Managing recurring expenses is no easy feat.
You've got to deal with car insurance, housing costs, credit card bills, grocery shopping and on and on and on. There are a lot of things to remember, and missing payments on any one of these important expenses can result in very serious consequences.
Fortunately, there's recurring billing software specifically designed to prevent late payments, automate bills and take the stress out of the process.
Even more fortunately for businesses, the same accounting software can have a major impact on normalizing monthly income, managing customer subscriptions and keeping track of payments from a high volume of customers.
Because of the many benefits for businesses and customers, choosing the right billing software is essential. These systems are offered in a variety of configurations and platforms and at a number of different price points, which makes researching your options crucial to the selection process.
Here's what we'll cover:
Simply put, recurring billing software is invoicing and payment software specifically designed to collect on a subscription basis. It's one of those ubiquitous pieces of tech that pretty much everyone uses without giving it much thought at all.
For example, anyone who holds a gym membership has probably been entered into a recurring billing system that holds their payment information, sends regular reminders of upcoming payment due dates and automates calculations for things such as state taxes and discounts.
Recurring billing dashboard from Zoho Subscriptions
There are plenty of benefits afforded to customers with recurring billing options, but it's hard to overstate the value this software offers to businesses—the number one advantage being that more and more consumers are shifting their preferences toward subscription-based services over pay-per-product models.
Consider Amazon Prime. The supply chain goliath's subscription-based service that provides users with access to faster shipping, streaming music and video and discounted products is now estimated to have about 80 million members in the United States.
The lesson here is that customers are willing to pay regular and repeated fees in exchange for goods or services they deem worth it, and, for the most part, any business can find ways to capitalize on the booming subscription economy.
Before searching for a recurring billing software that best fits your business needs, you'll want to have an idea of what features are available to you, which ones would be nice to have and which ones are mandatory for your business model.
Here are some of the common functions found in most recurring billing products.
|Dunning management||Dunning management is a feature specific to recurring billing software that helps users deal with failed payments, i.e., bounced checks or declined credit cards. Whatever the reason for the payment failure, dunning systems can help address the issue in two ways: charge retries and customer communication.
Software should be able to automatically retry processing a payment a few days after the initial decline. Some systems are already programmed with a retry schedule, and others allow managers to determine when and how often the system should retry payments.
It's always important to keep the customer in the loop, but this is especially true when payments don't go through. Most billing systems will be able to send automated, form-based emails to notify customers of payment failures, retry schedules, next steps etc.
|Invoicing||This one may seem obvious for a billing system, but it's worth noting the specific features of recurring payment invoicing that you should be on the lookout for. The key here is clarity—for you and for your customers. Recurring billing invoices should be able to display every type of charge, including upcoming or missed payments, accrued interest fees, taxes etc. You should also be able to view past invoices for the entire customer relationship history just in case any discrepancies occur.
Additionally, invoicing functionality should be capable of automating the creation, scheduling and sending of invoices as well as enabling customers to complete payments through an electronic portal.
|Trial management||Trial subscriptions certainly aren't a required feature, but they can help build your brand and name recognition by making your customers more inclined to test out the system and increasing the number of regular subscribers overall. If you decide to offer free trials, you'll want to make sure your billing software can handle tracking these users and either rolling them into regularly paying customers or end their access once the trial period ends.
Trial management features should also include follow-up emails to keep customers informed about when their trial ends and what options they have for continuing the service.
There are a number of different pricing models to choose from when determining how to set up your recurring billing process. The most common configurations are:
We've already touched on a few of the advantages offered with recurring billing software, but there are a few more—for both the consumer and the business—that are worth being aware of.
For customers, recurring billing systems take away the burden of remembering to make regular payments while also ensuring uninterrupted services—be that in the form of electricity to their houses or regular delivery of expected goods.
For businesses, especially smaller ones, recurring billing is an invaluable tool to normalize revenue and automate payment collection processes, so business owners can focus on other things.
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