When you are starting a new business, one of the first things you need to think about is what payment methods you are going to offer. After all, business is all about getting customers to buy your goods or services and pay for them!
In this blog we look at the pros and cons of taking online payments as a new business. Click on the links to jump to each section...
What are the benefits of recurring payments to businesses >
What are the benefits of recurring payments to customers>
How to set up a recurring payment >
Recurring payments vs direct debit >
Why use PaySuite for your recurring payments >
Recurring payments are where customers authorize service providers to pull funds from their debit or credit account automatically at regular intervals for the goods and services provided to them on an ongoing basis.
Strictly speaking the term “recurring payments” refers purely to a specific type of instruction given to your bank.
In the banking and payment processing world, a recurring payment is an agreement between a customer. But in many instances people tend to use the term recurring payment to also mean direct debits or standing orders. Legally and operationally, these are completely different thing. To be clear, so in this article we’re going to focus on recurring payment options.
Businesses that want to grow need to have access to cash and a predictable income stream.
Recurring payments offer this as the financial manager knows exactly when the payments are going to fire and how much they are going to be. The certainty offered by the recurring payment system means that the company can concentrate on growing rather than worrying about cash flow.
Debt management is much easier using recurring payments.
The first reason is that it is much less likely that your customers will get into debt in the first place. Their monthly payment is made at the same time each month and this is much more reliable than just hoping that they remember to put you on their manual payment list. This means that your company is likely to have a smaller aged debtors listing and more cash in its bank account.
When customers do fall behind, setting up a recurring payment for slightly more than their monthly purchases means that they gradually and reliably get their account back on track. This is helpful because it tends to lead to fewer upsets and lost customers whilst at the same time making credit control much easier.
Making the payment process simple and worry-free means that customers are much more likely to be loyal to your business. After all, why would they bother looking around for another supplier when they already have an easy way to pay?
Keeping costs low when you are growing is important.
Recurring payments are much cheaper to operate for the business, both from the point of view of bank charges but also in regards to processing costs.
If you sat and worked out how much time is spent issuing invoices, receiving cash, manually entering on your system and then reconciling the customer accounts then you would probably be horrified!
Add to that the additional time, effort and cost of credit control and you can see that manual payment processing is an incredibly time-consuming and therefore expensive proposition.
Manual payment processing is also prone to errors and putting these right is massively time-consuming too.
A well set up payment processing system like PaySuite will integrate with your website and accounts package so that your customer payments are dealt with automatically, accurately and without fuss. See other reasons why to use PaySuite.
Recurring payment systems give your business options.
You can develop into a subscription model business, use it as a method of collecting variable amounts or offer it as a method of prepaying accounts.
The important point here is that as your business grows, you will need to make sure you are able to continue to offer your customers the options they want and that your company remains flexible in the way it does business.
The key to growing your business is to have happy customers.
This takes two forms; making your products or services as useful and attractive as you can and making it easy to buy and pay.
Customer-centric businesses sell more, have more engaged customers and find that they develop a true community rather than simply a transactional user base.
A customer-centric business puts the needs of the customer front and centre in everything they do, from product design right the way through to payment processing.
Rather than forcing people to use the payment method that the company prefers, the customer-centric business provides as many easy ways to pay as they can so that the customer can pick and choose the one that suits them the best.
Setting up a recurring payment for your buyers means that it will stop them racking up debts that are either a surprise or that they find hard to pay back. This kind of regular payment method makes it easy to budget so that they know where they are at all times.
One of the most annoying things is when a service is cut off due to non-payment. Often this isn’t wilful refusal to pay, but more a case of simply forgetting to go through the payment process.
Having a recurring payment authority means that the customer can always be certain that the business will maintain service on their account and avoids those embarrassing outages!
With a continuous recurring payment firing in the background, the customer won’t have to worry about payments, they simply happen automatically at the same time every month.
Setting up a recurring payment authority is much quicker than doing it manually. You only have to do it once and when it is in place the customer can just forget about it.
Contrast that with logging on to the bank every month and making the payment manually and you can see why customers prefer the recurring payment option.
Want to know more? Speak to our friendly team who can talk you through our payments solutions. We offer direct debits with simple, affordable pricing, with no set-up fee and transaction fees as low as 4p.
The recurring payment process works by making a call on customers’ bank account. This means that you need to have in place an authorised recurring payment processing service that you can connect to.
It's a breeze setting up recurring payments for your customers bank accounts with Paysuite. Connect to your existing payments software or use our API integration.
We have no set up fees, flexible payment timings, and low fees.
Like most things there are pros and cons to both methods and depending on your size and type of organisation there might be a clear winner.
Generally speaking, Direct Debits are considered better for business as from a service provider point of view you don't have to worry about customer expired cards and money is taken straight from their bank account.
When you accept recurring payments, there is risk of failed payment from lost or expired cards and it can be more expensive as more players are involved in the payment process.
PaySuite offers businesses a fully secure and simple to use payment processing solution, allowing companies large and small to take recurring transactions with ease.
Growing businesses need to make sure they both delight their customers and keep a handle on costs. And recurring payments are an easy to use, convenient and reliable method for the customer to ensure that their account is settled.
For the business, the ease of use, low cost and accuracy of recurring payments means that they really are a superb option.
Add to that the fact that using recurring payments means that bad debt is reduced and you have a reliable and predictable cash flow then you can see why so many companies are now taking up this method.
Generally there are two types of recurring payments: fixed and variable.Things like gym memberships or subscriptions services like Netflix are fixed recurring payments. Variable recurring payments are as they sound and the charge may change depending on the services provided, an example is a mobile phone or utilities bill.
Typically recurring payments are known as automatic. Although they might be called automatic payments, subscription payments or recurring billing. Whichever name they come after it's when a customer authorises a provider to charge for their services at an arrange schedule.
The best way to stop a recurring payment is to contact the service provider that is billing you. You can also use online banking to easily stop a direct debit.
Recurring card payments offer fast clearance and are charged to the credit or debit card account. Direct Debits may take several business days to clear and are pulled from a bank account.
Pricing varies depending on the size of your business and the number of transactions you process. See our pricing here or get a quote.
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