Key Takeaways

• Recurring invoices are flexible and adjusted in terms of price and billing cycle.
• Recurring invoices are beneficial for the business as they reduce the administrative burden.
• Business-client relationships improve because recurring invoices enhance on-time payment.
• Recurring invoices are a positive contributing factor to enhancing cash flow.

What Are Recurring Invoices?

Recurring invoices refer to invoices that business professionals send to their clients for fixed service consumption or when buying a product. These invoices are sent at regular intervals, referred to as billing cycles, which can be weekly, biweekly, monthly, or annually.

Recurring invoices are sent to the same client for the same line items, so details like customer name, address, contact number, and bank account information remain the same. The total payable amount will also be the same, but in some cases, it will fluctuate. For instance, the amount of electricity used will change according to consumption.

Recurring invoicing is based on the automation concept that keeps the billing process streamlined and systematic.

Let’s understand recurring invoices through a recurring invoice example.

Suppose a rental firm provides a rental service to a customer. The company charges on a monthly basis, so the company sends a recurring invoice to the customer on the chosen date. Once the customer receives the invoice, he is bound to make payment on or before the last date.

How Does a Recurring Invoice Work?

After knowing what a recurring invoice is? We now delve into its working. Recurring invoices work on the automation and scheduling concept. Let’s understand the following steps:

1. Set Up Recurring Invoice

The initial step is setting up a recurring invoice by choosing the right recurring invoice software. The approach will be similar to the normal invoicing process, where you need to fill in the details, such as the client’s name, corresponding address, and contact details.

You also need to fill in the amount and line item details. Once you have filled in all the details, select the recurring invoice option and the duration of invoicing (weekly, monthly, or annually).

2. Sending of Invoice

Once you set everything up, the recurring invoice will be sent to the customer according to the payment schedule. When the customer receives the invoice, it becomes his duty to make the payment before the due date.

3. Payment Process

With an automated invoicing tool, companies receive payment on a decided schedule automatically through online mode. This automation process reduces the administrative burden and prevents payment delays.

4. Information Update

Business professionals can easily update their information if necessary. They must ensure that customers are paying for the correct bill.

5. Cancellation of Service

Companies should offer cancellation flexibility to their customers. This approach enhances the client business relationship and allows clients to manage their subscriptions efficiently.

Recurring Billing vs Recurring Invoicing

Although recurring billing and recurring invoicing are related to automated payment processing, they have different purposes. Here are the differences:

What Are the Benefits of Sending Recurring Invoices?

Sending recurring invoices puts forward many advantages to the business. Here are those merits:

1. Steady Cash Flow

Recurring invoices let the company gain a steady cash flow. Regular payment at fixed intervals makes it easier for the business to receive on-time payments.

2. Automating the Payment Processes

One of the major benefits of recurring invoices is automation in the payment process. Invoicing software like Moon Invoice helps to streamline the payment operation through automation. The customer’s linked credit card automates the payment process.

3. Boost Payment Flow

Recurring invoices boost payment flow because you are binding your client to pay the bills on time. This helps to enhance the payment flow while providing a convenient payment approach to the customer.

4. Save Time

Recurring invoices help professionals save time. Because of the automated concept, the invoice is sent automatically to the client, who must complete the payment. That means business professionals do not have to put extra effort into following up with their clients to make the payment.

When to Send Recurring Invoices?

Along with what a recurring invoice is, you must also be aware of the ideal time to send recurring invoices. This is crucial for the business to keep the operation in the active phase.

An ideal time to send recurring invoices is weekly, biweekly, monthly, quarterly, or annually. However, you must ensure that you are providing the same product or service to the same customer.

Also, be sure that the recurring invoice is always sent according to the customer agreement. If your customer has chosen monthly payment and agrees to pay monthly, then the invoice should always follow the same pattern. This is a common scenario of subscription plans.

How to Set Up Recurring Invoices?

Now, let’s see how to set up recurring invoices. To accomplish this process, you need to choose the appropriate recurring invoice software, like Moon Invoice, and follow the below steps:

1. Make an account and log in to Moon Invoice.
2. Once logged in, navigate to the Invoice option under the Sales option.
3. Fill in invoice details, such as invoice number, invoice date, due date, and currency.
4. Mention your customer name, address, and phone number.
5. Include your business details, like business name, address, and contact number.
6. Mention line item details with quantity and rate, along with applicable tax or discount.
7. Add your terms and conditions.

This is a general invoice. Now, to set up a recurring invoice, you need to check the option Recurring button. Set the interval and date up to which you want to keep recurring invoices.

For instance, if you want to set a monthly invoice as a recurring payment, select the monthly option from the drop-down menu of intervals and set the date accordingly.

This is how you can schedule a recurring invoice with Moon Invoice.

Final Remarks

A recurring invoice is beneficial for the business because it keeps cash flow on the go and reduces the extra burden on the accounting department. Additionally, business professionals should always opt for reputable invoicing software to receive recurring payments on time.

Fortunately, you have that option: Moon Invoice. Want to experience how it could ease your recurring invoicing? Give it a try today!

Frequently Asked Questions