The 10 Key Benefits of Recurring Billing System for Business
Subscription billing is a great business model. And with the increasing number of customers, businesses need an automated and swift business process to collect revenue and keep the customers happy. But even though some processes still need to be done manually, billing must be automated.
Using a top-notch subscription billing software can do this for you. It can also provide extra features that enable you to increase customer engagement, have better revenue predictability, more easily calculate the lifetime value of customers, manage inventory more efficiently, to name a few.
Let’s take look at the most significant benefits of using recurring billing software in your business.
What is recurring billing?
Before we discuss the benefits, let’s talk about recurring billing.
Do you know how 40 years ago people would get mild delivered to their doorstep? Or a newspaper in the morning? These are just a couple of old-school examples of recurring billing and the subscription business model.
Recurring billing, also known as subscription billing, is a process of ongoing payment periodically for a product or service.
In practice, this means a customer provides their credit card information to pay for goods or services periodically.
The provider then withdraws the specified amount on a regular schedule for as long as the individual’s subscription lasts. Once the subscription is approved, subscribers can set it and forget it.
Modern-day thriving subscription billing businesses are either SaaS businesses, like Netflix, Disney+, Canva, or Spotify. Or sell (and deliver) products right to their subscribers’ doors, such as Dollar Shave Club, FabFitFun, Birchbox, Firstleaf, Barkbox, and many more.
From the customers’ point of view, the beauty of this business model lies in its convenience. While for business, it’s appealing because it makes revenue more predictable.
Benefits of Recurring Payments for Business
We already mentioned that the subscription business model offers many benefits to businesses. And to most of it, companies need to utilize reliable recurring billing software.
Here are the ten key benefits of using recurring billing platforms for businesses.
Time Saving and Money
One of the main advantages of utilizing a recurring billing system is the ability to automate and streamline the entire recurring billing process.
A recurring billing platform is set up to keep track of subscriptions, payment information, and schedules so that it can prepare and send invoices to clients regularly, send emails and notifications, and even retry failed payments without having to be checked.
Automating and standardizing these processes eliminates the need for manual work, reduces the time associated with these tasks, and significantly reduces administration costs.
Cut Down Late Payments
Naturally, when you have an automated system that takes care of payments, it can significantly cut down late and missed payments.
And this is especially important when your customer base grows. The platform makes it easier to flag customers that haven’t paid and automatically sends them a past due notice.
And when you immediately know that some payments haven’t gone through, you can pinpoint which customers you need to focus on.
Build Better Customer Relationships and Increased Customer Retention Rate
Usually, subscription billing platforms have built-in tracking capabilities that help businesses understand customer behavior, thus increase engagement, improve customer satisfaction, and increase retention rate.
When you have access to extensive customer data, you can segment customers according to their preferences and identify the best ways to engage each group.
And since engaged users can tell you what’s working and what isn’t, you can easily make adjustments.
Improve Security and PCI Compliance
Safety and security of customer (payment) data are a vital concern for businesses and customers alike. And for a good reason.
But building your billing solution and implementing safety and security features, and on top of that, getting a PCI compliance certificate on your own can be complicated and requires investing a lot of time and money.
Third-party recurring billing systems have these features built-in, though, so incorporating one can make things much easier (and safer) for you.
Choose from Multiple Online Payment Gateway Providers
A reliable Recurring Billing System offers you to choose from different payment gateways. It helps in bringing you the flexibleness of selecting the very best and the most economical payment support systems or gateways for business.
Offering different payment gateways helps in cost-saving and also allows you to focus on other areas. In case a payment is declined due to an error on your supported payment gateway, then you’ll have the option to choose another one. Make sure your recurring billing platform supports different payment gateway provider and can also integrate with your current system in minutes.
Flexible Billing and Implementation of Trials and Promotions
Subscription billing businesses rely heavily on their ability to offer flexible billing cycles and combinations that enable them to optimize when, why, and how they bill customers.
This includes offering different subscription options, trial periods and freemiums, promotions, discounts.
That’s why it’s vital to utilize a platform that supports easy and fast set up of promotional offers, discounts, upgrades or downgrades of plans, and more to enhance marketing efforts.
Get Real Time Reports
The beauty of recurring billing systems is that they are equipped with key metrics and reporting tools out of the box.
When you integrate a recurring billing platform, you get instant real-time access to key metrics such a how many people to sign up, daily and monthly revenue estimates, outstanding amounts, and more.
Having clear insights can help you understand whether your efforts yield positive results and identify places for improvement.
A Flexible API and Seamless Integration
Most subscription billing platforms have a SaaS friendly API that’s flexible, well documented, and robust.
This allows for seamless integration with other systems and platforms that businesses might be using, such as a CRM platform, accounting and revenue recognition software, business management tools, and payment gateways.
These types of integrations allow businesses to have a complete overview and see details of the records for each customer, which creates transparency across the organization and facilitates better collaboration between departments.
Monitoring subscription and gathering key metrics are two key elements that help subscription-based businesses access the health of the company.
Through these reporting features, you can gain essential insights that will allow you to project future revenues.
Most recurring billing platforms enable you access to four main reporting pillars: sales, cash, revenue, and monthly recurring revenue (MRR). As your business moves forward, all these metrics and reports play a crucial role in making informed strategic decisions.
When you charge clients repeatedly, it’s expected that they might have questions regarding the billing process. And when this happens, it’s important that you can provide answers quickly.
Locating customer details is relatively easy with a recurring billing platform, especially one that integrates with other systems (like CRM).
This saves time for your staff, increases their morale, and makes customers happy.
More importantly, the recurring billing platform will save actions, from lead generation to payment collection, and provide a clear and easy to follow audit trail for your business.
Benefits of Recurring Payments for Customers
In addition to the numerous benefits for businesses, recurring billing platforms offer many benefits for customers that make the subscription model so popular.
In addition to the set-it-and-forget-it option that makes subscription billing incomparably convenient, here are the other key advantages that recurring billing platforms provide to customers.
Safe and Controlled Payments
Signing up for a subscription service means entering payment information once, and leaving it to the service provider to take care of the rest – send notifications and invoices, charge your card, etc.
Additionally, customers can control their payments, and efficiently manage their subscription – upgrade or downgrade your subscription plan, remove specific products or services, pause or cancel the plan – knowing that any changes are tracked. The invoices (and billing) are adjusted accordingly.
Since the billing systems send automated notification and emails, customers will also be able to ensure timely payments and avoid paying additional feel.
Better Way to Buy
Subscription billing businesses offer their services or products directly to customers through their website, making it easy for customers to browse offers and sign up.
Additionally, they can change their subscription and switch to another plan or cancel their subscription with no hustle.
Moreover, customers that sign up for more extended periods, like quarterly or annually, may get better(discounted) rates. And since the companies are eager to form long term relationships with clients, they will continue to bring new content, features, or promos to make the customer experience more valuable.
Customers that sign up for a subscription are looking a continual, uninterrupted service delivery, and ongoing automated payments. And having robust recurring billing solutions backing subscription offerings is necessary for providing exactly what – a valuable customer experience on all platforms with no disruptions in service delivery or payment.
Additionally, it enables companies to bring new content and features to the customer continually. So instead of being stuck with an old system and experience all sorts of incompatibilities, customers get the latest system improvements and upgrades automatically.
In addition to the streamlines experience and payments, with subscription billing, customers can also get access to highly focused products and high levels of personalization.
Since subscription billing platforms gather a large amount of customer data, they can put it to excellent use and ensure that based on your current plan and choice of products or service, customers receive personalized recommendations and special offers that match their preferences. For example, Spotify creates personalized playlists like the Daily Mix, and Netflix has Top Picks.
There are many reasons why businesses and customers love the subscription billing model. For customers, it’s an incomparable convenience of the model. And the best parts that make it even better – the ability to change their subscription plan or cancel anytime without a penalty.
For businesses, it is not only the ability to automate and manage essential business functions and save time but the opportunity to focus their attention on other more critical areas such as product or service development, business growth, sales, and marketing.
Also, utilizing a subscription billing platforms allows businesses to form better relationships with customers and triple the average customer’s lifetime value. So it’s a win-win.
And oh! Using a subscription billing platform to handle all your invoicing and payment collections eliminates the need to print out and send invoices or receive checks. That makes the business eco-friendly by saving paper and reducing your carbon footprint.