Recurring invoices have become very popular in modern business times because they can automatically charge customers at regular intervals.
A recurring invoice is sent to the customer at regular time intervals. They are normally sent every month. Under this invoicing method, the supplier first gets permission from the customer to regularly charge a regular amount until an agreed date for the ongoing service agreement. This method of invoicing is common with online software businesses, cable companies, gym or magazine subscriptions.
Recurring invoices are very convenient as the supplier is not required to wait for the customer or ask for payment details. Also, the customer is not required to send manual payments repeatedly. Some of the other benefits of raising recurring invoices are:
In this invoicing method, it is harder to trace errors as a standard invoice template is already set and sent to the customers regularly. But, under normal invoicing, the supplier sends an invoice to the customer, and if there is any error, the customer will send it back for resubmission. Thus, the error gets resolved immediately.
Under, recurring invoicing both identification and correction of errors is difficult.
Below are some of the templates of recurring invoices:
A recurring invoice shall contain all the details as required for a normal invoice. For more information about the contents, refer to our article on the tax invoice.
The workflow of a recurring invoice is as follows:
Using a recurring invoicing system depends upon the nature of your business. Below are examples of companies using recurring invoicing systems.
After going through the above examples, you can decide whether it is suitable for their business requirements.
An ideal recurring billing system provides:
Recurring invoices automatically charge customers at regular intervals. Benefits include improved cash flow and automated payment process. Drawbacks include tracing errors. Contents of a recurring invoice are similar to a standard invoice. Workflow includes using customized templates, setting time interval, recording payment details. Companies suitable for recurring invoicing include those providing maintenance services or subscription-based models. An ideal recurring billing system should be flexible, time-saving, and simplify invoicing process.