Recurring: A brief intro to recurring everything

4.3.2021
Angelica A.
  |  

From payments to billing to revenue, we want to give you the basics of what Recurring is all about. For that, we’ve come up with a brief intro to Recurring everything. And here it goes!

What’s Recurring? 

Focused on repeated actions, recurring speaks of those constant charges or fees our software can easily manage. For us, Recurring is a brand name that speaks of the best one-stop-shop to manage all of a company’s SaaS Ops stacks. 

What’s recurring billing?

You know when you hire a service, and they give you a fixed date for your weekly, bi-weekly, monthly, or annual payments? Contracts signal for you when those are due. And then there are regular automatic charges to which you agree as a consumer or that customers approve for you as a merchant. Well, all of that can be deemed recurring billing.

Whenever you charge consumers or merchants bill you for a service or product on a predefined schedule, you’re facing what we can term recurring billing. For that, we need to disclose specific personal details and grant merchants authorization for recurring charges. 

Think of the cable bill or cellphone as automatic bill payments. Those would be great examples of recurring billing as much as any other utility bill, entertainment account, and online subscriptions. 

Before we wrap up on this definition of recurring billing, it should be said that one of its benefits is precisely discounted services or improved pricing. Merchants rely on a more stable financial agreement of lower risk-taking in terms of account receivables this way. And that typically ties to user privileges. Now, what does that have to do with revenue? We’re on it!

What’s recurring revenue?

Recurring revenue (RR for short) happens when we’ve managed to generate revenue as a stable income source. The term relates to earnings you can count on coming in over a certain period. It’s the part of a startup’s revenue that will most likely keep on recording as revenue over time. 

Do you have enough data to justify seeing these income sources as a constant and steady stream of revenue? If it’s relatively safe to count these as safe and regular earnings, you’re looking at RR. But beware! Companies need to be very confident about these being stable numbers to count them as continuous revenue sources. Make sure of that. 

What’s an excellent tool to manage recurring expenses in a team?

Software as a service (SaaS) platforms can help manage automated expenses for a team. They’re tools set to precisely track incoming payments and handle subscriptions, for example. 

Recurring, for instance, can help track usage and expenses this way, which makes it a great tool to manage recurring costs for a team. 

But that’s not all these tools can do at once. With Recurring, for instance, companies can manage most other software they’re using. And by they, we mean everyone who’s part of our internal - and even external - teams. 

The great thing about tools like these is the smart recommendations that come with them. Those tips based on what we do with our diverse resources ultimately optimize spending. They help through something as easy as signaling, which orphaned or duplicate tools can be removed. A measure as nutritious as that can set us apart from SaaS waste into optimum management of our entire set of stacks. 

Check Recurring out now to learn more of how this tool can help manage a startup’s recurring revenue. 

What’s the difference between annual recurring revenue and annual run rate?

Part of the beauty of recurring billing is that it allows us to calculate recurring revenue a bit more stably. When we bill people regularly, we can resort to helpful metrics such as our annual recurring revenue. That’s not the case for other types of business models. 

Annual recurring revenue and annual run rate are both sometimes coded as ARRs. However, the recurring revenue part for a year is only possible when our companies run on monthly or annual billing. What we do is use models to generate stable projections, basically. 

To come up with those figures, we look at what users or consumers are paying per single period. We can take up a monthly recurring revenue rate and multiply by 12. Simple as that. Or we can draw upon a full year to divide between the total number of clients to get the sum for which we’re looking. 

On the other hand, annual run rates exclusively determine final figures based on revenues that we extrapolate from different periods. Those are usually shorter ones, too. So these apply to other sorts of business models, as well. 

To go over these quickly, say you made X amount April through June. If you multiplied that average sum up to 12, you could reveal an annual run rate. It’s still a mere projection, so to speak. On that note, see how there’s a higher margin for error if we draw on high influxes of money that came in during busy months. We’d get an entirely different result if we established projections based on our weakest days of ongoing income. Now that we’re pausing on differences in terminology, let’s cover another relevant one next. 

What’s the difference between autopay payments and recurring payments?

Not all automated payments are of the recurring kind. That might be the main difference we need to highlight here. 

While both require we authorize a merchant or seller to bill our banking cards or accounts automatically, autopay differs from recurring billing. For autopay, we allow automated payments to happen. Yet, those can take place for various amounts at different times.With recurring payments, we usually work on a predefined sum to be discounted on a fixed term. So, payments are drawn on a specific date for a peculiar amount. With autopay, that certainty can flux. 

Is there a service like Mint.com that can detect recurring payments?

Of course, there are several services like Mint.com that can detect recurring payments. Recurring, for instance, is a perfect example of a winning one. And there are numerous others in this category, such as PocketSmith and Personal Capital, to mention a couple.

Knowing that Mint is mainly focused on custom budgets, spend tracking, and subscription monitoring, there are plenty of tools to deliver on these tasks as perfectly as Mint has. We certainly stand by Recurring out of them all. Just click on the link to find out more.

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