How Auto Refinancing Program Helps You to Lower Your Monthly Payments?

Business.com / Finances / Last Modified: February 22, 2017

Auto recurring billing enables businesses to automatically bill customers for balance due without sending invoices or obtaining payment ...

Auto recurring billing enables businesses to automatically bill customers for balance due without sending invoices or obtaining payment information each any every time money is collected. With recurring billing programs businesses can utilize any electronic payment process including direct-debit ACH transactions and credit/debit card transactions. In addition, when businesses convert legacy payment systems to auto-recurring systems utilizing exclusively ACH direct-debit transactions, they typically reduce processing costs by over 50%.

Direct Benefits of Auto Recurring Billing for Businesses include:

  • Faster payment processing (you get your money faster)
  • Elimination of printing, mailing and postage costs
  • Elimination of defaults and associated collections activities
  • Streamlined data entry and bookkeeping
  • Elimination of time consuming trips to the bank
  • Normalized cash flow
  • 24-48 hour NSF notification
  • Improved customer service
  • Ability to accept payments funded from credit/debit cards, checking account and savings accounts.
  • Auto recurring billing is not only a time and money saver for businesses, but for consumers as well. NACHA.org, the organization that oversees all electronic payments, reports that 54% of all US households currently use ACH (a direct-debit from a bank account) for at least one monthly bill.

    Direct Benefits of Auto Recurring Billing for Customers include:
  • Bills are automatically paid on-time, every-time, even if customers are ill or out of town.
  • Late payment fees are eliminated
  • Time and expense of writing and mailing checks is eliminated
  • Customers can keep electronic records of all invoices and receipts
  • Auto recurring billing takes ACH to the next level—eliminating the need for the customer to actively pay a bill (whether by paper check or online).

    Implementing an Auto Recurring Billing Program

    If you currently accept payments electronically via direct-debit from a bank account, or via credit card, you can likely use your current payment processing system for auto recurring billing. The auto recurring program can be implemented in two ways: 1. Use the auto recurring billing functionality in your business management software (such as QuickBooks), and export a batch (daily, weekly, monthly) to a payment processing system. 2. Implement the auto recurring billing function in your payment processing program (note that some companies require an additional charge for this function.) If you don’t already accept electronic payments, you will need to subscribe to this type of service. The simplest way to do this to find a service that will enable you to perform ACH transactions using your current business bank account. This system will let you set-up an auto recurring billing program where you can direct-debit customer checking accounts for outstanding balances.

    Marketing an Auto Recurring Billing Program to Your Customers

    Once you have processing capability in place, you can open the auto recurring billing program to your entire customer base. Many consumers know about these programs and are excited to sign-up for the new offering. Others need to be educated about the electronic payment process, and the benefits it can provide them. Note that you cannot enroll a customer in an auto recurring billing program without explicit permission. Each customer must provide you with bank account information and sign a form giving you permission to debit that account.

    Most organizations introduce auto-recurring billing programs by sending a letter to the customer base, and asking them to sign-up for the program. A sample customer letter is available here.

    When customers have signed up, you stop mailing them paper invoices, they stop mailing you paper checks and all billing and collections are handled electronically.
    • Choose a payment processing system that does not require you to purchase expensive hardware or software upfront.
    • If you currently use a software package to manage your business, be sure to choose a payment processing provider that is compatible with your core system.
    • To get the best value, make certain that auto recurring billing functionality is part of the core payment processing system and that you are not charged additional fees to use it.
    • Make certain that the payment processing system you choose is designed to take the type of payment (credit card or check (ACH)) that you typically accept. To cover all your bases, it is usually best to select a provider that can process both credit card and ACH transactions.
    • Pay attention to both monthly fees, transaction fees, and monthly minimums to select a payment processing system that makes the most financial sense for your business
    • Security is important when transferring funds electronically—make certain that the payment processing system you use has powerful security and encryption tools in place such as a 1024-bit Digital Certificate, 128-bit encryption, and a SSL (Secured Socket Layer) compliant with CISP -- Cardholder Information Security Platform.
    • Your payment processing provider should also be a partner—choose one that provides help (such as free marketing materials, customer education materials, and sample customer letters) with promoting your auto recurring billing program to your customers.
    • With any new technology, transitions can be confusing. Be certain that your payment processing provider provides free customer support and technical support. The best of them will walk you through the entire process.

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