B2B Recurring Billing: Good for you and your customers

Many small- and medium-sized businesses (SMBs) regard billing customers as a time-consuming expense. That makes sense, because for those SMBs still doing it the old-fashioned way, it is a significant, labor-intensive expense.  

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B2B Recurring Billing: Good for you and your customers

May 27, 2019

B2B Recurring Billing: Good for you and your customers

Many small- and medium-sized businesses (SMBs) regard billing customers as a time-consuming expense. That makes sense, because for those SMBs still doing it the old-fashioned way, it is a significant, labor-intensive expense.

A 2018 study by Opinium Research found that manual invoicing costs SMBs an average of $2,600 per year, and that about one-third of SMBs continue to issue paper invoices, with one-quarter still snail mailing their invoices.1

If you or your staff is still spending valuable time and money printing and mailing invoices, this article is for you.

As you’ll see, implementing B2B recurring billing—sometimes referred to as subscription billing—not only allows you to cut costs, but it can also be a growth driver for your business. How so? Let us count the ways.

Ways B2B Recurring Billing Can Help Grow Your Business

First and foremost, recurring or subscription billing can help you to increase sales and revenue, especially if many of your customer or client subscriptions are set to be paid automatically.

In this scenario your client or customer doesn’t have to actively say “yes” every month or every billing cycle; as long as they don’t actively say “no,” the revenue continues to come in. As a result, your business ought to realize more stable, predictable revenue streams.

Also, a monthly (or regular) ongoing installment is likely easier for a customer or client to stomach than an annual or one-time payment. This is especially true if the product or service you provide is considered expensive and customers are prone to experiencing “sticker shock.”

And because B2B sales are often based on the strength of relationships, recurring billing gives you a longer time frame to build your relationship, not to mention upsell or add new components to a subscription, which is a lot easier than making a large, one-time sale with a new customer. You might even earn business from a different arm of your customer’s company after you’ve established a successful relationship. Never mind that it’s cheaper to retain an existing customer than it is to acquire a new one, and that existing customers are more likely to try new products and services.

Meanwhile, B2B sales are a good fit for recurring billing in another way. If your customers are like most B2B buyers, they don’t like the idea of switching suppliers. So if you understand the needs of your customers and reliably provide what they’re looking for, they are much less likely to look for an alternative. With B2B recurring billing you have the opportunity to repeat transactions, further solidifying already existing relationships, even as you streamline the payment process.

And while brand loyalty is a term more commonly used in the world of B2C, brand loyalty is no less valuable in the world of B2B, even though the products and services being bought and sold might not be as glamorous as those that are popular with consumers.

Recurring billing even opens the door to utilizing free trials if appropriate, which are common in the B2C arena and a good way to get potential customers to try your products and services.

Then there are advantages in terms of convenience and customization. Remitting an invoice electronically—and automatically triggering a payment—is convenient for both you and your customers, requiring little to no intervention on the part of accounts payable and accounts receivable. Recurring billing also allows for customized renewal dates (assuming both parties are amenable), and can very nearly put an end to late payments and late fees, both of which are much less likely to be an issue if bills can’t get lost in the mail and payments aren’t made manually.

Finally, both parties save time and money by not have to manually produce and process invoices, never mind having to cut and send paper checks, which can bounce and have to be manually recorded and deposited. It’s all time and money that can be better spent investing in your respective businesses.

B2B Recurring Billing: A “Gateway Drug”?

Your payment and billing options get even better once you’ve accepted the idea of utilizing B2B recurring billing, as it effectively opens the door to closely related and complementary next-level payment solutions that include: allowing buyers to pay with virtual, single-use credit cards, buyer initiated payments (BIPs), and dynamic discounting, all of which are explained in our recent post on B2B Payment Cards and the Slow Disappearance of Checks.

Another topic which may be of interest to you is Supplier Enablement and Enrollment (SEE), which involves looking for opportunities to use recurring payment processes, providing suppliers with clear incentives to begin utilizing these processes, and making it easy to get started.

If you have questions about any of the above or want to learn more about commercial payment processing solutions, don’t hesitate to give us a call at 1.888.845.9457. We understand the unique operating environment surrounding B2B payments and can help you differentiate yourself from competitors and capitalize on growth opportunities.

1 Barclays Offers Small Firms Mobile eInvoicing Tool, PYMNTS, https://www.pymnts.com/news/b2b-payments/2018/barclays-small-business-mobile-electronic-invoicing/

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