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Your Ultimate Guide To Recurring Billing And Billing Automation For Small Businesses

The recurring billing system is on the rise in many industries. Different businesses can use recurring billing, better known as subscription-based payments, as a predictable and reliable way of collecting revenue. 

Regardless of how the business earns its revenue, it is critical to have an intuitive and easy-to-track payment system. With a little backend set-up (which your payment service provider can handle), you can automatically execute your billing, invoicing, and receipting and among many other use cases

Stripe is a popular and reliable way to handle these payments, and automating Stripe billing is as easy as choosing the right software. Learn more about how Stripe-used businesses can use and select the right Stripe billing software.

What Is Subscription Billing Automation Software?

Subscription billing software works for SaaS ecommerce businesses, helping them automate their billing, payment, and receipting system. The software handles everything from sending an automated invoice to deducting a specified amount of money from the customer’s debit/credit card and sending receipts. These payments may be deducted on a weekly, monthly, or yearly basis.

Stripe-used businesses can use subscription Stripe billing software to create branded invoices, integrate payment gateways, create reminders for payments, generate quotations and reports, and build a user-friendly payment tracking interface for customers.

Benefits of Recurring Payments Automation

Recurring payments may occur as fixed or variable subscriptions. Fixed payments charge a customer the same amount every period (gym memberships, SaaS products/services, magazine subscriptions, etc.) Variable payment may change each period, usually according to how the customer uses the product or service, such as phone bills or utilities (based on predetermined guidelines).

Businesses that can benefit from recurring payments automation include:

  • Subscription services–streaming services, magazine subscriptions, subscription boxes, SaaS e-commerce products
  • Membership services–gyms, co-working spaces, professional organizations, or social clubs
  • Municipal/government entities–taxes, utilities, etc.
  • 1:1 Professional services–legal services, childcare, tutoring, cleaning, personal training, etc.:
  • Financial services -They include services such as 401K and investment plan remittances, savings, loan repayments, and contributions.

Recurring payments have obvious benefits, such as being easier to use and time-efficient for both merchant and customer. Automating these payments provides a level of revenue/income predictability for merchant/customer, respectively. Both parties can predict cash flow and make business decisions based on reliable data. 

How Do Recurring Payments Work?

For a business owner to automate their SaaS/ecommerce billing, they must create a merchant account with a payment provider, such as Stripe. The payment service provider (PSP) takes care of every aspect of electronic payments–the primary subscription payment platform.

The PSP handles transaction processing, system security, and payment remittance to the merchant. Often, the merchant creates a specialized merchant account to receive funds from credit/debit card deductions.

Invoicing

If the business uses the invoice system, you can set up your Stripe billing software to charge the customer each time an invoice is generated. This works if customers save their payment details in the business’s invoicing platform. 

The software uses the invoicing schedule to generate invoices and deduct payments. A customer receives an email with an e-receipt stating that their payment was processed. You can also send the customers a notification email/invoice ahead of payment processing.

Ecommerce Purchases

For ecommerce businesses, a customer must opt into subscription-based payment during their initial payment. Subsequent payments are processed without intervention from either merchant or customer. The customer may still get a receipt or notification once the payment is processed. 

Payment Processing

The actual payments occur the same way any other charges occur: the PSP contacts the merchant’s bank (aka acquiring bank) and customer’s credit card provider (CCP) network (MasterCard/VISA). The CCP network then contacts the bank that gave the customer their credit/debit card (aka issuing bank).

The issuing bank verifies that the transaction is legitimate and that the customer has available funds/credit. If approved, the CCP network notifies the PSP, who places a hold on the funds for a short time to ensure that the transaction is not fraudulent. After this waiting period, the PSP deposits funds in the bank.

How to Choose Your Recurring Billing Software

Any Stripe billing or other payment service software should make it easy for both merchant and customer to track payments. It must fit the business model and its product/service needs. These are the qualities of a suitable billing software:

Efficient Automation

The payment system must automate invoicing, notification, receipting, and reminders for failed/missed payments. The merchant, therefore, saves the time and resources needed to follow up on failed transactions (at first, anyway).

Recurring Billing History and Management

The Stripe billing service should support various subscription plans and offer different pricing tiers with varied periods/users/transactions. It should also include volume discounts, add-ons, and other feature benefits.

Dunning Management

Dunning is a fancy word for a failed payment recovery system or the process of informing customers about failed payments/transactions. The dunning system may send regular reminders to a customer, particularly for declined payments for services already rendered.

Payment Gateway Options

It should go without saying that the PSP must support the payment gateways that the business uses. It must accept online transactions and process payments from the sources your clients are likely to use.

Reporting

Aside from transaction reporting, the PSP should have data on other vital metrics, such as failed payments and customer churn. These performance metrics help to streamline the automation strategy to increase customer satisfaction and decrease churn.

Conclusion

A common and costly mistake among small business owners is failing to systemize their payment systems. Customers may become disillusioned with payment delays and may even dissociate from future subscriptions. 

AccountDock is a leading Stripe billing platform for small businesses. Within minutes, you can track your Stripe billing history, operate your payment dashboard, and send professional, branded invoices and notifications to clients without your intervention. This way, you can concentrate on your core functions without worrying about revenue handling.

Contact us for a free trial to enjoy the benefits of our cutting-edge Stripe billing automation.

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