What Is A Recurring Transaction?

A recurring transaction is what it sounds like– a payment that occurs on a regular basis. You, like many people, may already be familiar with recurring payments. The most common example is the Netflix subscription, which deducts a certain amount from your bank account every month. You charge your customers at regular intervals for your goods and services. 

The most important benefit of a recurring transaction is that you can maintain better financial discipline. It helps with your cash flow management and saves time spent manually asking for payments. If you are looking to develop a financial plan, getting outsourced CFO services in Miami, FL, can change your life for the better. 

How does a recurring transaction work?

Recurring transactions and regular transactions work the same, except that customers buy your services at regular intervals instead of paying a lump sum. You or the merchant can set up the time interval, and the customer will pay a pre-agreed amount. This system continues for as long as the customer does not cancel the membership, subscription, or agreement. 

How are recurring transactions helpful for businesses?

Recurring transactions help business owners receive payments from their clients more efficiently. This way, you won’t have to constantly worry about your customers/clients forgetting to pay or running out of money. Instead, you can process the payment using their credit or debit cards, digital wallets, or any other mode of payment. 

What are the benefits of a recurring transaction?

Apart from making sure that your money reaches you on time consistently, here are some additional benefits of a recurring transaction system:

  • Better customer experience: Once your customers sign up for the recurring transaction system, the money will be deducted from their accounts automatically. They won’t have to pay every time manually. It is a hands-off process. 
  • Increased customer retention: Recurring transactions are more likely to make your customers stick than manual payments. Since the money is automatically deducted, they get used to the service and are less likely to cancel. 
  • Increased security: With recurring transactions, customers only have to enter their billing information once. This way, they won’t have to send payment information to you over and over again. 
  • Predictable income: Recurring transactions are a steady source of income. When you know there are a certain number of clients who have subscribed to your services, you can create an image of your financial standing. It allows you to make predictions about your income. 
  • Improved cash flow: Recurring transactions make sure your payments do not get stuck. This, in return, creates a better cash flow.