While we all as consumers enjoy a wide range of services from mobile data and Netflix to more niche items like monthly coffee supplies which are all now generally paid for on a monthly basis, more and more business types are moving to recurring billing to automate the collection of their income and reduce administration time. We're hearing many business owners now advising their customers that fees will be collected on a recurring basis. There's a growing awareness in the minds of consumers and businesses that the norm is the payment for services on a regular basis. It's always easier to swim with the current.

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Introduction

Recurring billing, also known as automatic billing or subscription billing, is a payment model in which a customer is charged for goods or services on a regular basis, typically monthly or annually, until the need for the collection comes to an end.

While recurring billing is often used for subscription-based services, such as online streaming services, software as a service (SaaS) products, and membership etc., it’s equally a valid approach to collecting income for a wide range of more traditional or off-line service providers and those involved in distribution. Very simply, it enables businesses to automatically collect their income for the service they're providing and helps the paying customer avoid the hassle of manually making payments each time an invoice payment is required.

To set up recurring billing, customers paying for the product or service provide their payment information, be it their card details or for SEPA direct debit, their name and address along with their account details i.e their IBAN. By doing so they authorise the automatic debiting of their bank account for fees due. The business collecting income then charge/debit the paying customer's account at the agreed-upon intervals, until the customer stops using the service.

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The business collecting is able to generate a predictable revenue stream with visibility of what cash is due in each month from the automatic billings.

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SEPA direct debit v payment cards

Taking this one step further with a focus on the SEPA direct debit scheme as the means to process the payment, where credit and debit cards have an expiry date the beauty of debiting a bank account via direct debit is that there is no expiry date. Yes the account being debited can be closed, we’ve seen this recently as Ulster and KBC exit the Irish market, but account closure is generally rare and certainly no way as certain as card expiry. The benefit here of course is that once the authorisation to debit the account is secured there’s no need to re-authorise whereas when a card expires the payer needs to be brought back into the mix to authorise recurring billing with their new card.

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Predictable income and lower administration costs

Recurring billing can be beneficial for both the business collecting fees and the customer paying for a service or product. The business collecting is able to generate a predictable revenue stream with visibility of what cash is due in each month from the automatic billings. Further, with income arriving into their bank account on set days each month the task of bank reconciliation and payment allocation is greatly reduced. 

The customer enjoys the convenience of automatic payments and uninterrupted access to the product or service, it also avoids any credit related calls with the service provider where a payment may be missed or delayed. 

In short, recurring billing simplifies the collections and payment processes on both sides and serves to develop a healthy and long lasting relationship for both parties.

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Here at DebaPay we specialise in all things recurring, we know the value it brings to business of various types, be it those providing an ongoing technical service but equally where a company provides Professional Services be it Accountancy or Consultancy. The world of business continues to move to recurring billing and predictable revenue streams, contact us to learn how we’re focused on making this a reality for our customers.

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info@debapay.com

0906400199

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