transfers them into customer invoices by hand.
If the vendor supplies the data in a CSV file or through an interface, Business Central imports it directly. It assigns each line to the right customer, calculates the price, and includes the amount in the next billing run, in addition to the fixed per-user fee. Once configured, this works the same way every month.
Finance and management
Deferrals and visibility without Excel
Deferrals at month-end
If the property management company bills for a parking space for a full year in advance, the revenue needs to be recognized over twelve months rather than entirely in the month of invoicing. Today, someone calculates that during the month-end close and posts the entries manually.
With subscription billing, deferrals are created automatically as soon as the invoice is posted, based on the service period of the individual contract line. As part of the month-end close, the finance team recognizes the deferred amounts for all contracts in one step. The same applies to costs from vendor invoices paid in advance.
Visibility for management
With all contract data in one place, Business Central can answer questions that currently require a separate report. Power BI shows recurring monthly revenue, cancellation rates, and how your contracts change over time, directly from the current data.
Choosing the right approach
Subscription billing or recurring sales lines?
The difference
If you already use Business Central, you may be familiar with recurring sales lines. They generate the same invoices at regular intervals for selected customers. But they do not record the contract itself in the system. There is no contract term, notice period, renewal, stored contract price, or link to the vendor contract.
They also have limitations when it comes to deferrals. Deferrals are based on templates per item or account, rather than the service period of the individual contract line. Recurring sales lines are sufficient for a handful of simple invoices with the same monthly amounts. Once contract terms, different billing schedules, advance payments, or vendor costs are involved, they are not.
What does subscription billing cost in Business Central?
There is no additional license to buy. Subscription billing is included with Business Central, starting with the Essentials license. You can check current license prices in our cost calculator.
Implementation
What does implementation involve?
Implementation can be completed in a few weeks. Most of the work comes at the beginning, and it involves three areas at the same time: sales, purchasing, and finance. Sales knows the customer contracts and their terms. Purchasing knows the contracts with software vendors and suppliers. Finance knows the accounts, cost centers, and month-end close. All three need to be involved from the start.
Update the item master data
Anything you bill on a recurring basis needs its own item in Business Central, configured as a subscription item with the appropriate templates for billing frequency, contract term, and notice period. Existing items often cannot simply be reused for this. It is worth setting up these subscription items and templates carefully once, because every subsequent contract builds on them.
Transfer existing contracts
Each active contract is created in Business Central: the customer contract with its lines and, for resale, the corresponding vendor contract. This does not have to be done one contract at a time by hand. If the contracts are currently held in an Excel spreadsheet or another system, they can be prepared and imported in bulk. To keep billing running without interruption, Business Central needs the current status of each contract: the next invoice date and the end of the current contract period. From there, it calculates all subsequent invoices and dates itself.
Your partner
Nexova Dynamics implements subscription billing for your business
Nexova Dynamics implements Business Central for Swiss SMEs with a team that understands both Business Central and finance and accounting. We help you transfer your items and existing contracts, bringing data from Excel or your previous system into Business Central in a structured format. We talk through how you bill today and show you which parts subscription billing in Business Central can handle.
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