As a business owner, you are already well aware that customer satisfaction needs to be one of your highest priorities. Equally important to your survival: Getting payments from your patrons in a way that is fast, accurate, and frictionless. Fortunately, furnishing buyers with the option to purchase a subscription package, or to participate in ongoing recurring payments, can work out well for you, your valued customers, and your bottom line.
Subscriptions and automatic payments defined.
You may already be familiar with these options since they have become quite popular in recent years. However, it never hurts to get a bit of a review.
When you offer a subscription service to your clients, they pay a monthly or annual recurring fee for your products or services. Buyers can rest assured that they will get their items on a set schedule and will not be surprised by the fact that payments are regularly withdrawn from their account. You’ll be rewarded by this type of business model with predictable access to an ongoing stream of cash. The longer you and your customer engage in this type of mutually beneficial relationship, the stronger your operation’s value grows.
In one sense, the automatic payments model is a component of any subscription service that you provide. After all, funds are regularly withdrawn from your customer’s account — with their permission, of course. Automating the payments process enables you to take advantage of cash flow that is steady and predictable. What’s more, you can say goodbye forever to the thankless job of chasing down late invoice payments.
There are several different types of automatic payments. The ones you choose to use will depend on the nature of your business, but they include the following:
- Fixed amount automatic payments. This kind of payment schedule is used for businesses offering subscription-based services, like we discussed in the example above. Customers are charged the same amount each billing cycle. Examples of companies that commonly utilize fixed automatic payments are physical fitness centers and freelance web designers.
- Variable amount automatic payments. Unlike the above static option, customers are charged varying amounts each cycle. The charge is dependent upon the type and extent of services used. Freelance writers, photographers, and other creative clients often submit their payments using this model.
- Pre-approval transactions. With these automatic payments, a buyer’s credit card is pre-approved and is then charged immediately after a particular service is rendered. Shared ride services such as Lyft and Uber are well-known users of this type of automatic payment.
Regardless of which of the above payment structures you use, you and your accounting staff will undoubtedly come to discover the benefits.
How subscriptions and other types of automatic payments can set your business apart.
Capital is the life blood of your company; without it, you will have no way of paying your staff, replenishing your inventory, maintaining your physical property, upgrading your equipment, or growing your business. By simply incorporating automatic payments into your business’s way of functioning, you can have easier and more predictable access to the cash you need.
If you are not already convinced of the benefits of automatic payments and subscriptions, consider the following enhancements that they can bring to your retail operation:
- You can set your clock to your cash flow. Instead of praying for late invoice checks to trickle in, automatic payments enable you to know exactly when that infusion of much-needed cash will arrive in your coffers. Similarly, customers will not be blindsided by an unexpected withdrawal from their account since they will have given their permission in advance.
- Customers can set it and forget it. Most people don’t want to be delinquent in making their payments; life just gets in the way. The automated withdrawal means that your customers will never need to fork over late payments again and can rest assured that they are always in good standing with your company.
- You save time. Gone are the days when you need to spend hours creating invoices, processing payments and going after stragglers. Automated payments mean that the entire process is taken care of for you by your payment processing software.
- Enhanced security. Good payments software is that which keeps you in compliance with Payment Card Industry Data Security Standards (PCI DSS). That means that you can have the peace of mind that comes from knowing that all personal and credit card information is safely encrypted throughout the transmission process.
- Environmentally conscious. With automated payments, there is no need for you to send out a hard copy invoice. By the same token, a customer is not required to submit a check to you. With an all-electronic transaction, no paper is wasted.
When you think about the convenience and predictability that subscriptions and other automated payment structures could bring to your store, you would be forgiven for asking yourself why you have not jumped at adopting this option sooner.
What types of businesses lend themselves to automatic payments?
Although virtually any retailer might well find that offering automatic payments to their customers is valuable, they are particularly suited to certain types of business. These include the following:
- Freelance writers, designers, and other creative professionals.
- General contractors.
- Lawyers and accountants.
- Private child care providers.
- IT professionals.
If you have come to the conclusion that you and your customers would find value in this way of paying and accepting funds, there is no time like the present. Make the effort to research the best and most secure automated payments providers, let your customers know that you are now offering this service, and shower them with incentives for signing up for the program. In the end, both of you will benefit!