2 min read
Setting up recurring invoices is one of the best ways to streamline the payment and invoicing systems of your business. Recurring invoices are ideal for those clients for whom you provide the same service or products regularly. If they pay you the same amount each month, an automated recurring invoice system saves you significant amounts of time and energy.
Let’s look closer at how recurring invoices work and who benefits most from them.
What is a recurring invoice?
A recurring invoice is the same as a regular invoice except that it is automatically generated and sent to the same customer at predetermined intervals. Usually such intervals will be every month, but they could be every week or quarterly depending on the goods or service provided.
Recurring invoices include the same invoice details except the date, which automatically adjusts to identify the payment due date. The goods or service being paid for remain exactly the same, as do the client and your details.
A change in the amount of goods purchased or level of service required requires a new invoice reflecting the new costs. Another change could be the price your business charges for the goods or service. Such invoices can then immediately become recurring should the new payment amount remain the same for future invoices.
It can be more efficient for a business with repeat clients paying the same amount each interval to set up a recurring invoice. There are recurring invoice tools in many of the online accounting software apps, such as the QuickBooks recurring invoices feature. Such tools are simple to set up and allow your invoices to be automatically sent to your customers at the correct intervals.
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Who uses recurring invoices?
Any business that provides the same goods or services at regular intervals can greatly benefit from recurring invoices. The most common type of businesses and payments using recurring invoices include:
This is a broad term that can apply to anyone renting out a building or equipment. If the rent fee remains static over the course of the contract, there is no need to waste time drawing up a new invoice every month for payment. Simply use a recurring invoice tool to automate the invoice with the same details other than the date on which it is sent.
Monthly subscription payments by their very nature do not change from interval to interval, so a recurring invoice service makes sense for this kind of repeating transaction. It also integrates perfectly with the usual online subscription model, where the sign-up and subsequent access to services or extra features is automated.
Likewise with memberships, it makes sense to automate the regular payments until such a time that the membership rate is raised or reduced.
Outsourcing IT maintenance to a specialist often involves paying a regular flat fee which can be paid via a recurring invoice. Any additional services used during an interval that is not covered by the regular fee can be paid separately.
Many consultants operate similarly to the IT maintenance business model, with a regular fee paid at agreed-upon intervals.
We can help
GoCardless is perfect for taking recurring invoicing payments as our service offers a direct debit or bank debit solution. We also offer integrations with more than 200 partners, including Xero, QuickBooks, Salesforce Billing, Chargebee and Zuora.
Other features of GoCardless include:
An international payment network. Take payments from more than 30 countries at the real exchange rate.
Success+, GoCardless’ intelligent retries tool. Automatically retries to collect payment if the first attempt fails. Success+ collects, on average, 76% of payments that initially fail.
If you’re interested in finding out more about recurring invoices, or any other aspect of your business finances, get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.