Updated by 07.26.2023
The Case for Recurring Billing
Recurring billing it’s a simple concept. In a recurring billing scenario, merchants use a system that allows them to automatically accept electronic payments at pre-defined intervals, for example, on a certain day each month.
Payments are automatically charged to customers’ credit or debit card accounts or transmitted to merchants via ACH or wire transfer.
Recurring billing is also an option well worth adopting by any merchant or company that provides goods and/or services to consumers. Consider the advantages of doing so:
- An improved bottom line and a more predictable revenue cycle. Recurring billing eliminates the need for customers to initiate payments, reducing the number of payments that arrive in merchants’ hands late or are never received at all. This improves cash flow and bolsters the bottom line. Additionally, recurring payments are scheduled to be made on long-term financial forecasting and planning.
Recurring billing also bolsters the bottom line by making the prospect of purchasing pricier goods and services more attractive to customers. Many will be far more inclined to do so when a series of small, recurring bill payments can be scheduled as an alternative to a single, larger lump sum payment.
Similarly, once customers are signed up with a particular merchant to receive an ongoing service from a merchant and pay for it through recurring billing, they will be far less likely to defect to the competition. Again, the end result for merchants is higher revenues.
- Reduced costs. A NACHA Council For Electronic Billing and Payment survey conducted several years ago revealed that between paper, postage, and processing, electronic billing, including recurring billing, saves businesses 40 to 50 cents per invoice.
- Streamlined payment collection efforts. Unlike traditional bill payment methods, recurring billing involves minimal legwork on the merchants’ part. Once customers’ initial payment schedule has been set up, handling any changes in customers’ payment methods, for example, when they obtain a new credit card or switch from ACH payment to credit card payment is the only effort required. For merchants, collecting payments is really as easy as watching funds land in their business bank accounts.
- Better data security. Full-featured, PCI-compliant recurring billing software enables merchants to securely manage their customers’ sensitive account information. Just as importantly, by cutting out paper, recurring billing reduces the potential for customer data to fall into the wrong hands. This minimizes the risk of fraud, the incidence of which can cause a myriad of headaches and have a negative impact on merchants’ reputations.
- Improved relationships with customers and their aftermath. Customers like the convenience of recurring billing they appreciate that they don’t need to remember when payments are due, write checks, and, possibly, go out of their way to put payments in the mail. Customers also appreciate that with recurring billing, they will never be charged late payment fees nor need to worry about the security of their account information. This kicks customer satisfaction up a notch, paving the way for better relationships with and loyalty to the merchants that serve them.
E-Complish’s PCI-compliant RecurPay software, which works with the company’s desktop and MobilePay solutions, lets merchants reap the benefits of accepting recurring payments both instantly and securely. Schedule a consultation to learn more.