If your business operates on a subscription model, or you provide the same service for your clients every month, there’s no reason to continue sending out bills manually.
Accepting recurring payments helps you achieve steady cash flow while reducing administrative work. It also aids in customer retention. It will benefit your customers, too, though. It’s a far more convenient billing process for them as they don’t have to pay the same bill time and time again.
Learning how to set up recurring payments is easy, too. We’ll guide you through how to set up automatic payments for your business below, from choosing a payment processor to configuring your payment plans.
With InvoiceSherpa it takes just a few clicks to set up automatic charges, eliminating hassle and guaranteeing payment. The best part is our accounts receivable automation software will then sync the payment over into your accounting software, streamlining your financial management.
Get started today with a 14-day free trial and see firsthand how our billing automation system can elevate your business, or learn more about how to set up recurring billing below!
First things first - why set up recurring payments in the first place? The short answer is that everyone wins when you start accepting automatic payments. Here are the benefits for you and your customers.
The most notable benefit is that recurring payments provide a reliable and consistent revenue stream. This stability allows you to plan and allocate resources more effectively, reducing the risk of cash flow shortages and enhancing accounts receivable forecasting accuracy. After all, inconsistency in payments is a huge part of how cash flow problems usually start.
Plus, you can save time associated with manual invoicing and payment collection. You or your team can in turn focus attention where it’s better spent - serving clients or growing the business. This also means you won’t have to deal with issuing a demand for payment letter or sending out a payment reminder email as frequently, further saving internal resources.
We’ll discuss the client-specific benefits in a moment, but accepting automatic payments will strengthen client relationships by providing a more convenient, hassle-free process. You may experience less churn as a result.
It also just makes your business look more professional. It demonstrates to clients that you have a reliable and efficient process in place, which can increase their confidence in your services.
On the other hand, customers love businesses that set up recurring payments because it makes their lives easier. Think about how frustrating and inconvenient it must be to pay the same invoice every single month - it’s no wonder you find yourself chasing down payments.
Plus, if your business charges the maximum late fees by state, customers can avoid these altogether by being charged automatically at the start of each billing cycle.
With recurring payments, customers are less likely to experience service interruptions due to missed or late payments. This is particularly important for services that require ongoing access or subscription-based models.
Before we get into how to set up automatic payments for your business, let’s figure out if it actually makes sense for your specific business model. Here are some of the most common accounts receivable automation use cases:
These are just a few examples of businesses that could benefit from accepting automatic payments. There are countless others. Just ask yourself, do you send the same or similar invoices every single month? If so, setting up recurring payments makes sense.
All in all, learning how to set up recurring payments is an excellent choice for the right business, one that will benefit you and your customers alike. So, let’s get into how to accept recurring payments below!
Setting up recurring payments can be a simple, stress-free process when you have the best AR automation software. You configure your payment plans once and then can forget about them once and for all! That being said, let’s start with choosing the right payment processor.
Look for a processor that supports automatic billing, offers strong security measures, and integrates seamlessly with your existing business systems. Popular options include PayPal, Stripe, and Authorize.net.
Evaluate their fees, customer support, and features to ensure they meet your business needs. You should also consider ease of use and the availability of customer support so that you can hit the ground running fast.
Compliance is one of the most important things to account for when dealing with recurring payments.
Your chosen payment processor must comply with industry standards and regulations such as PCI-DSS (Payment Card Industry Data Security Standard). This protects sensitive payment information and helps prevent fraud.
Take your time to familiarize yourself with any local regulations or industry-specific requirements that may impact your payment processing to avoid potential legal issues.
Now comes the fun part - actually setting up recurring payments. Determine the billing frequency (monthly, quarterly, annually) and the amount to be charged. If you offer multiple services or products, create different plans to cater to each offering.
Make sure your pricing is competitive and clearly communicated to your customers. You may also want to include discounts for long-term commitments or early payments. It’s common to shave a bit off the price when setting up recurring payments, too - say 5-10%.
Most payment processors provide APIs or plugins that allow for easy integration with your website, accounting software, and CRM systems. This helps automate the billing process, ensuring that invoices are generated and payments are collected without manual intervention.
It’s essential that all systems are synchronized to avoid discrepancies and streamline your financial operations. Learn more about this in our guide to AR reconciliation.
Transparency is key when implementing recurring payments. Inform your customers about the new billing process, detailing how it works and what they can expect. You must get consent to charge their card or pull funds from their bank automatically.
Provide clear instructions on how to enroll in the recurring payment plan and highlight the benefits, such as convenience, uninterrupted service, and if you choose to offer it, a discount.
Use email notifications, website updates, and customer service representatives to ensure your clients are well-informed and comfortable with the new system.
Unfortunately, failed payments are an inevitable part of recurring billing. This is why you need to develop a strategy to handle these situations efficiently.
Most payment processors offer tools to automatically retry failed transactions after a certain period.
You should notify customers promptly if a payment fails, providing instructions on how to resolve the issue. Sometimes it’s simply a matter of card expiration. So, consider implementing a grace period or flexible payment options to maintain customer relationships.
There you have it - how to set up automatic payments for your business. You’re just a few clicks away from harnessing the benefits of AR automation, and there’s no better place to take the first step than right here at InvoiceSherpa.
Our solution is designed to get you paid faster and eliminate many of the frustrations of manual billing processes, all at a fraction of the cost of traditional accounts receivable management services.
There is a suite of features you gain access to, like the ability to customize your invoice late fee wording, send out automatic payment reminders, automatically sync payments into your accounting software, and more.
But, most relevantly, you can effortlessly accept automatic payments. Pick the customer groups you want to apply this structure to and fine-tune the AutoPay frequency and charges. Every month your client will be billed automatically and the funds will sync into your accounting platform without you having to lift a finger!
InvoiceSherpa integrates with a variety of systems, from Quickbooks, Clio, and Xero to Paypal, Stripe, Authorize.net, and more. Clients also get their own dedicated dashboard where they can view invoices and payment terms, and you can allow them to pay via credit card or ACH.
The possibilities are endless, and getting started is quick and easy. With a 14-day free trial, why not see for yourself what makes InvoiceSherpa the best automated invoice processing software? Take the first step toward setting up recurring payments today!
As you can see, learning how to set up recurring payments is an excellent way to reduce the headaches of chasing down payments every billing cycle. It will save you administrative resources, get you paid quicker, and make life easier for your customers all at the same time.
Plus, accepting automatic payments is easy with InvoiceSherpa. You can effortlessly integrate with your payment processor of choice, from Stripe or PayPal to Authorize.net. Setting up recurring payments is just the tip of the iceberg with InvoiceSherpa, too.
You can find more accounting tips in our blog, including how to calculate accounts receivable, unbilled receivables, how to send an invoice to collections, accounts receivable challenges and how automation can help, how to automate accounts receivable, accounts receivable automation best practices, and more.
In just a few clicks you can begin reaping all the benefits of automated payments for your business. So, start simplifying your payment processes today with InvoiceSherpa!
August 8, 2024
