Most small business owners have heard the term “recurring billing”, but few make use of it or know what benefits it can hold for their business. Let’s begin with getting a precise idea of what recurring billing is and then move on to investigating how integrating it in your business can increase your cash-flow and save you money.
So, recurring billing, what is it? Recurring billing will charge an amount more than once to your credit card or bank account. The amount is usually the same and recurs on the same date each month. But subscription billing can also happen for varying amounts on any term or frequency on any date. Recurring billing is great for charges that never change in amount, for example: A monthly subscription to your favorite magazine.
Now that we know what subscription billing is, let’s see how subscription billing can make your business better:
Enable better cash-flow
Small businesses and freelancers stand to benefit greatly from adopting recurring billing procedures. Recurring billing is not just for large or enterprise type businesses. Small businesses can easily and very cost effectively initiate this strategy.
Collecting payment via recurring billing means increased cash-flow for small businesses. When billing only via wire transfer or direct deposit only you are haphazardly getting small, unscheduled payments that each incur bank changes to you and your customer. These once off payments can be sporadic so you are never sure when or even if your customers will pay you.
This means you are unsure of your cash-flow. This in turn leads to you not being able to plan ahead. Not being able to predict what your income will look like over the next few months will hinder you from being able to schedule your own debits and plan the growth of your business.
Don’t forget to remember
Recurring billing allows you to control when you get paid. It’s easy, when custolmers sign up you specify the debit amount and recurrence. Then sit back and wait and you watch funds being automatically collected on the dates specified. This means no more late payment or waiting for urgently needed funds to clear. You now know precisely when you are going to get paid.
Reduce administration costs
Ensuring the bulk of your clients pay via recurring billing translates to reduced administration tasks for you and your clients. Administration is less on the customers side because payment is automatic. The customer no longer needs to go into a bank to make a direct deposit or login to online banking to manually make a wire transfer. Administration is also reduced on your side because you do not have to recon hundreds of small individual payments. Gateways that allow for recurring payments usually offer automatic account recon or provide bulk recon files that allows easy and accurate consolidation.
Sounds awesome! Sign me up! Find the best resources for recurring billing systems online or ask other business owners for referrals. We suggest signing up with a gateway that automates subscription billing and a payment facilitator that allows automatic account recon.
Susan Bapsnill is an expert at business billing. She suggests a recurring billing system to automate your billing procedures. Click here to try a recurring billing system for free.
