SaaS Case Study
HappyCo automates Subscription Billing and Revenue Recognition
Ordway automated complex subscription billing and revenue recognition for parent-child hierarchies.
Summary
Order-to-Cash Automation
HappyCo uses Ordway’s recurring billing software to generate customer invoices and recognize revenue for the associated contracts. Since implementing the platform in 2023, Ordway has become the source of truth for all of the company’s reporting on customers, subscriptions, MRR, and booked revenue. It is integrated with HappyCo’s CRM (Salesforce) and also feeds the company’s FP&A (Abacum) and ERP system (NetSuite).
Prior to adopting Ordway, HappyCo was using SaaSOptics (Maxio) for billing and revenue management. The finance team was looking for an alternative that would better support the parent-child relationships in its complex customer contracts and automate proration calculations for mid-contract upgrades. With Ordway, HappyCo has been able to significantly reduce the amount of time spent managing billing, which enabled it to scale its operations without adding FTEs. The company was also able to accelerate revenue from upsells and cross-sells.
The client
HappyCo
HappyCo is a vertical SaaS application designed for acquiring and maintaining multifamily properties such as apartment buildings. HappyCo automates the full lifecycle of asset management for real estate owners and operators. Investors can use it to perform due diligence and lease audits of new properties they are evaluating. Maintenance teams can use it to perform on-site inspections of buildings and track work orders for apartment repairs.
The company’s mission is to create happier experiences for residents, owners, and operators, which is why they chose the name HappyCo.
The challenge
Complex Billing, Taxes & Accounting
Parent-Child Account Hierarchies
HappyCo was looking for an application that could support the complex parent-child account hierarchies needed to properly invoice its customers. Real estate owners and operators typically don’t own just one apartment complex, but instead a whole portfolio of geographically distributed buildings. Some customers prefer to be billed separately for each location (child account) while others require a consolidated invoice at the parent level.
Sales taxes for these account hierarchies are complex as well as the rates for online software vary by state and local jurisdiction. Taxes must be calculated correctly for each property and inserted into the appropriate child or parent invoice.
With Ordway’s platform, the team has been able to automate all of its complex billing scenarios. Native, out-of-the-box features accommodate most of the use cases and those that fall outside the lines can be automated using custom fields and Ordway’s no-code/low-code options. For example, custom workflows were configured to automate the more complex parent-child requirements. When a subscription changes at the parent level the appropriate modifications are automatically its child accounts.
“Ordway was the first billing system we found that had a deep ability to manage parent-child relationships from the contract through to billing and revenue recognition.”
Liz Hanson, CMA
Director of Accounting at HappyCo
“I’ve never gotten into a situation where Ordway said they can’t do something. There is always a way to configure the application to meet our needs.”
Kim Poisson
Revenue Operations Specialist
Revenue Recognition
Accounting in the Revenue Subledger
HappyCo also needed an application to support a variety of complex revenue recognition scenarios. As is common in the SaaS industry, HappyCo uses a mix of subscription and usage-based pricing with some charges prepaid in advance and others invoiced in arrears. Parent-child hierarchies also complicate the accounting as revenue needs to be accurately reported at both levels.
With Ordway’s revenue recognition software, HappyCo has been able to automate journal entry creation for its various pricing models and contract types, ensuring compliance with both GAAP accounting principles under ASC 606 and the company’s policies. The revenue accounting engine generates the necessary deferred revenue schedules and recognizes revenue at the correct time based on business rules configured in the system. All the heavy-lifting for revenue is performed in Ordway’s sub ledger, avoiding the need to burden the company’s ERP system.
“We may switch to another ERP in the future, but we are not considering alternative revenue recognition tools. We have so much trust in the numbers from Ordway that it’s not something we are willing to break.”
Liz Hanson, CMA
Director of Accounting at HappyCo
Accounting for Contract Modifications
High Change Velocity
One of the unique challenges HappyCo faces with both billing and revenue recognition is the high velocity and volume of changes to customer contracts. HappyCo’s customers are frequently adding and removing assets from their real estate portfolio, which results in lots of subscription changes. Each time a child account is added or removed from an account, there is a need to adjust the amounts being invoiced, the revenue schedules, and MRR reporting.
In addition to the customer-driven changes, there is also a high velocity of change from internal groups for product names, rate cards, and billing schedules. With Ordway, the accounting team can make bulk updates easily through the user interface or a file upload. The system dynamically calculates the adjusted prorations, updates billing schedules, and recalculates the journal entries to reflect the changes.
“The support has been fantastic. Ordway is always willing to jump on a call with us and talk us through the best way to configure the system or build a workflow.”
Kim Poisson
Revenue Operations Specialist at HappyCo
“Ordway was exactly what we needed. On the front end the output is very simple and speaks the customer’s language, but on the back end we are able to overload it with continually evolving inputs.”
Liz Hanson, CMA
Director of Accounting at HappyCo
Customer Support
Ordway’s Differentiator
One of things that the HappyCo team likes best about working with Ordway is the ability to speak with a real person when they need support.
HappyCo also likes that Ordway’s management team is very receptive to feedback about improvements to the platform, including direct conversations with the CEO or CTO about the product roadmap. For example, HappyCo was a key contributor to requirements for Ordway’s recently launched payments, which includes cash application features the team suggested.
HappyCo has a diverse community of internal users which includes everyone from accounting staff on the finance team to account managers in the go-to-market organization. Many of the users do not have a financial or technical background, which created a challenge in billing system selection. The application needed to be both simple to use, but also support complex billing and accounting scenarios.
Ordway satisfies both types of users. Customer Success Managers can easily pull up their account’s latest invoice and MRR in Salesforce, while more advanced accounting users can do things like add custom fields to subscriptions and generate custom reports.
Benefits
Automated Recurring Billing
Expansion ARR from Upsells and Cross-Sells
One of the biggest benefits of switching to Ordway has been the additional revenue HappyCo is able to generate from upsells. The previous billing system was not able to automatically perform proration calculations for mid-period changes. As a result, HappyCo often had to wait until the next billing cycle to apply price increases for additional services. For example, if a customer had a billing cycle that started on July 1st and an upgrade occurred on July 10th, the new charges would not be applied until August 1st. As a result, HappyCo would lose out on 21 days of revenue.
With Ordway, prorations from mid-contract changes are automatically calculated and an invoice for the upgraded services can be sent out immediately.
Lean Finance Team
Scaling without Additional Headcount
HappyCo runs a lean finance team. Automation of high-volume, repetitive tasks like contract changes and journal entry creation is critical to the team’s success. The high degree of automation that HappyCo has been able to achieve with Ordway has enabled the accounting team to scale its operations without adding headcount.
If the company had continued with its prior billing system, HappyCo would have needed to hire at least one FTE to support the additional invoice and customer volume.
