Does your Netflix subscription get automatically renewed every month? Or perhaps your organic snack box gets delivered without you having to order each time? That’s an example of a recurring transaction. Put simply, it is any payment that occurs on a regular basis – say monthly, quarterly, annually, or any other custom time period. You might have noticed as a customer that an increasing number of companies are moving towards this payment model. Are you prepared to do the same for your business? The following benefits of recurring transactions will convince you to if you’re still on the fence.
You’ll enhance the customer experience
Recurring transactions are a lifesaver for customers because making payments each and every single time a service is required can be incredibly tiresome. Customers will be able to sit back, relax, and enjoy uninterrupted service, whilst still being able to manage their payment settings conveniently and with a touch of a button. In a nutshell, it’s a hands-off process that can enhance their customer experience.
The silver lining: You’ll keep customers coming back for more
Not having to enter their payment details over and over again will also make customers more inclined to stick with the default choice, which is to continue using your service. They might even become used to the service, turning them into your life-long customers. Who knew recurring transactions could also lead to increased customer loyalty and retention?
You’ll know exactly how much you’ll earn
If you have customers paying for the service as and when they like, it’s much harder to predict how much income will be trickling in. However, once you make recurring transactions an option, say through a monthly subscription model, you’ll get a more reliable stream of income. Knowing how many customers will be billed and how much income will be generated also enables you to plan your expenses and avoid going into the red.
You’ll have better cash flow (as a result of fewer late payments)
Recurring transactions also saves you from having to remind customers to make payments, ensuring that all payments are made in a timely manner. This way, the funds go directly into your account when it’s due and with minimal effort on your part. The bottom line? Greater peace of mind that comes with a better cash flow. You can also use the freed up time and resources to focus on customer relationship building instead.
You’ll be able to automate your accounting
Due to the fact that recurring transactions are automatic in nature, you’ll need lesser time and resources for accounting purposes. As with anything that’s automated, there will be fewer human errors and increased efficiency. What’s more, you can say goodbye to data entry or other repetitive tasks and enable your accounting team to work on other, more important areas.