Accounts Receivable
How to set up recurring payments (and how to accept them)

How to set up recurring payments (and how to accept them)

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By setting up recurring payments, you can offer your customers subscription services, memberships, and other automatic payments. As a business owner, you can use recurring payments to create a predictable revenue stream, eliminate late or missed payments, and increase your rate of customer retention. 

In fact, some business analysts have predicted that recurring payments will become a dominant form of payment as we continue into the 2020s.

Of course, this means you'll need the right payment processing system to accept recurring payments. This guide will show you how to set up recurring payments for customers, as well as how to accept recurring payments in your business.

What is a recurring payment?

A recurring payment occurs when a customer agrees to pay a business regularly or by using a credit or debit card to set up automatic payments, usually at the same time each month. 

Before a merchant can accept recurring payments, the customer must give permission through an authorization form. Depending on your payment service provider, you may have to pay a monthly fee.

Your payment provider may also influence the frequency of your recurring billing cycle. The most common payment frequency is monthly, though you may also be able to set up recurring payments weekly. 

Recurring invoices are used to notify the customer of each billing cycle, and even the invoicing process can be automated to facilitate a smoother payment process.

How recurring payments work

What is the purpose of a recurring payment?

The recurring payment model is ideal for businesses that want to set up things like:

  • Subscription payments
  • Membership services
  • Utility-based services like water or electricity
  • Payment plans that split the bill into recurring payments

Customers can use recurring payments to manage subscriptions or make consistent payments according to a payment plan. And business leaders appreciate how recurring payments deliver consistent, predictable cash flow.

Recurring payment examples

Recurring payments come in two different varieties: fixed and variable. Each type of recurring payment works differently. Here are some examples of each.

Fixed recurring payments

Fixed recurring payments are those that are the same each billing cycle. A fixed recurring payment is typical for things like:

  • Subscription payments, such as for software or a magazine
  • Membership fees
  • Payment plans when hiring contractors for long-term projects

When using invoice-based recurring payments, the customer will receive an invoice each billing cycle with the same amount, though with different dates.

Variable recurring payments

Variable recurring payments work a bit differently. Variable payments are those that recur each month but have different costs. Common variable recurring payment examples include:

  • Utilities and data-based services
  • Inventory replenishments
  • Property taxes
  • Payroll, especially for contractors who work on an as-needed basis

Here, a recurring invoice is particularly helpful. It alerts the customer to the exact amount owed during that billing cycle. In business, you can select approvers to govern your accounts payable (AP) process to quickly process payments.

How to set up recurring payments

To set up recurring payments, you'll need a payment processor that can assist you with recurring payment processing. BILL provides recurring payment services as part of its robust platform. Here's how to set up recurring payments using BILL's intuitive interface.

  • Create a recurring payment

Start by setting up a recurring payment in BILL. You can do this anywhere you can create a bill (Inbox or the Bills tab) and can do so with or without an invoice. Here are the steps to take to create a recurring payment from the “Bills” menu.

  • Select "Bills" from the navigation menu
  • Select the "Recurring Bills" tab
  • Select "Enter Bill"
  • Select the vendor
  • Under "Bill frequency," select "recurring"

You'll determine the schedule for the recurring payment in the next step.

  • Set the due date for your recurring payment

Next, you'll enter the information regarding the next due date for this vendor. Remember that in BILL, the due date is based on the Due Date minus the vendor's payment terms. The Bill Date will default to the Due Date without specific payment terms.

  • Determine the frequency of your recurring payments

Next, enter the appropriate information in the "Repeats every" section. This will determine how often the bill will be created (weekly, monthly, etc.).

  • Create the bill

In this step, you'll determine the number of days in advance the bill will be created. BILL sets this to 30 days by default, though you can set it to anywhere from 1 to 365 days.

  • Set the end date

You can also select when the recurring billing schedule ends. To ensure that you create all necessary bills, have your end date be at least one day after your last bill. You can also select No End Date for ongoing payments.

  • Set up automatic payments

Once you create a bill, you can set up automatic billing if you're a bank-authorized user. And keep in mind that selecting automatic recurring payments means you won't be able to add approvers — if you select “Autopay” for recurring bills, bills will be paid regardless of their approval status.

By setting up automated payments, the vendor will be paid automatically on the bill's due date. Make sure to keep your vendors' banking information up-to-date. BILL's autopay feature will attempt to use that bank account to run the payment even if the account is set as inactive, so you must update the information on the recurring bill.

  • Enter the billing details

Enter the billing details, including:

  • The amount
  • A bill description
  • Expenses and items

While only the amount is strictly required, it always helps to add a description. This will help any other staff members who may be reviewing the bill and serve as a reminder for yourself later.

  • Select approvers

If desired, you can select one or more approvers to manage your payment cycle. Remember, however, that if you select the “autopay” option, payments will go out regardless of their approval status.

  • Select save

Once you have your details set up, select "save." You're now set up to complete payments on a recurring basis, though you can also come back and edit or even delete this recurring payment schedule.

  • Edit or restore previous bill schedules

If need be, you can edit or delete your previous bill schedules. Find "Bills" in the navigation tab, then select "Recurring bills." You'll see the payment schedule you set up previously. Select the setup and press "edit" to adjust the parameters. Alternatively, you can delete it altogether.

If you accidentally delete a billing schedule, navigate to the "Bills" section. Then, select the "Recurring bills" tab. Select "Filters," followed by "Deleted" under "Bill status." You can now view deleted billing schedules and restore anything you may have lost.

Benefits of setting up automatic recurring payments

Accepting recurring payments brings many benefits to your business — for you and your customers. Here are just some of the reasons why business leaders love to use recurring payments as part of their billing processes.

Boost customer retention

Subscription payments and membership options are a surefire way to increase customer retention rates. You can store your customers' payment information to set up fixed recurring payments. Encouraging customers to commit to your products or services will help you grow your customer base and build revenue.

Experience greater convenience

Offering recurring payments will give your customers greater convenience, though doing so can also save you and your business time. 

If your vendors set up recurring invoices, you can automate your payments so that you eliminate a time-consuming approvals process. By using the right payment processing services, you'll automatically create records and business data that can be used for long-range planning.

Eliminate late or missed payments

Recurring payments eliminate late and missed payments. Since you already have the customer's credit card or other payment information on file, you can bill them automatically each month. 

But even variable recurring payments can eliminate late fees. The best online recurring payment solutions offer automated payment reminders so your customers and clients submit timely payments.

For businesses, a recurring payment service also ensures that you submit your own vendor payments on time each month. You'll maintain stronger vendor relationships and avoid late fees for overdue invoices.

Predictable cash flow

If you accept recurring payments in your business, you'll develop a more predictable cash flow. This is especially true when your customers automate their payments so that you can collect them at the same time each month.

You can also use your recurring payment platform to pay your vendors and suppliers strategically. Timing your vendor payments will ensure that you maintain a steady cash flow rather than depleting your operational budget at the same time each month.

What are the main ways to accept recurring payments?

You can process recurring payments using more than one payment method. The following are the most common ways to accept payments in a recurring billing system:


Automated Clearing House (ACH) payments are a type of electronic money transfer between banks and credit unions. ACH payments are typically faster and more affordable than card-based solutions, which may make them preferable to credit and debit cards, especially for large purchases. However, depending on your payment processor, you could pay a small fee to set up recurring payments.


Recurring invoices are another common way to accept recurring payments. In this model, you'll generate a recurring invoice for each payment cycle. This can be an excellent method for variable recurring costs and allows customers to choose their preferred payment method.

Credit/debit card authorization form

You can also keep a customer's payment data on file to better manage recurring billing. However, you'll first need your customers to sign a credit or debit card authorization form to permit you to access their account. The advantage of this method is that it's fast and easy, and some credit card users can earn reward points with every purchase.

Best practices for using recurring payments

If you want to use recurring payments in your business, here are some tips to make sure the process runs as smoothly as possible:

recurring payments best practices
  • Be transparent with clients about the terms and billing process
  • Always secure customer authorization before setting up recurring payments
  • Keep client payment information up-to-date to avoid declined payments
  • Offer flexible payment options to ensure faster payment
  • Use a platform with fraud protection solutions to protect business/client data
  • Continually engage customer base to avoid churn

An all-inclusive small business platform can help you achieve these and other goals and transform your business for you and your clients.

Using BILL for recurring payments

BILL makes recurring payments a snap. You can use this convenient platform to set up recurring payments and even automate your payments to save time. And when you automate your payments, you don't have to go through a time-consuming approval process. BILL can now:

  • Create recurring bills through a simple user interface
  • Add documents and notes to recurring bills upon their creation
  • Fill out both spend and expense tables

Discover more features by exploring BILL's ACH payment processing capabilities. BILL can transform the way you do business.

Recurring payments FAQ

How much does it cost to set up recurring payments?

The exact cost of recurring payments varies by payment provider. In some cases, there may be monthly fees in addition to a per-payment fee. BILL offers a simple pricing structure that is ideal for small to midsize businesses.

Can I set up recurring payments to go out monthly?

Yes. Most payment providers allow you to set up monthly payments, while others allow great flexibility in your billing cycle. BILL enables you to edit your payment cycle and set up automatic payments for added convenience.

Why is it important to get recurring payments right?

Errors in recurring payments can cause payment delays, which can lead to fees and other penalties for overdue payments.

The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided "as-is"; no representations are made that the content is error free.