Foundations of recurring billing

12.3.2021
Angelica A.
  |  

How are you handling recurring payments for your startups? Is recurring billing a reality for you yet? Or would you like to get started with recurring billing, and are you looking for a place to do that? Either way, you’ve come to us. And we hope this article on the foundations of recurring billing can help clarify whatever needs mending. As usual, if anything is amiss in the process, drop us a line. We’d love to help

What’s recurring billing? 

Recurring billing is what we say to describe a merchant who makes automatic charges to a consumer. This can happen for any reason, from goods to services. Common examples include our cable TV, cell phone bill, gym subscription, and other services, such as Netflix. 

The critical factor here is that we agree for all these payments to happen on a fixed basis. Usually, that time is previously arranged. Clients can choose how often and how much they decide to cancel in exchange for whatever they’re purchasing or hiring. 

None of this will happen without a customer’s initial permission. Often, this means adding other essential contact and/or payment information. From the first time on, charges typically happen regularly, making recurring billing a somewhat automated process. 

And who does recurring billing benefit?

At times, engaging in these dynamics is worthy of a particular discount by a merchant, which is a first added benefit for users when they sign up for recurring billing. Users or consumers can add never having to take out a credit card or provide their billing details once more to engage in similar or same purchases. Overall, it should be a matter of convenience for users. Another added value is never having to fall delinquent as payments are deducted automatically. A simple sign-up like this can mean never spending on past dues or other fees. 

Transactions set this way are also referable for startup founders. Business owners can rely on recurring revenue to lower the risk involved with scaling their companies; otherwise. Primarily, this kind of billing can do literal wonders for customer retention for a startup. Getting all payments on time makes cash flow easier to manage. That translates to more stable projections and account balances. 

Thus, as seen above, recurring billing can be a win-win situation for merchants and consumers. Additionally, these types of charges can more commonly take place online, removing physical or other limitations for both parties. 

In the end, we’re talking about client and company ease and convenience as much as business predictability and stability for merchants. In the end, recurring billing can easily signify a much more enchanting customer experience. 

Are there setbacks to recurring billing?

Every coin has two sides, they say. And in this case, complications in billing can take considerable time to solve. Typical financial mishaps can happen, and those usually involve payment processors with their own timelines for conflict resolution. If we include banks in the process of discounting fixed fees off a client’s card, operations can quickly get complicated. That would be one possible risk assumed as a potential setback for this kind of billing method. 

Another aspect to consider would be the amount of customer service any scenarios like the above can imply. At times, clients can forget having subscribed to recurring billing services. When they come back to us, solving a reasonably discounted amount can get tricky. And disappointment can set in quite quickly to no one’s genuine fault, even. 

Taking all this into account, would you say monthly or annual charges work better? We considered that question and answered it to the best of our ability below. 

What’s a better billing cycle for SaaS subscriptions: monthly or annual?

Let’s take into account that we’re eventually going to need to make predictions. In that sense, annual projections are easier to handle in some aspects. And they can bring in more significant sums of money to our corporate accounts, too. Moreover, deviating from monthly charges means less accounting per month, fewer invoicing, and fewer transactions to record. 

However, bear in mind users might find monthly charges to be highly more manageable. It’s also a matter of running lower risks with fewer amounts to pay by the end of a 28 to 31-day cycle. 

There’s an exception to the user perspective for monthly, too, however. Some consumers can truly already know they’re spending a full year using what we have to offer. For those steady subscribers, a single yearly fee with a complete perk package that just shines with opportunity can be the most practical choice by far. 

So, there’s also a mix of the two to consider. Startups that offer one option don’t typically make the other available. Yet, there are a few that do. 

If you’re going for monthly payments as an option, we’ll help a bit further with the ideal options to receive those fees. 

What’s the best option to receive monthly recurring payments?

Merchants commonly offer credit or debit card payments. Yet, some take direct debits from checking accounts, for instance. E-wallets are at times acceptable, as well. And those last ones can work like magic! 

Look into Square or Stripe, for instance. These tools can manage automated payments for you. Of course, we certainly go by Recurring for all our automatic software management needs. 

Again, how are you handling recurring payments for your startups? 

Can Recurring lend a helping hand here, as well? Recurring was designed to help startups succeed as a one-stop-shop to handle all of a startup’s subscription needs in one. Viewing and managing our companies’ internal processes out of a single place can enhance what we do to free time for more demanding tasks. 

The tool also minimizes cost through smart recommendations. Those feed off common app usage, as well. All of this means being able to cut down on unnecessary expenses and optimizing what we do spend. 

Our teams can get valuable suggestions on new tools that simplify their tasks. And our accounting can find a fantastic resource in this platform to reconcile costs, expenses and do so much more! Give Recurring a chance; it might do what can seem like miracles for you.

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