Most SMME owners have heard the term “recurring billing”, but few make use of it or know what benefits it can hold for their business. Let’s start off with getting an exact idea of what is recurring billing is and then move on to investigating how implementing it in your business can increase your cash-flow and save you money.

Recurring billing is when you give a merchant or service provider permission to charge your bank account or credit card at regular intervals for the purchase of goods or services. The recurrence can be on any term eg. Monthly, fortnightly or annually. The recurring amount debited is usually the same on each recurrence, but can differ. For example a monthly fee of $10.00 for your subscription to an online service.

We know what it is now, but what can recurring billing do for you and your business?

Keeping your cash-flow healthy

Small businesses and freelancers stand to benefit greatly from adopting recurring billing procedures. Recurring billing is not just for large or enterprise type businesses. Small businesses can easily and very cost effectively implement this strategy.

Collecting payment via recurring billing means increased cash-flow for small businesses.  When billing only via wire transfer or direct deposit only you are intermittently receiving small, unscheduled payments that each incur bank changes to you and your customer. These once off payments can be sporadic so you are never sure when or even if your clients will pay you.

This means you are uncertain of your cash-flow. This in turn leads to you not being able to plan ahead. Not being able to project what your income will look like over the next few months will prevent you from being able to schedule your own debits and plan the expansion of your business.

Get paid on time

Recurring billing allows you to control when you get paid. It’s easy, when client’s sign up specify debit amount and recurrence. Then sit back and relax and you watch funds being automatically collected on the dates specified. This means no more late payment or waiting for urgently needed funds to clear. You now know exactly when you are going to get paid.

Reduce administration

Ensuring the bulk of your clients pay via recurring billing translates to less administration work for you and your clients. Administration is reduced on the client’s side because payment is automatic. The client no longer needs to go into a bank to make a direct deposit or login to internet banking to manually make a wire transfer. Administration is also reduced on your side because you do not have to recon hundreds of small individual payments. Gateways that facilitate recurring payments usually offer automatic account recon or provide a bulk recon files that allows easy and accurate resolution.

Sounds awesome! Sign me up! Find the best resources for recurring billing systems online or ask fellow business owners for referrals. We suggest signing up with a gateway that automates recurring billing and a payment facilitator that enables automatic account recon.