For start-up businesses, the subscription business model could be an ideal fit. Offering predictable revenue, immense opportunities to scale, and stronger relationships with customers, many start-ups have had success with subscription commercial models.
But if you’re implementing a subscription-based model, your payment method matters. Failing to manage recurring payments quickly and efficiently may cause your customers to lose faith in your business and go elsewhere. Fortunately, learning how to manage recurring payments doesn’t have to be a struggle. Find out everything you need to know with our top five tips on payment processing for start-ups.
1. Offer the right payment method for your chosen market
Different countries have different preferences regarding their preferred payment method. To ensure fast payments for start-up businesses, it’s a good idea to find out what these preferences are and ensure that you’re catering to them. GoCardless has put together a study of payment preferences for recurring purchases that can help you do just that. While the U.S. is still very much in thrall to credit cards – it’s their preferred payment method for online and traditional subscriptions – other countries may be more likely to rely on Bank Debit or digital wallets. In Australia, credit cards, Bank Debit, and debit cards are the preferred options for online/traditional subscriptions, so it makes sense to offer these payment methods to your customers.
2. Optimise your billing procedures to reduce customer churn
Churn is one word liable to put any start-up business on edge. Whether due to insufficient funds or cancelled/expired cards, involuntary churn can be a major problem for businesses trying to manage recurring payments effectively. To keep churn to a minimum, ensure that you set up your billing system to notify you of any payment failures and identify the issue causing the failure. Also, you should set up your payment process to retry payment after a set amount of time (1 hour, 24 hours, etc.), as payment failures can be caused by technical issues. It’s also worth noting that Bank Debit payment schemes are much less likely to fail as payment is taken directly from the account.
3. Keep communicating with your customers to reduce chargebacks
While getting your billing processes right is a significant factor in learning how to manage recurring payments, it’s also important not to forget about the human aspect. If you’re unable to provide the goods or services ordered by a customer by the stated delivery date, you should notify them immediately. This way, you can reduce the number of chargebacks that your business experiences, while also minimising the number of calls to your customer support line.
4. Let your customers choose their preferred payment schedule
Sometimes, the best way to handle payment processing for a start-up business is to offer flexible terms of payment. By letting your customers select the day that they’re billed, as well as the frequency with which they’re billed, you can ensure that your customers always have enough funds in the bank to make payment. Allow your customers to receive bills monthly, quarterly, or annually – they’ll appreciate the additional flexibility and may be more likely to stick around for the long haul.
5. Use GoCardless to manage recurring payments seamlessly
GoCardless is a great way to manage recurring payments for start-up businesses. With low fees, flexible timings, and an easy sign-up process, you can cut down on involuntary churn and maximise LTV. Plus, GoCardless offers seamless integrations with popular accounting software like Xero, so it’s simple to incorporate GoCardless into your existing payments structure.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.