Dating back to the days when ivory was a common form of currency, payment collection for goods and services has presented its challenges. Granted, a lot of products are only delivered upon receipt of payment, but many industries rely heavily on invoicing and other accounts receivable methods to collect.
The progression in payments technology has introduced new options for collecting payments, one of the most common of which being recurring payments. As consumers, most of us have come across recurring payments somewhere in our lives. Gyms, Netflix, property managers, and auto insurers are just a few examples. But, as a business owner, have you thought about how recurring payments could benefit you? Here are five ways auto-recurring billing can help your business:
Minimize the Legwork
When you use auto-recurring billing, all you have to do is set up the initial payment schedule, and then manage any changes in payment type or amount. It’s as easy as sitting back and watching the payments get deposited in your business bank account on your customers’ pre-determined billing dates.
Decrease Late Payments
Late payments have a significant negative impact on your business’s cash flow. Many organizations find them to be so detrimental that they charge a fee to late-payers, which hurts the customer relationship. Setting up automated payment schedules keeps incoming payments on-time and allows you to take some of the guesswork out of your cash flow situation.
Improve Customer Relationships
In addition to avoiding those awkward late-payment conversations, recurring payments can help your relationship with your customers by saving both parties time and energy. I don’t know about you, but as a consumer, I leap at the opportunity to set up automatic payments. I can not only control when the payments are drafted from my account, but I can pretty much eliminate the need for envelopes and stamps. Which brings us to…
Cut Costs and Decrease Waste
A recent survey of small businesses found that businesses using electronic billing methods are saving 40-50 cents per bill.* As few as 20 bills sent and received each month equals nearly 7 pounds of paper a year. Included in the production/transport of that paper is 171 pounds of greenhouse gas emitted, 63 gallons of wastewater released, and 5 gallons of gasoline consumed.**
Keep Payment Information Secure
Most recurring billing solutions also give business owners the ability to securely manage their customer information. Cutting out paper leads to a reduction in the duplication and circulation of sensitive information. Using recurring payments eliminates one of the middlemen between you and your customer, and gives the consumer and business the power and flexibility to pay and get paid.
If you’re in one of those industries that can replace some of your manual processes with automated ones, give recurring billing a shot. Your staff, cash flow, customers, environment, and security will all benefit from the switch.
*Stats from NACHA’s Council for Electronic billing and Payment survey. February, 2011.
**Stats from electronicpayments.org.