Recurring billing is a payment model that enables businesses to charge their customers at predefined intervals, such as weekly, monthly, annually, or custom intervals, for the products or services they provide. This model is commonly used in subscription-based businesses, where customers pay a recurring price at regular intervals for access to a product or service. Recurring billing provides a consistent and reliable cash flow for a business, which helps the business owner to predict the revenue that will be generated in a specific time frame. It also saves time for both customers and business owners, as the process of charging customers recurrently is entirely automated once the invoice is created, the payment cycle is set, and the customers payment information is linked.

Recurring billing is advantageous for business providers because it reduces account receivable risks. It also guarantees a predictable revenue stream, which is essential for businesses that rely on recurring revenue. Recurring billing is similar to a subscription system in many ways but doesnt necessarily involve the pricing tiers that a subscription system may include.

Recurring billing can be challenging for customers to correct billing problems, and they may not even notice problems with the amount theyre paying for quite a while. Therefore, its crucial to get customers permission upfront and make it seamless for them to agree to terms that include permission to initiate a series of payments on their behalf, frequency of payments, and details on how the payment amount will be determined.

To manage recurring payments, companies must build or integrate a billing system that acts as the infrastructure that operationalizes a recurring customer relationship. Great billing systems are also flexible enough to meet the evolving needs of a business as it scales.