Subscription business models aren’t only for beauty, health, and wellness boxes. Your business can also benefit from building a recurring payment system!
Recurring payments help you save a lot of time and operational costs.
Recurring payments, subscription billing, automatic payments, or automated billing, whatever you call it, is one of the most efficient business models out there. It means you can automatically charge your regular customer’s payment from their saved credit card details, rather than having them pay every single time they make a purchase. Perhaps, the most obvious reason why most businesses prefer recurring payment is that it makes their revenue generation more predictable and keeps their cash flow smooth and frictionless.
The good thing is, recurring payments work for both services as well as product-based businesses. Not just that, you can set them to a specific segment of customers. Not only will it make your payment processing swift, but also help you build the loyalty and trust of your customers. Further, if you have the right tools to manage your recurring payments, then you can save a lot of time and operational costs as well. One such powerful tool is a payment gateway. By having the best payment gateway at your disposal, you can process recurring payments in a much efficient way.
7 Reasons Why Recurring Payments Are Beneficial For Your Business
Apart from the ones we have discussed above, there are many other benefits of using a recurring payment system. Below are the top reasons why you should build a recurring payment system for your business :
1. To Improve Cash Flow
Recurring invoices helps in generating a steady stream of monthly revenue. This improves your monthly cash flow and you get enough money to keep your business running by covering all the basic expenses. Besides, this practice also smoothen out the cash flow projections. For instance, when you pay your monthly internet bill, the interest service provider knows that they can leverage a certain amount of income from you every month.
2. To Accelerate Payment Processing
In this digitalized world, the majority of us are habitual of paying regular bills, such as rent, phone, electricity, Internet, etc. By sending recurring invoices to your customers, you can encourage them to lock into their usual payment routine.
On top of everything, the right invoicing software allows you to link your customer’s credit card which not only promotes quick payments but makes the whole process very convenient.
3. To Minimize Processing Time
By charging on a recurring basis, you can avoid chasing the payments. Note that the recurring invoices accelerate the payment cycle by promoting your clients to make payments in a timely manner. This will save you from reminding them again and again to clear the invoices.
Further, your customers will also benefit: they will not have to remember the due dates and won’t have to pay the hefty late payment penalties in case they miss the last dates of payments.
4. To Automate Payment Processing
With the right software, you can fully automate your payment processing. Whether it is designing an invoice, setting a payment schedule, linking your customer’s payment details, it takes care of everything. You don’t have to do anything manually.
In fact, the top payment gateways also allow you to automate your payment processing. All you need to do is find and integrate the right payment gateway with your website.
5. To Build Healthy Customer Relationships
Recurring payments also help you build stronger bonds with your customers. Instead of perceiving you as a regular vendor, your customer will look at you in a more familiar way. Further, you will also be able to gain their trust and support.
6. To Reduce Operational Cost
Processing monthly invoices is a very time-consuming process. Not just the time, it also comes with a lot of hidden charges that impact your profits. By implementing a recurring payment system, you can cut down on your operational cost.
7. To Improve Overall Efficiency & Performance of Business
By saving money and time, you can shift both your attention and your budget to other important areas of your business including sales, marketing, warehousing, etc.
So, these are a handful of reasons for building a recurring payment system. But if you’re still confused as to whether or not it is the right model for you, then check out the below section!
Who Can Use Recurring Payment Systems?
A recurring payment model is suitable for all types and sizes of businesses.
Before adopting recurring payments, it is very important to know whether or not it is suitable for your business. Below are some types of businesses that can benefit from the subscription-based model :
- Service-based businesses charge for a fixed time every month.
- Businesses offering monthly service plans. For example, a media house that offers a weekly newsletter and downloadable reports to a client.
- Companies offering maintenance packages for their products. For example, a software service provider, who installs a particular software in the system of their customer. To keep it updated and bug-free, they will need to provide a monthly care and maintenance plan.
- Businesses offering education materials. They can charge a fixed monthly amount for a fixed portion of study materials like downloadable reports, videos, and lectures.
- Membership sites and even other businesses can provide exclusive offers or deals to limited customers for a small membership fee. For example, a cosmetics store provides freebies and special discounts to their members, in return for a monthly subscription fee.
Apart from the above-mentioned examples, many other businesses can also benefit from recurring payments. Whether you’re a service provider or an e-commerce merchant, you can always build a subscription model for your business. And even if you don’t want to adopt this model entirely, you can also use it for a specific segment of your clients. This will help you keep them engaged and loyal to your company. There is numerous invoicing software that can allow you to charge your customers on a recurring basis.
Apart from invoicing software, there are payment gateways that offer a one-stop solution to the entire payment processing environment of your business. In this post, we have covered the reasons for option recurring payments along with other useful things regarding the same. We hope it helps!