Subscription Terminology 101.

Medical device as a service or medical equipment as a service is a business model where medical devices are not sold through traditional sales channel but rather offered either as subscriptions, rentals, lease or pay-per-use basis.

Dunning is the process of regularly reminding customers to pay their overdue bills. This involves sending reminder letters, emails, or making phone calls. The aim is to get the customer to pay what they owe without needing to take legal action. The process usually starts with polite reminders and becomes more assertive if the payment is still not made.

Automated dunning is the process of using automated systems and software to manage the collection of overdue payments. This method is particularly useful for subscription-based businesses and recurring billing models, where timely payment collection is crucial for maintaining a steady cash flow.

Dunning management is the systematic process of handling payment declines and overdue invoices to recover owed funds. Once set up, the system follows predefined steps after a payment fails, including retrying the payment and communicating with the customer about the failed charge.

Subscription management is a term used to refer to the process of managing subscription-specific operations that go beyond recurring billing and recurring invoicing. Recurring payments are only a part of subscription payments. In recurring payments, a customer authorises the vendor to deduct payment at an agreed upon frequency on an ongoing basis.

A recurring revenue model is a type of business model in which a vendor does not sell the product at the purchase price but instead offers access to a product as a service in exchange for regular scheduled payments. By giving access to the product, the vendor retains the ownership of the product and generates payments on a recurring basis.

Recurring invoicing is a collective term for generating and sending invoices to the customer everytime recurring transactions are being charged. In a subscription business invoices needs to be generated not only for recurring transactions, but also for one-time transactions and refunds.

Product-as-a-service, PaaS, means the customer purchases the desired result instead of the equipment or product itself, and the system is run in a subscription-based business model. In this model, the customer does not own the product; rather they pay for the product and the services included in the bundle. They return the product once the subscription period is over and the product owner can sanitize, inspect, and repair the product, if needed, for another rental cycle.

Recurring billing is a collective term for the frequency, duration and amount of “bill” to be charged by a business to its customers. Recurring billing is a process that ensures that the customers of a subscription business are “billed” and the “bills” are collected on time.

You can differentiate between the different types of subscription businesses based on the type of product being offered as a service.

The difference between subscription and leasing can be best understood via two differentiating comapirsion points; customer’s intent and commitment to an asset.