Creating an efficient, automated billing system is a priority for many businesses. Manual billing processes require more time and resources from businesses and can result in errors. Refining the billing process can help businesses build a strong brand image and stand out from competitors, while creating a streamlined customer experience.

Below, we'll explain automated billing systems: their core components, benefits and how to set up a recurring invoice system that works for your business.

What's in this article?

• What are recurring invoices?
  
• What are recurring invoices used for?
  
• Benefits of using recurring invoices
  
• How to set up recurring invoices with Stripe
  
• How Stripe Billing can help
  

What are recurring invoices?

Recurring invoices are invoices businesses automatically generate and send to customers at consistent intervals, such as weekly, monthly or annually.

What are recurring invoices used for?

Recurring invoices are used when a business needs to bill a customer the same amount on a predetermined, regular basis. Recurring invoices ensure continuity in billing procedures and reduce time spent billing customers for identical services or amounts. They are a common tool in many business scenarios, including:

• Subscription-based services
  If a business offers services or products on a subscription basis (usually billed monthly or annually), they'll set up recurring payments with recurring invoices to bill their customers. Examples include software subscriptions, magazine subscriptions and gym memberships.

• Rent and lease agreements
  Landlords or property managers might use recurring invoices to collect rent payments, especially in commercial settings where the tenant is a business renting office space.

• Retainer contracts
  Professionals such as lawyers, consultants or designers might have retainer agreements with clients in which they provide ongoing services for a fixed fee, and they'll use recurring invoices to bill them.

• Financing or instalment payments
  If a customer has purchased a high-cost item and is paying it off in instalments, the business might use recurring invoices to remind the customer of each payment.

• Web hosting and domain services
  Companies that offer web hosting, domain registration or other online services typically bill customers on a monthly or yearly billing cycle using recurring invoices.

• Utilities
  Although many utility companies don't technically send invoices, their billing structures are similar to those used for recurring invoices. Customers receive regular bills for services such as water, electricity and Internet.

• Maintenance and support contracts
  Businesses that offer ongoing maintenance or support might set up recurring invoices to charge their clients or customers.

Benefits of using recurring invoices

Using recurring invoices can make the invoicing process more efficient and transparent for businesses. The benefits of this type of billing include:

• Time efficiency
  By automating the billing workflow, businesses can save a significant amount of time each year and reallocate this time to other important tasks, such as planning and customer engagement.

• Financial stability
  Recurring invoices provide a predictable revenue stream. With regular billing intervals, businesses can understand their financial inflows more clearly, and can use this information to improve budgeting, resource allocation, and investment planning.

• Professional reputation
  Regular and punctual billing indicates a disciplined business approach. It communicates reliability and can drive customer loyalty.

• Enhanced accuracy
  Automating the billing system minimises human errors. This precision protects the accuracy of financial records, which is important for audits, financial reports and building trust with stakeholders.

• Customer relations
  Predictable billing structures eliminate unexpected charges for customers, setting clear expectations and reducing disputes. This clarity can foster customer loyalty and increase retention rates.

• Economic efficiency
  Transitioning from manual to digital billing reduces tangible costs, such as paper and postage, and decreases indirect costs associated with manual processing, storage and rectifying errors.

• Comprehensive features
  Modern invoicing platforms offer many functionalities beyond generating invoices. They can track payments, generate financial summaries, and provide insights to assess business performance and customer behaviour.

• Adaptable systems
  Growing businesses need tools that can adapt. Recurring billing systems typically offer modifiable parameters, ensuring the billing process remains aligned with changing business needs.

• Data security
  Generally, invoicing systems have expansive, rigorous security protocols that protect sensitive financial data, helping businesses and their customers avoid data breaches and associated costs.

• Transparent communication
  Effective communication is important for successful business relationships. Regular, consistent invoicing demonstrates commitment, sets clear expectations and prevents misunderstandings.

How to set up recurring invoices with Stripe

Businesses are increasingly using digital tools to improve their billing operations, especially for functions that require complex logic such as recurring invoicing. Here are the steps to set up recurring invoices through subscriptions with Stripe Billing:

Initial setup and account creation

• If you're new to Stripe, start by creating an account. Existing users can log in.
  
• Provide your business details, banking information and other important credentials.
  

Navigate to the invoicing section

• Once you have logged in, head to the Dashboard.
  
• On the panel on the left-hand side, click "Billing".
  

Create a subscription

• In the "Invoices" section, click "Create" in the top right-hand corner.
  
• Choose "Create subscription".
  
• Fill in customer details or select the customer from an existing list if you've billed them before.
  
• You can specify payment methods such as credit cards or direct debit for automatic payments.
  

Input product or service details

• Add the products or services that you're billing for. Stripe allows you to select from pre-existing items or add new ones.
  
• Make sure you're entering the correct price and quantity.
  

Determine additional settings

• Stripe provides a suite of additional settings, including due dates, tax rates, promotional discounts and custom notes.
  
• You can add your own branding or create different invoice templates.
  
• Assess your billing needs and configure these settings accordingly.
  

Preview and finalise

• Before sending or scheduling the invoice, always use the "Preview" feature to double-check that all the details are accurate.
  
• Once you are satisfied, you can either send the invoice immediately or schedule it.
  

Monitor and manage

• Stripe's Dashboard will update the status of invoices continuously, from "Sent" to "Paid" or "Overdue".
  
• Use the Dashboard to track or resend invoices if needed, and manage discrepancies or issues that might arise.
  

Evaluate and iterate

• Review the efficiency of and response rate for your recurring invoices from time to time.
  
• Stripe equips businesses with analytical tools that provide insight into payment timelines, successful transactions and potential areas of improvement.
  

Implementing recurring invoicing through Stripe standardises and automates the billing process, so businesses can manage financial transactions easily and efficiently.

How Stripe Billing can help

Stripe Billing lets you bill and manage customers however you want – from simple recurring billing to usage-based billing and sales-negotiated contracts. Start accepting recurring payments globally in minutes – no code required – or build a custom integration using the API.

Stripe Billing can help you:

• Offer flexible pricing: Respond to user demand faster with flexible pricing models, including usage-based, tiered, flat-fee plus overage and more. Support for coupons, free trials, prorations and add-ons is built-in.
  
• Expand globally: Increase conversion by offering customers' preferred payment methods. Stripe supports 125+ local payment methods and 130+ currencies.
  
• Increase revenue and reduce churn: Improve revenue capture and reduce involuntary churn with Smart Retries and recovery workflow automations. Stripe recovery tools helped users recover over US$6.5 billion in revenue in 2024.
  
• Boost efficiency: Use Stripe's modular tax, revenue reporting and data tools to consolidate multiple revenue systems into one. Easily integrate with third-party software.
  

Learn more about Stripe Billing or get started today.