As a small business owner, you’re constantly looking for ways to save time and increase efficiency. One great way to do this is by setting up automation for your payments. Not only does this type of automation save valuable time, but it also ensures that important payments don’t fall through the cracks! The difference between recurring payments and recurring invoices, however, can be a little confusing.
Although they might sound the same, recurring payments and recurring invoices are very different – and should be used in different situations depending on the needs of your business.
Here’s a quick and easy breakdown:
- Recurring payments automatically charge the customer’s card on a pre-set schedule.
- Recurring invoices automatically send an invoice to your customer on a pre-set schedule. No payment is collected until the customer takes action.
Some businesses are a perfect fit for recurring payments, others for recurring invoices, and some for both. Take a look at the following examples and see if your business fits the bill!
- A company that offers a product for a monthly subscription that requires prepayment. A great example of this is meal prep kits or clothing subscriptions.
- A marketing agency that supplies a fixed set of projects. For example, if you supply a client with 20 social media posts and a newsletter every month, it’s safe and efficient to set up billing on an automatic schedule.
- A consulting or law office that offers fixed services with billable hours.
- A company that offers monthly services at a fixed price – like monthly landscape maintenance or IT support.
Depending on your situation, recurring payments and recurring invoices could be a good fit for your business. Setting up recurring payments ensures that your customer won’t have to remember to make a payment and can avoid late fees while sending recurring invoices helps you to minimize any duplicate work. Ultimately, both help you save time, allowing you to shift your attention to other areas of your business that require your attention.
If you haven’t already incorporated these types of payments to your flow, consider the following benefits and see if this is the right fit for you.
Speed Up Payments
The less time you spend chasing down payment, the faster you can get paid. Relying on automation to send out payment reminders, or simply initiate the transaction, means money in your pocket faster. Most consumers pay their regular bills in a similar way, so becoming part of that process for them reduces the risk of someone forgetting to pay and integrates your product or service into their daily routine.
Improve Cash Flow
Cash flow is important to any business. Having a constant flow of funds to support other areas of the business is vital to success. By setting up recurring payments or invoices, you can ensure that payment is deposited in your account on a monthly basis, reducing the risk of being stuck without the cash you need!
Save Time (and Money!)
Automation is a wonderful thing for business owners, especially when it comes to something as important as payments. By using the Omni Virtual Terminal to send out your invoices or initiate your transactions, you can spend more time on what matters most to you! Plus, once the payment schedules are set, you no longer risk forgetting to send an invoice or incorrectly keying in payment information.
Enhance Customer Relationships
Instead of being perceived as a one-time vendor, recurring billing sets you up as an extension of your client’s daily operations. Not only do you reduce friction by automating the payment process for them, but you remind them how valuable you are as a vendor – building a long-lasting relationship and champion of your business!
Setting up recurring payments and recurring invoices with the Omni Virtual Terminal is a snap! Simply set the schedule for the automation when you create the invoice – it’s that easy. Learn more about how the Omni Virtual Terminal can help your business grow.