Recurring Invoices: Everything Your Small Business Needs to Know
Recurring invoices are extremely beneficial to small businesses for a multitude of reasons. First and foremost recurring invoices provide your business with consistent cash flow. During the stagnant months, recurring invoices are especially beneficial for your business. That all said, it’s really no surprise that small business owners try to bill their clients using recurring invoices.
Here’s everything your small business needs to know about recurring invoices and whether or not they’re a good fit for your operation:
The Benefits of Using Recurring Invoices
Recurring invoices have many advantages for your business. It’s important to take a close look at what your pain points are when it comes to billing your customers. If recurring invoicing can solve some of those issues then you’ll want to look for an invoicing solution that supports this functionality.
Your Cash Flow Will Improve
Recurring invoices represent dependable income for your business. After about three months of payments, you can start to confidently adjust your budget around this guaranteed cash flow. In addition your cash flow projections will begin to improve drastically.
You Can Prioritize Your Time
Creating, sending, and tracking invoices to clients takes up a ton of time. Whether you’re handling these tasks or you’ve hired an accountant it will accrue costs nonetheless. Recurring invoicing will save you time so you can focus on growing your business. As a small business owner you have way too much on your plate to get caught up with invoicing.
Automated Payments May Be an Option
If you choose to work with an online payments provider that offers online invoicing you may be able to utilize automated payments. Automated payments essentially allow you to bill your customer’s credit card automatically on the specified payment date. Make sure your payments solution allows you to securely vault customer credit card information for later use. When asking your clients to opt in to automated payments they’ll want to be assured that their personal payment information is kept safe.
You Will Improve Client Relationships
Developing stronger relationships with your clients encompasses many things. Payments are one of the least favorable interactions between contractor and client simply because “it is”. The more back and forth you can remove from this interaction the better. Recurring invoices represent the perfect solution for that.
Are Recurring Invoices Even Suitable for Your Billing Process?
The truth is, recurring invoices may not be suitable for your billing process. For example if you typically engage with clients on short term projects with few payment intervals you probably won’t be able to utilizing recurring billing. If you’re still unsure, here’s a list of a few businesses that are perfect candidates for this practice:
- Membership programs or websites. For example, you may own a fitness blog that provides users with weekly diet plans and workouts. In order for customers to gain access to your blog you can setup recurring invoice plans with each client.
- Software providers who charge license fees for access to their products.
- Service-based companies that offer a set number of weekly or monthly working hours.
- Subscription services for both physical and digital goods. For example, you may own a snack box subscription service.
- Your client engagements typically span over six months or more. If deliverables are clear you can suggest a recurring payment plan with your client.
Using the above examples it should be pretty easy to determine whether or not your business is suitable for this billing strategy. If you’re interested in pursuing recurring invoices step one is to find a payments company that supports it. Take a look at this list of some of the top payments companies and try a few out before making your decision. Once you’ve made your pick go ahead and invoice away!