Too often, entrepreneurs get caught up in all of your “typical” revenue-generating activities. That could be outbound sales, inbound marketing, or conversion rate optimization to improve your website.
Everyone focuses on strategies to get more customers, but many forget one very important thing: making sure that the customers you have right now are paying.
After all, what’s the point in getting new customers if you fail to collect payment from them? All you’re doing is expending money into marketing efforts that probably aren’t going to produce a solid return on investment for you.
In this article, we’ll go over how you, as a subscription service, can effectively collect payment from your customers.
Identify the Right Billing Cycle
With any subscription billing service, one of the first steps you’ll take is identifying the right billing cycle. Are you going to charge your customers monthly, quarterly, weekly, or by some other period?
There are a few factors to consider here. Firstly, the more frequent the billing cycle, the more likely it is that a customer will miss a payment. That’s just because more payments means more for them to keep track of and a greater chance they’ll miss one.
In addition, if you choose to use shorter billing cycles where you bill upfront, then you can acquire more money upfront. For instance, if you sell software that is billed in advance, billing every quarter rather than billing every month gives you thrice the money at the beginning of the quarter. This would be a massive improvement to produce healthy cash flow in your business.
Decide on Credit Card Pulls or Invoices
Once you’ve decided on the frequency of your billing cycles, it’s time to decide on whether you want to use credit card pulls or if you want to invoice your customers. If your business is in a B2B industry, catering to companies, then this decision may have to made by your customers.
Some companies’ finance teams don’t allow any recurring purchases they make to be put on an automatic credit card pull. Instead, the purchase has to be invoiced to the finance team so they can approve it before releasing the payment.
Figure out what works for your industry, and stick to it (even if that means giving your customers a few different options to choose from).
Use the Right Software
Last but certainly not least, make sure that you’re using some kind of software. The right software will take a lot of the mundane grunt work out of collecting payments from customers.
Finding the right software, though, is a little more tricky than you might think. It’s certainly not straightforward and cut-and-dry. You have to consider your company size, the industry you’re in, etc.. Each tool on the market has different strengths and weaknesses, so make sure to try a few free trials before deciding to invest in any single one.
Never Forget to Collect Payment From Customers
With these tips under your belt, you’re ready to never fail to collect payment from a customer again!
For more business and finance advice, make sure to check out the rest of the articles on our website!