Invoicing of customers can help grow a business but also has hidden costs some companies don’t consider. A business has to pay employees to generate the bills, pay for postage, printers, and paper. If an invoice is paid on time, additional costs accumulate for processing of the payment, and if an invoice is past due, the cost is much higher. Consumers today often prefer the convenience of paying an invoice online or automatic deduction from their bank account instead of manually paying a bill through the mail. The main advantages of recurring billing are the invoices go out to the customers and payments are returned to the company without the customer performing any type work.
• A customer’s bill will be automatically paid through deduction of money from their bank or credit card account. Every additional invoice will be paid automatically unless the customer chooses to stop the recurring payment cycle. Additional employees won’t be needed to process payments.
• Payments can be received 24 hours a day, 7 days a week. The collection of payments through this type of system reduces late payments or missing bills. A customer won’t forget to mail their payment in the mail.
• Customer retention can be increased because the payments are out of sight and out of the customer’s mind.
• Recurring billing and payments reduce an organization’s carbon footprint.
• Auto reminders to customers reduce delinquent payment.
• Customers payments can be integrated into various business platforms of accounting software.
Establishing the initial payment schedule is very easy and any changes in the customer’s payment type or amount can be changed. Customers will have pre-determined billing dates which can be changed if necessary. A merchant’s cash flow will be more consistent and will help to grow a business. The business forecasting will be much more accurate. A customer will only have to submit their payment information once instead of each time they would manually enter a payment. Customer’s with recurring payments won’t be burned by late fees or collection calls.
The advantages of recurring billing can be for any type of business or organization. Non-profits that accept donations, can benefit a lot from this type of service. A donor can set up donations to be withdrawn from their account on a yearly, monthly or weekly basis. This reduces the cost of personnel following up with donors about their donation. It allows a donor to support an organization’s cause simply and easily. A non-profit won’t have to worry about additional costs of envelopes, statements, and postal fees.
A customer has the editing capability to update their payment method or the amount of the payment to their budget needs. This type of payment processing offers greater convenience for a customer. They won’t have to log into their account to make their payment. They can spread out the cost of a large purchase over several billing cycles, and the recurring payment gets processed much more quickly than using a paper-based check. A customer won’t have a deduction in their bank account, days or weeks after they made a payment on their account.