How to use recurring payments to get paid on time

Recurring payments ensure you’ll always get paid on time, and it helps take manual work off your clients’ plates as well. They’ll appreciate being able to pay automatically, rather than remembering each due date. 

Do you find yourself having to constantly remind your clients when their payment due dates are coming up? If you have clients who work with you over a long period of time, this can be a hassle for both of you and significantly slow down your payment processing. 

Instead, many clients these days expect some form of recurring billing. It’s the payment method they’re already used to using for things like magazine subscriptions and streaming services. 

Learn more about recurring payments and how to get set up so you can get paid faster. 

Jump to: 

• What are recurring payments?
• What’s the difference between recurring payments, recurring invoices, and autopay?
• How recurring payments make your life easier
• Who are recurring payments for?
• How recurring payments help independent business owners
• How to get set up with recurring billing
• Leverage multiple payment methods to offer the best experience

What are recurring payments? 

Recurring payments are automatic payments your clients have authorized you to collect from their credit card or bank account. The same amount is automatically deducted on the monthly due date (aka payday for you!)

What’s the difference between recurring payments, recurring invoices, and autopay?

Although the terms “recurring payments,” “recurring invoices,” and “autopay” may be used interchangeably from time to time, they have different meanings. Here’s a breakdown of what these terms mean: 

• Recurring payments: Recurring payments, or recurring payment plans, are regular payments that are initiated by the payee. For example, when a person sets up a recurring payment with a credit card, you’ll automatically charge the payee’s card at regular intervals for a predetermined price. 
• Recurring invoices: Recurring invoices are automatically sent from a business to a client to request a payment. For example, if you receive monthly payments from your clients, you may send a recurring invoice to them 7 days before the payment is due. Then you process the recurring charge 7 days later. 
• Autopay: The terms “autopay” and “recurring payments” are often confused. While they both lead to regular payments, they are somewhat different. Autopay is initiated by the bank at the request of the payee. Recurring payments are initiated by the payee with the merchant. Following that initiation, the merchant honors future recurring payment requests.

How recurring payments make your life easier

Setting up recurring payments is easy, and the benefits are great. You’ll get paid faster and your clients will also enjoy the seamless experience. You can count on these benefits to make your life easier:

• Save time—Forget manually re-sending invoices each month and reminding your clients to pay. Recurring payments also let your clients enter their payment details once, so they don’t have to worry about it again.
• Improve cash flow—When you accept recurring payments, you’ll have a more consistent cash flow. You know exactly how much to expect on your clients’ different due dates, and there’s little risk that you won’t have that cash when it’s due. 
• Get paid quicker—When your clients’ payment due dates are coming up, they’ll automatically be billed. You don’t have to worry about money coming in after the due date, or sending payment reminder emails to ensure you get paid. 
• Provide a better client experience—Clients approve the recurring payment schedule once and never have to worry about missing a payment again. It’s less hassle for your clients, less work for you, and a win-win for everyone.

Slow payments and missing payments are by far the biggest issue for freelancers,” said Caitlin Pearce, executive director of Freelancers Union in New York City. “Freelancers experiencing non-payment lose an average of $6,000 annually.

Whom are recurring payments for?

You might not need to process recurring payments if you offer physical goods or products, but if you sell services, it’s an excellent payment method for both you and your clients. For example: 

• Freelancers: Freelancers, like copywriters, designers, and other types of freelancers, can bill their clients with monthly retainers with ease. This can save them hours of back-and-forth paperwork and payment tracking. 
• Subscription-based businesses: Subscription-based businesses, both online and off, can benefit from recurring payments as well. Whether you provide sports coaching, workshops, or online software, recurring payments simplify the process of getting paid. The best technologies make it possible for subscription businesses to create custom pricing plans. 
• Small businesses: Like freelancers, businesses with small teams operate best when they have a customer base of long-term, returning clients. Recurring payments can help ensure positive cash flow.

Ultimately, recurring payments are designed for any company that provides a product or service for which its clients are billed regular amounts at regular intervals. Recurring payments can also improve the customer experience.

How recurring payments help independent business owners

Recurring payments are easy to set up, and they can have a profound impact on your business’s success. For example, Steve owns a marketing agency in Miami. He would sell individual, one-off marketing services before he realized that he could make more money from recurring, subscription-based services. 

He decided that he would sell packages of marketing services on retainer. But to do so, Steve needed a recurring payment system. That’s when he found HoneyBook, an all-inclusive payment and clientflow management platform that combines invoicing and billing with other key features, like capturing and tracking leads. 

In what seemed like no time at all, Steve had a comprehensive system that made it possible to automatically send invoices to his clients and accept recurring payments. The move was a smashing success: Steve quadrupled his earnings in 6 months, and he attributes much of his success to his ability to use today’s recurring payment technology to build a customer base and increase his retention rate.

How to get set up with recurring billing

To start accepting recurring payments, look for an online payment software that includes it as an option. These days, most payment processors include it as an option. To pick the right payment system, you can also look for software that connects payments with the rest of your clientflow. 

With HoneyBook, for example, you can accept card payments as well as ACH transfers. You can also use invoice templates and online contracts to complete your booking process. Beyond that, HoneyBook lets you capture interested leads, qualify them with sales collateral, and manage your project from start to finish. 

Once you’re set up to collect payments, update your invoices to accept recurring payments (if they’re applicable to your client). Your clients can provide their payment information once, then have their card on file for autopay. If needed, you can always stop the payments with the click of a button. 

Leverage multiple payment methods to offer the best experience

At the end of the day, your payment process should be seamless and meet your clients’ expectations. Determine which payment methods would be best for your client base. Do you usually accept a retainer fee, followed by a final payment? Do you charge monthly subscriptions? Also consider payment options, like debit cards, credit cards, and ACH transfers. 

Once you know what your clients need, it’s easier to find the right options and software to facilitate your payments. 

With HoneyBook, you can treat your clients to a variety of payment options and set custom payment schedules in each invoice. Offer your clients a more personalized, exceptional experience.