For many growing companies, updating and maintaining a legacy billing system, rather than replacing, seems like a good way to save money. Avoiding that upfront investment in a new system means more cash to invest in product development, marketing, and human resources, right? Well, not really.

Actually, research has found that the companies limping along on these legacy systems are losing quite a bit more money than they may realize. In fact, 90 percent of IT professionals say legacy systems are preventing them from taking advantage of the digital technologies they require to be more efficient. As a consequence, not only are they spending significant money updating and maintaining the old systems, but they’re also losing out on missed opportunities to streamline operations and grow revenue by better meeting customers’ needs.

To dig deeper, let’s take a look at some of the hidden costs — both direct costs and opportunity costs — of legacy billing systems.

Direct Costs

The direct costs to maintaining a legacy billing system come primarily from the IT resources required. When business plans and the market both evolve, legacy systems aren’t built to keep up, so adjusting pricing models, adding new products and other significant changes all require manual updates. Usually, this involves a legacy billing system expert. Legacy systems also need significant maintenance, both to simply stay up and running and to integrate with other, ever-evolving processes and systems. Meaning, more hours. And it’s not just talent costs, but equipment, too. A growing company will eventually need additional capacity to accommodate its client base. So, factor in the cost of purchasing and installing new servers, too.

Ultimately, research has found maintaining these systems to be a significant drain on a business, while modernizing their systems could help reduce a business’s overall operational costs by 13 percent.

Opportunity Costs

While the direct costs certainly add up, the indirect costs — the missed revenue opportunities — are likely to be even more painful.

Let’s start with the time it takes to implement all those updates we just talked about. While IT gets the legacy system up to speed, invoicing, billing and reporting will all require manual intervention (more than usual, even), resulting in delays, errors, frustrated customers and missed revenue opportunities.

Agility is a powerful driver of growth in today’s market, but legacy systems don’t foster that well. MGI has found that only 29 percent of companies are equipped to introduce new pricing plans in less than four weeks. With customer needs and preferences constantly in flux, a slow time to market on new products, services, and pricing models is liable to miss the wave, leaving businesses behind again the moment they think they’re caught up.

Additionally, legacy billing systems tend to require significant manual intervention even when they’re not in the midst of being updated. (90 percent of senior financial technology decision makers say their operating platforms have limitations that require manual processes.) No matter how skilled your team, that much human involvement in the minutiae of billing is guaranteed to lead to errors and customer disputes. In fact, financial modeling specialists have reported that 88 percent of spreadsheets contain errors, and MGI finds that billing disputes cause significant customer friction for nearly 60 percent of companies. All this is to say that a legacy billing system is liable to have a serious negative impact on the customer journey as would-be buyers sit through delays, only to be presented with inaccurate or unreadable invoices. Not only does the business lose out on the opportunity to convert one-time shoppers into long-term customers, but they also trade out favorable word-of-mouth reviews for negative ones, deterring even more potential customers in the long run.

Modernizing Billing

While maintaining legacy systems may seem like the frugal way to go, when you actually calculate the hidden costs, it’s likely to be a less appealing choice. On the other hand, senior IT decision makers believe modernizing these systems can boost revenue up to 14 percent per year — on top of the saved operating costs.

Cloud-based, SaaS billing platforms are designed to power growth, not hinder it. And while there’s no getting around the upfront investment, the right system will soon pay for itself by helping your business streamline processes, better serve existing clients, and make strategic billing decisions and then move quickly in order to capitalize on new opportunities.

Here at Gotransverse, we pride ourselves on helping our clients implement systems specifically designed to help them achieve their business goals. After all, your money is too heard-earned to be dumped right back into the system that’s supposed to be helping you earn it. Isn’t it time to find a solution that fits the bill for your business? When your organization is ready to modernize, we invite you to take a tour of the Gotransverse platform and call us to schedule your complimentary, personalized demo.