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There are multiple ways a business can receive payments when customers purchase their goods or services. All of them fall under the two banners of recurring and non-recurring payments. But what does a non-recurring payment mean? Here’s our guide that explains all the key information.
Recurring payments happen when the customer authorises a business or organisation to deduct an agreed amount of money from their bank account at recurring intervals such as weekly, monthly or annually. Such recurring payment agreements can be ongoing as in the case of a subscription, or for an agreed period of time until a total amount has been paid in incremental intervals. They also require a separate receipt either in the form of a bill or invoice for every single separate payment.
Non-recurring payments are one-off transactions that usually happen only once. There will be just the one invoice or bill required as the entire payment was completed in the single non-recurring transaction. Such payments tend to be larger than recurring payments, as the latter usually involves a greater sum being broken into much smaller sums.
Examples of non-recurring payments
As non-recurring payments are one-off payments, you could choose almost any kind of purchase of goods or services that can be paid for in one single payment as an example of a non-recurring payment.
Such examples of non-recurring payments include the purchase of any goods and merchandise, including any equipment or other physical products. You will also usually pay for the likes of event tickets via a non-recurring payment.
Many businesses offer both non-recurring and recurring payment options to their customers. For example, buying a product online for £100 may have the option of paying all in one go as a non-recurring payment. An alternative would be to pay for it in four recurring payments of £25 per month over four months.
Other business models that provide subscription services that require payment usually offer a variety of payment options. For example, you can subscribe for a recurring payment of £10 per month, or pay the annual subscription fee of £120 per year all in a single non-recurring payment. Usually, paying for an annual subscription all in one go will grant the customer a discount. This means they pay £100 for 12 months if they pay all at once, rather than paying £120 by paying the monthly recurring subscription fee.
Benefits of non-recurring payments
Allowing non-recurring payments provides several benefits to a business, even if they exclusively offer subscription services that generally work via recurring payments such as Direct Debit. These benefits include:
More payment options
Lower initial costs
More payment options
Offering customers a wider choice of payment options makes it easier for them to choose your company to do business with.
Lower initial costs
Non-recurring payments helps reduce initial costs involved with the recovery of marketing and sales costs by reducing lead times.
By having the option for non-recurring as well recurring payments, your business will be able to offer a wider palate of products and services. This can include the likes of gift vouchers and other one-off purchases that can complement a subscription service.
A non-recurring payment means your business receives more money up front. This gives you more capital to invest in growing your business.
We can help
GoCardless offers Instant Bank Pay which allows merchants to send links to customers to request payment, especially for one-off amounts. It is only currently available for UK and Germany-based customers, although it can also be used for transactions from UK customers to the United States. Using bank-to-bank payments powered by Open Banking, it is a perfect system for one-off payments and payment confirmation is instant.
Payment request links make it easy to get paid as the customer simply needs to click the link and follow the simple instructions.
If you’re interested in finding out more about how a non-recurring subscription works, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.