Implementing automated recurring billing is simple. All you need is a trusted partner to develop a customized solution for your unique business.
Many of us use recurring payments or automated recurring billing to pay our personal bills each month. This online recurring billing process ensures you never miss a payment or incur late fees. Many businesses offer online recurring billing as an option for accepting payments online, both for the convenience of their customers and increasing revenue.
If you are thinking about recurring payments or online recurring billing for your company, it is probably a good idea, especially if you intend to use a B2B payment or an eCommerce payment gateway. Here, we will discuss different types of automated recurring billing options, how to set them up, how they affect your e-commerce accounting, and how to manage them tactfully. So, keep reading.
What Does Automated Recurring Billing Mean?
Online recurring billing is a payment method set up to withdraw funds from a bank account or credit card each month. This is also known as a recurring monthly payment, and it is frequently used to pay car payments, cable bills, utility bills, and so on.
As a company that works with vendors and others, you may want to offer automated recurring billing as a form of payment to make payments a lot easier.
How Does Automated Recurring Billing Work?
Payment service providers are the most convenient way to implement online recurring billing. These services manage all aspects of e-payments, from assembling and processing recurring payments on behalf of customers to ensuring payment security and depositing funds into the merchant’s business account.
It is very simple to set up recurring billing with customers. At first, when a customer selects a product to purchase on your website, they select the automated recurring billing option. Then the customer provides their payment information and agrees to the amount they will pay after accepting the terms and conditions and receiving authorization.
Recurring billing benefits both the SaaS company and the customer. The merchant gains from increased customer retention, lower administrative costs, and fewer accounts receivable risks. Online recurring billing also provides businesses with consistent cash flow. Automated recurring billing can also reduce paper, printing, and delivery, all of which harm the environment, depending on a company’s commitment to sustainability.
What Are The Benefits of Automated Recurring Billing?
Online recurring billing is widely accepted because of the benefits it offers to both merchants and customers.
• Predictable Cash Flow Into The Company
Online recurring billing ensures that a company’s cash flow is consistent and reliable. This allows the merchants to forecast how much revenue will be generated in a given time frame.
• Saves Time
Customers only need to sign up and provide their payment information once in an online recurring billing system, understanding that the merchant will be paid automatically for the services they provide.
• Entirely Automated
The process of charging customers frequently is completely automated in an automated recurring billing system. Once the invoice is created, the payment cycle is defined, and the customer’s payment information is attached. The customer will be billed and charged for the service without further manual interference.
Recurring billing is a mechanism that allows a company to receive ongoing payments while only collecting card information from the customer once. In many ways, it is similar to a subscription system, but it does not necessarily include the pricing tiers that a subscription system may include. Automated recurring billing is beneficial to merchants as it ensures predictable cash flow and the completely automated setup saves time and resources. A good online recurring billing system can be implemented with the help of the right subscription management tools to address challenges such as payment failures as well as fraudulent payments.
Oceanpayment online recurring billing will assist you in automating your recurring billing process and will send out professional invoices on your behalf based on the billing frequency. Contact our experts any time for your queries regarding our services.
With the world becoming interconnected due to the presence of the Internet, businesses from one country have expanded their markets to other regions. Such business expansions have led to the popularity of automated recurring billing.
This means that businesses can set up online recurring billing for automatic and periodic payments. These payments are made according to specific subscriptions, for example, monthly, bi-monthly, or annual billings.
With the feature of automated recurring billing, businesses do not have to chase down the customers for late payments. They also do not have to spend money on manual billing processes. If you wish to learn more about online recurring billing, here is a detailed guide.
What Is Recurring Billing?
Online recurring billing, also called recurring payment, occurs when businesses automatically deduct payment from the customer’s account on a scheduled basis.
This allows the merchants to charge the client periodically for goods or services that they provide.
Automated recurring billing involves signing a one-time consent form. Then, the cardholder has to sign the terms and conditions. These terms and conditions include the duration, usage, and cancellation policy of businesses and subscriptions.
Once the customer signs the form, the vendor then makes automatic recurring payments to the client’s account without further permission. For example, you subscribe to Netflix.
First, they will require your credit card information. Next, you will be provided with a monthly subscription. Every month, automatic payments will be made from your account.
Other examples of automated recurring billing include cell phone bills, magazine subscriptions, gym membership subscriptions, cable bills, etc.
Mechanism of Automated Recurring Payments
If you wish to avoid complications, it’s best to manage recurring billing through global payment services. Services such as Oceanpayment are an all-in-one solution for automated recurring payments.
Oceanpayment handles all types of e-payments by providing over 500 payment methods to customers across the globe. The mechanism of automated recurring payments involves subscription services or merchants consulting payment services.
Services such as Oceanpayment then allow businesses to collect information about payment methods from their customers.
Then the payment methods such as automated recurring payments enable the businesses to deduct the money from the client’s account through a payment gateway connected to the merchant’s account.
This way, businesses can implement automatic recurring billing. All they require is a trusted global payment service to help receive payments securely.
Oceanpayment also develops customized payment solutions for your business. It is your go-to global payment service if you’re a merchant looking to expand the business and get involved in cross-border payments.
Types of Recurring Billing
The two primary types of recurring billing include fixed recurring billing and variable recurring payments.
Fixed Recurring Billing
In fixed online recurring billing, a specified or fixed sum of money is collected from the client’s bank account. Businesses that provide a service or product for specific prices use fixed recurring billing.
For example, services such as music apps have fixed monthly payments.
So, when you subscribe to a music app, a fixed amount is transacted from your account periodically. For businesses, this method of online recurring billing provides stable revenue.
Variable Recurring Billing
Another type of online payment method is the variable recurring billing, in which the sum of money collected from the customer’s account varies in every payment cycle.
In this payment method, the amount collected from the customer depends on the customer’s service usage. Thus it is also called usage-based billing. Examples of usage-based billing include utility bills.
Another type of variable recurring billing is quantity-based billing. In this type of automated recurring billing, customers pay advance money according to the quantity of the product they purchase.
For example, a customer signs up for monthly delivery of toilet papers.
If the customer signs up to pay $10 a month for five toilet paper rolls, $20 for ten rolls of toilet paper, and $25 for twenty rolls, then their card will be charged at the start of the month by the company for the chosen quantity of the product.
Benefits of Recurring Payments
Online recurring billing has become a popular payment method in the world of e-commerce.
This is because it simplifies the payment processes while also offering an excellent experience to the customers.
Benefits for Customers
Customers prefer to choose payment methods that are convenient and simple. Online recurring billing benefits the customers in a way that makes the payment process hassle-free.
Clients do not have to go through tedious billing methods with slow checkout processes. Instead, they have to confirm a payment plan then automatic payments are made from their account. This way, recurring payments speed up transactions.
Online recurring billing also minimizes the time that customers spend on their payment administration.
Benefits for Businesses and Merchants
Recurring billing benefits businesses and merchants in more than one way. Businesses do not have to opt for the process of manual billing. It saves their time and money.
Once the customers set initial payment schedules, automated recurring payment methods make it easy for merchants to calculate profit margins and monthly revenue.
This makes it easy for businesses to manage their assets. It also helps them plan for financial endeavors in the future.
How to set up online recurring billing?
If you regularly bill clients on a set schedule, recurring payments can largely save your time. To set up your business to accept automated recurring billing from clients, you’ll need to find the payment service provider that works best for your business and fits your budget. Here are the steps to take to set up automated recurring billing for your business and encourage clients to use the service:
Do Your Research
Look into the various service providers that enable small businesses to accept automated recurring billing. Select the provider that works best for your business model and your budget. Most providers will charge your business a transaction fee for each credit card payment, including for recurring payments, so research the fees they charge.
Make Sure It’s Secure
For the most part, automated recurring billing merchant will offer customers a high-level of security and encryption in the handling of their client’s personal data and payment information. Even so, you should do your due diligence and look into the specific payment security measures offered by the provider you select.
Market It to Customers
Once you’ve set up your business to accept automated recurring billing, make sure you let your clients know they can now use the service to pay their invoices. You can update the payment terms on your invoice to include a note about accepting recurring payments. Or, include an email with every invoice you send out for the first few months letting clients know they can use automatic bill payment to simplify the billing process.
You can also offer clients an incentive to sign up for automatic bill payments. Consider rewarding early adopters of the service by providing a small discount off their invoice, either a percentage or dollar amount deducted from their total bill in the month that they sign up for automated recurring billing.
Online Automated recurring billing Solutions
Recurring billing solutions are popular as they offer benefits for both the merchant and the consumer. Some of these advantages are outlined below:
The advantages for merchants: Reduces late payments – automated billing is the best option to receive payments on time without worrying that your customers might miss the payment date of their subscription plan.
Improves customer relations – by offering subscription billing solutions you build a stronger and longer-lasting relationship with your customers as they will be purchasing your product (or service) constantly and not simply as a one-off purchase.