We all like certainty in business. Having a handful of reliable clients or working with trustworthy associates can increase the level of certainty in your business operability.
Naturally, knowing when you’re going to be paid for your work also improves the feeling of financial security. In order to ensure a seamless cash flow and a certain level of payment expectancy, introducing recurring invoices is a clever thing to do. In this text, we’re going to discuss the most practical elements of this payment option.
Who is eligible for recurring invoices?
A recurring invoice is the one issued at the precise, prearranged time, under the conditions agreed upon in advance. Let’s say that you’re a freelancer and you send a client four 2000-word texts every month. If you’ve established such a regular work pace with that client, you can establish a recurring invoice payment system.
To be more precise, you should talk to the client and ask them about the most convenient invoice payment date at the end of a work cycle.
For instance, you can suggest the last day of the month as their payment date. Of course, the date when you issue your recurring invoice should be a few days earlier. All these terms and schedule features need to be discussed with the client in question.
As for the business individuals and ventures eligible for this invoicing system, everybody who performs some regular work tasks for the same client could start using it. From software vendors and maintenance businesses to eCommerce enterprises to various digital agencies – make recurring invoices the pillars of mutual trust and collaboration with your clients.
Saving your precious time
New business owners and freelancers usually have a lot on their plate when they start doing their new job. From communication to clients, to project management and accounting obligations, it takes some time and energy to covers all the bases in business.
Because of that, it’s imperative to reduce the amount of wasted time whenever you can.
By turning to recurring invoices, you’ll spare yourself the potential waste of time caused by slow, manual invoicing work. When you go for recurring invoices and optimize the invoicing process with some additional hacks, you’ll reduce the time needed to issue every invoice. As a result, you’ll have more time to focus on other business projects and tasks.
Improving your business brand
Sending your invoices at the strictly set time every month will add to your business image. We’ve all got used to paying monthly bills, from water and electricity, to rent and cable TV. And those bills that we get from the providers of those services are nothing more than recurring invoices. They’re sent at the same time, every month, for the package of services we’ve used from the provider.
A business that established such a payment system will be perceived similar to those bigger business names. When you succeed in becoming an important business entity as those big providers, you’ll make your brand stand out from the rest of the pack. Therefore, using recurring invoices can help your branding strategy, as well.
Apart from that, only a satisfied client will agree to make regular payments to another business venture. After you’ve proven to be a reliable service provider and gained the trust of several clients, recurring invoices are the next logical step in strengthening your business collaboration.
Enabling better business planning
Freelancers and small business owners alike know that there are ebb and flood tide seasons in work.
What’s important here is to be able to pay your overhead expenses, as well as your collaborators and business associates regardless of the season.
In the light of these trends, recurring invoices will enable you do plan your business duties in a better way.
Again, there will be no recurring invoices without long-term clients. Here you can learn a few tips about winning your first client as a free agent.
As you obtain several reliable clients and introduce recurring invoices, you can assign each of these payments a different purpose.
For instance, the invoices paid by client A will be used for your overhead expenses. Similarly, the payments made by client B will be streamlined into your emergency fund and kept as a backup budget for a potential ebb-tide season.
By directing your clients’ payments received thorough recurring invoices, it will be easier for you to make a long-lasting business plan, instead of using some ad-hoc financial solutions.
Accelerating the payment procedure
Many business owners complain about late payments. For example, in the UK, every small business is owed about £6,100 on average, which has put many of them at risk of being in financial problems.
In order to avoid such a situation, business owners should seek the most effective strategies to get paid in a timely manner.
Recurring invoices can help you achieve the goal, as well.
When your client has agreed to make such regular payments, the hazard of experiencing financial problems due to late payments is much lower.
What clients can also do is connect their account with your recurring invoices, so that everything is done automatically. This is a win-win situation for both parties: you get your money on the agreed date and the client doesn’t have to worry about the payment every single month.
Still, there might come a time when your reliable, long-term client simply doesn’t have assets to make the payment. In that case, always offer several payment options to them. Reliable clients rarely avoid making their payments on purpose so show some understanding. You might even suspend the recurring invoicing system for a while here and make a special payment schedule for that special situation.
Nevertheless, in case of less conscientious clients who don’t pay recurring invoices on time, you can apply these strategies for late payments and get what’s yours.
Potential drawbacks of recurring invoices
Despite all the advantages that recurring invoices can have for both the client and the service provider, there are a few drawbacks, as well.
For starters, the client might not automate the payment. In that case, you’ll be sending your invoices in line with the agreed rules, but the client won’t make their payments. Since this can happen by chance, you need to contact the client and politely inquire about the payment status. They’ll check their bank account and correct the potential mistake.
When it comes to mistakes, what can also happen is that the service provider enters the wrong amount of money on their invoice. Since it’s a recurring invoice, the client might not notice such a mistake for a while. Again, if the client contacts you to report such a mistake, check the agreed terms and the amounts you’ve been sending to them. If you’ve really made a mistake, refund the client at once and, of course, apologize for the mistake.
Conclusion
Automating and speeding up the payment process is one of the most appreciated benefits of modern payment technologies. Recurring invoices are a great tool for combining these two elements of smooth billing. Long-term clients and service providers will both find benefits in establishing such a payment system. In turn, it will increase their business efficiency and provide convenient financial benefits for both parties using recurring invoices.
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