Recurring payment solutions

It is always an exciting time when you have converted a new client and you are ready to collect payment. All of your hard work during the sales cycle has paid off and you can celebrate a new client contract being secured for your business.

However, before you can welcome the newest addition to your client list, you need to collect payment. While this can be straightforward if you are selling a product or service with a one-time fee, things get rather more complicated when you are charging clients a monthly fee.

The focus of our blog this week is to highlight why you need to automate the process of collecting recurring payments and some of the solutions available to make your life easier.

What is a recurring payment?
A recurring payment is any payment that is collected frequently, it could be weekly, monthly or annually, for a fixed period of time.

Most services that are sold online have a recurring payment attached, think Netflix or Amazon Prime for example. They are a good way for the selling company to build a long term relationship with their customers and offer value for money for the lifetime of that relationship.

From your perspective, as someone who currently operates a business or harbours ambition to launch a business, it is important to start factoring in recurring payments as a source of residual income for your next venture.

The holy grail for most business owners is to build up a significant amount of monthly revenue that keeps coming into the business each month which lessens the dependence of securing a set number of new clients each month. Residual income also helps with the general cash flow of a business and helps businesses plan with more certainty for the medium to long term.

But, why should you be using recurring payment solutions?
Well, the alternative is to use a manual process. Let us think about that for a moment and put it into practice for a business that has 10 recurring payments from clients each month.

If a business adopts a manual process, they will most likely be sending out invoices to each customer requesting payment. This will be a laborious and time-consuming exercise and result in many lost hours of productivity as staff or the business owner complete this task.

Once the invoices have been sent, in most cases, your clients will not be prompt in making payment and therefore you will now need to start chasing up payments. This could involve phone calls, resending invoices and countless back and forth emails. It is very easy to let this type of process get out of hand and be in a situation where you are still trying to collect payment for invoices that are a few months old.

The net result of this type of manual process is a reduction in your residual income each month which will affect the profitability of your business.

Wouldn’t it be better if you could automate recurring payments?
I’m glad you said that because now you can. Recurring payments can actually be set up during the onboarding process when you sign a new client. It can be as simple as sending a payment link to a new client with the agreed monthly fee and asking the client to input their debit/credit details. Once this has been received, recurring payments can automatically be collected from your clients and deposited into your bank account without the need for you to function as a credit controller.

If a payment fails, you are immediately notified and can reach out to your client to collect payment without having to wait and chase payments. This significantly boosts productivity and saves you time to focus on the other aspects of your business.

So what recurring payment solutions are available?
A simple Google search brings up lots of recurring payment solution providers that would be ideal for any business. For example, you can now collect recurring payments through PayPal and Stripe. However, a really popular and relatively low-cost option comes from a company called GoCardless which is currently working with over 50,000 businesses. With low transaction fees it is a good choice if you are looking to have a simple automated process for collecting recurring payments.

Summary
The days of manually collecting monthly fees from clients are thankfully behind us as there are now so many options available to business owners looking to use technology in every aspect of their business.

To find out more about how you can work with local clients and provide technology solutions with your very own Digital Agency, please contact our team today.

Until next time, take care.