Should you build your own invoicing software or buy off-the-shelf?

Managing software systems for businesses has changed drastically over the last 20 years, and the process of invoicing is no e...

Managing software systems for businesses has changed drastically over the last 20 years, and the process of invoicing is no exception. If you’ve been in the working world for a while, you probably remember how software decisions were made before the millennium. Specifically this: if your developers could build it, and your IT team could support it, it was always better to build than buy. If you had your own custom-built SQL or Microsoft Access database, raise your hand.

Times have changed though. Business software has increasingly moved from on-premise to the cloud. Cloud companies have taken advantage of massive economies of scale, more open online practices, and integrations with other providers. Customization ranges the gamut from out-of-the-box tools to the AppXchange on Salesforce.com.

Related: An eyewitness history of SaaS in 12 chapters

Gone are days are large IT support teams. New support has cropped up for Software-as-a-Service (SaaS), in the form of operations roles. Sometimes those operations roles are per department, depending on the number of SaaS tools and their complexity level.

Even with all the benefits of the cloud, you might still consider building versus buying when it comes to invoicing software - especially if you’re a technology company. With all those engineers at your disposal, why wouldn’t you leverage their efforts to support your business needs? You might save some money while keeping everything under one roof.

Before making any decisions, consider the pro’s and con’s for each scenario. The answers might surprise you.

Financial costs

Take a look at what it would cost you to build your own invoicing platform versus purchasing access to one. In order to make your comparison, gather pricing information from a handful of cloud invoicing providers that are in the running for your business. Make sure to include setup fees, licensing fees, and fees for any upgrades you’d require on top of the standard service. These are your “buy” costs.

To gather your “build” costs, think about all the costs you’d incur if you built invoicing software on your own. These factors include server space for any software you build, the cost of supporting that time (through your IT staff or otherwise), and the cost on engineering man-hours to build and upgrade the platform. And don’t forget security measures like PCI Level 1 Compliance and integrations with other platforms - they carry a high cost as well.

Soft costs

Soft costs are hard to define and not always comparable, but they can have just as big of an impact on your decision. Consider the ways a build vs. buy decision might impact your company from either side. If you take precious engineering resources away from core product development and refocus them on building internal software, how might that action slow down your ability to compete in your own marketplace? Alternatively, what’s the cost of allowing confidential customer billing data to be stored in an outside platform? What kind of stability can you guarantee in any software you build, versus the performance of an external platform? Only you can decide which of these soft costs trump others.

Maintenance and support

Once you’ve either built your own invoicing software or purchased a cloud invoicing platform, envision what maintenance and support look like. If you’ve built your own, maintenance and support will likely involve helpdesk functions, bug fixing, patches, and mini-release cycles. Where would this fall within your business? Do you have the staff to do the work today, or would you need to hire new employees? If you purchase a cloud invoicing platform, understand how they manage those same processes. Do you have access to a helpdesk? What’s their average turnaround for bugs? Give yourself a good understanding of maintenance and support for either scenario.

Future upgrades

Change is the only constant in this world. There will always be new developments to support for online invoicing - or any other platform. Your business may want to add new payment methods, complex billing logic, or new pricing formats. That means staying abreast of the latest trends in the industry and planning for future improvements, including prioritization and management of new features and functionality, development, testing, and launch. What’s the process and frequency for upgrades with the platforms you might purchase? How would you manage the process internally if you were to build your own? Consider the time and resources it would take to support upgrades internally vs. the economies of scale you’d gain from an external provider.

The decision to build your own software vs. buying off the shelf isn’t always a straightforward one. Everyone’s situation is different: some companies can’t take on the burden of building their own software, while others have enough resources to support an internal build. Whatever you do, take the time to evaluate your own situation and make an informed decision.

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