Recurring billing
What is recurring billing, and who uses it?
Recurring billing is a payment system in which a business charges customers a fixed amount on a regular schedule for goods or services. It’s a core element of subscription businesses, allowing payments to be automatically taken weekly, monthly, annually, or at any custom interval. Organisations that use recurring billing range from subscription box services and SaaS providers to utility companies, fitness centres, streaming services, and publishers offering newspaper or magazine subscriptions.
What are the advantages of recurring billing?
Recurring billing offers numerous advantages for both businesses and customers. For customers, it’s highly convenient because they only need to enter their payment details once during signup, resulting in a smoother and simpler experience.
For businesses, recurring billing creates a reliable stream of income and improves cash flow predictability, making it easier to forecast revenue and plan ahead. However, companies should be mindful of potential billing issues, such as expired credit cards or declined payments. Tools like dunning, which involve retrying payments and communicating with customers to update payment details, can help minimise disruptions and reduce churn. In addition, businesses handling recurring payments must maintain high security standards and comply with PCI requirements to keep customer data safe.
