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Most small business owners have heard the term "subscription billing", but few make use of it or know what benefits it can hold for their business. Lets begin with getting an exact idea of what recurring billing is and then move on to investigating how integrating it in your business can increase your cash-flow and save you money.

Subscription billing is when you give a merchant or service provider authority to debit your bank account or credit card at regular intervals for the purchase of goods or services. The recurrence can be on any term e.g. weekly, fortnightly, monthly, or annually. The recurring amount debited is usually the same on each recurrence, but can differ. For example a weekly fee of $10.00 for your subscription to an online service.

Now that we know what recurring billing is, lets see how recurring billing can make your business better:

Enable better cash-flow

If like many other business owners and freelancers you think that subscription billing is solely for enterprise or corporate entities, you will be surprised to hear that recurring billing can work wonders for your SMME as well. You can quite simply and very cost effectively implement subscription billing in your own small business.

Collecting payment via subscription billing means improved cash-flow for small businesses. When billing only via wire transfer or direct deposit only you are intermittently receiving small, unscheduled payments that each incur bank changes to you and your customer. These once off payments can be sporadic so you are never sure when or even if your customers will pay you.

If you are mostly unsure of when you will get your payment from your customer you can never plan ahead. This is where subscription billing saves the day. Now you know when you will be paid and can even work out a projected payment amount based on past success rates. This healthy cash-flow and ability to plan ahead really does mean that your business can expand quickly.

Dont forget to remember

Subscription billing means timely payment. Clients cant forget to pay because now payment collection is automated. You dont have to wait around anymore for late payment or have to deal with clients claiming they forgot about making payment. You get your money when you need it - hassle-free. Customers still have the freedom however to select their own debit dates according to invoice due date, so everyones happy.

Reduce administration

Ensuring the bulk of your customers pay via recurring billing translates to less administration tasks for you and your customers. Administration is reduced on the clients side because payment is automated. The customer no longer needs to go into a bank to make a direct deposit or login to online banking to manually make a wire transfer. Administration is also reduced on your side because you do not have to reconcile hundreds of small individual payments. Gateways that allow for subscription payments usually offer automatic account reconciliation or provide bulk recon files that allows easy and accurate resolution.

It all sounds excellent! How do you get started? We recommend you sign up for a payment facilitator that automates account recon and shop around for a payment gateway that enables your small business to bill recurrently.