Recurring Billing

Automated Billing System: What It Is and Best Practices for Enabling Clients to Use Automatic Billing Software

Donna McPhee

Automated billing is one of the best ways to ensure you’re continually receiving stable and continuous revenue from your clients. It also enables you to cut costs on your billing operations which can be put to better use in other areas of the business—more on that toward the end of this article.

Unsurprisingly, a good automated subscription billing process will increase the trust between your clients and your business in the long term. In fact, 77% of customers have received an incorrect invoice, while nearly 2/3 would consider switching suppliers due to billing issues.


  • An automated billing system is a software-based solution that enables businesses to automatically generate and manage invoices, process payments, and handle billing-related tasks without manual intervention.
  • Key features include recurring billing, reporting, processing payments and automating billing tasks.
  • Finding the right solution for your business may be time-consuming, but it’s a straightforward process.

What is an Automated Billing System?

An automated billing system is a software-based solution that enables businesses to automatically generate and manage invoices, process payments, and handle billing-related tasks without manual intervention. These systems streamline the billing process by automating repetitive tasks, such as invoice generation, payment reminders, and reconciliation, saving time and reducing errors.

Key features of billing automation systems include:

  • Recurring billing that automatically charges customers at regular intervals for subscription-model products or services
  • Invoice generation, which should include customizable templates and branding options
  • Secure payment processing, allowing customers to pay invoices online via credit card, bank transfer, or other payment methods
  • Automate billing-related tasks such as late payment reminders, payment reconciliation, and dunning management (handling failed payment attempts)
  • Running reports and analytics that provide insights into key metrics like billing performance, revenue trends, and customer payment behavior
  • Robust security features to protect sensitive payment data, including encryption, tokenization, SSL/TLS encryption for data transmission, and compliance with industry standards such as PCI DSS (Payment Card Industry Data Security Standard)

What are the benefits to your business of automated billing?

Automated billing is a huge boon to businesses. The major reason is that it saves your business tons of hours on billing tasks and often quite a bit of revenue leakage. (Seriously – our customers regularly save ~40 hours a month when they switch from manual to automated billing.) There’s are more benefits than that, though.

Automated billing: 

  • Reduces the time spent on collecting payments and the invoicing process by sending invoices automatically and offering convenient online payment options – ensuring you get paid faster and more reliably.
  • Reduces errors and mistakes commonly associated with manual billing processes by eliminating the possibility of human error.
  • Improves cash flow by streamlining the invoicing and payment process.
  • Improves customer satisfaction and therefore retention. (Keep reading for more on this point.)

What are the benefits of automated billing for customers?

First and foremost, automated billing means that customers will receive timely and accurate invoices, improving their customer experience greatly.

But, beyond having a better customer experience, your customer will also benefit more directly from an automatic recurring billing model.

Firstly, they’ll know exactly when their payments are due and how much their invoice will be.

Secondly, and more importantly, it saves time for them, too. They can leave it in the hands of their bank or credit union and your business to automatically process the payment. Making monthly subscription payments becomes something they no longer have to think about.

How to get your clients to switch to recurring billing

Despite these advantages, some customers might resist being placed on an automated recurring billing schedule. Some don’t initially trust companies, believing once they’re on an auto-pay contract the prices could increase without warning. Others simply don’t feel comfortable allowing businesses to keep their bank account or payment details on file indefinitely.

So how do you confront this resistance and encourage your clients to take advantage of automated recurring payments? Here are five ways.

1. Offer a discount

Savings are a particularly powerful tool for clients who are always looking to cut down on expenses and offering a discount is great if you operate on a fixed recurring billing model.

This is a common tactic used by telecommunications companies, but many energy companies also use this as a way to encourage their clients to pay for utility bills on a monthly auto-bill process. Normally, the average savings clients make for signing up to the automated recurring billing system is about 5%.

2. Offer a fixed term–fixed cost deal

One of the major concerns for clients is a change in price just after they’ve signed on to an automated recurring payments system. You can alleviate these worries by offering a contract that states you won’t raise the price of your services for six or twelve months. This is very good if you offer a service like telecommunications, software, etc.

During this term, you’re building trust because you’re keeping to the contract. This will increase the chances you will retain that client for the long term.

Regardless, you should always adhere to best practices and inform customers well in advance of any future fee changes. Jordan Mills, previously of Price Intelligently, reminds businesses that communicating pricing uplifts with customers is an opportunity to remind them that you’ll work hard to continue to get their returning patronage.

“Communicate it thoroughly to your customers. Listen to their pain points about the change if they bring them up. We all can admit that no one truly likes a change that doesn’t feel justified,” wrote Mills. “Delivering on value is core to a successful SaaS business.”

3. Offer a free gift

Who doesn’t love free?

If you offer a token gift when clients sign up for recurring payments automation, they’ll become more interested in the option. The token gift doesn’t have to be expensive but it does have to be something highly useful and unique to gain any interest from the client.

Not only will your customers (hopefully) appreciate the gesture, but your business could incorporate this into a marketing campaign.

Sending customers a branded, aesthetically put-together swag bag when they sign up can serve as a prompt for user-generated content (UGC)—a form of marketing where customers share content about your brand of their own volition and your business shares it. UGC campaigns result in 29% higher lead conversions, so this one really is an all-around win.

4. Offer a unique feature

Sometimes it’s good to entice your clients to the automatic bill payment system by offering them something those on a pay-per-use system don’t get.

This gives them more value for the same price— increasing the likelihood they’ll sign up for your services.

5. Only accept automatic payments

For some businesses, it’s preferential to offer their clients automatic bill payments as the only way of making payments. In this case, your clients have no choice.

In the past, giving an ultimatum at the beginning of the customer relationship may have had a negative effect. Nowadays, though, automatic payments are becoming more commonplace, with many subscription businesses not offering an alternative.

If you want to go the ultimatum route, still be sensitive to your customers’ concerns. If they’re worried about the security of their payment details, show them all the security features your recurring billing system offers. If they’re concerned about unexpected price hikes, include language in their contract that lays out terms regarding when and how you will make pricing uplifts.

And, of course, with good customer service, you can create a positive relationship by the end of the first contract term.

How to choose the right automated billing platform

There are quite a few automated billing solutions on the market. There’s an easy set of steps to follow, though, when choosing a solution.

  1. Identify your business requirements and objectives. Consider factors such as the volume of transactions, types of payment methods you want to accept, integration with existing systems, scalability, and budget constraints.
  2. Research different automated billing solutions available in the market. Look for reputable providers with a track record of reliability, security, and customer satisfaction. 
  3. Assess the features offered by each solution.
  4. Determine how well the billing solutions you’re considering integrate with your existing systems and workflows
  5. Assess each solution’s scalability. With hard work, your business will grow so you should consider factors such as transaction volume that may cause a solution to become unsustainably expensive in the future.
  6. Evaluate the quality and availability of customer support provided by the billing solution provider. 
  7. Take advantage of free trials or product demos to test the software firsthand. Use this opportunity to evaluate the user interface, functionality, and ease of use, and solicit feedback from relevant stakeholders within your organization.
  8. Evaluate the total cost of ownership of each billing solution, including subscription fees, setup costs, transaction fees, and any additional expenses. 
  9. Finally, ask for references and recommendations to gain insights into customers’ experiences, challenges, and successes with the chosen solution.

Automated Billing System Features to Look For

Most automated billing systems come with a bevy of features, and your business may not need all of them. As a reminder from earlier, the key features you should make sure a solution has, though, are:

  • Recurring billing
  • Invoice generation 
  • Automating billing-related tasks such as late payment reminders, payment reconciliation, and dunning management
  • Reporting and analytics dashboards
  • Robust security features

Further features that most businesses may want depending on their business model, billing cycles, accounting systems, and other relevant software solutions:

  • A strong library of pre-built integrations with common software tools and/or a robust API that makes it easy to build integrations that you need
  • Support for multiple payment methods, including credit/debit cards, bank transfers, ACH payments, and digital wallets, to offer flexibility and convenience to customers.
  • A self-service customer payment portal where customers can view and manage their invoices, payment history, and subscription details, enhancing transparency and empowering customers to manage their accounts independently
  • Access to responsive customer support channels, such as phone, email, or live chat, with knowledgeable support representatives who can assist with setup, troubleshooting, and ongoing support

Implementing Your Automated Billing Software: Best Practices

Successful implementation requires careful planning and execution. Here’s a closer look at some best practices to help you make the most of your automated billing software:

Offer training to get the team up to speed.

    Thorough training is crucial for ensuring that your team members are equipped with the knowledge and skills to effectively use the automated billing software. Provide comprehensive training sessions that cover the functionalities of the software, billing processes, and any changes in workflow. Offer ongoing support and resources to address questions or concerns that may arise during the transition period.

    Prep your data migration meticulously.

    Data migration should be carefully planned and executed to ensure a smooth transition from your existing billing system to the new automated software. Assess the data to be migrated, including customer information, billing history, and payment records, and develop a migration plan that prioritizes data integrity and accuracy. Conduct thorough testing to validate the migrated data and address any discrepancies before fully transitioning to the new system.

    Tailor the solution to your needs.

    Customization and configuration of the automated billing software are essential to tailor the system to meet your business needs and preferences. Customize invoice templates, payment reminders, and reporting formats to align with your branding and requirements. Configure the software settings to automate routine tasks and streamline billing processes, optimizing efficiency and accuracy.

    Security Measures in Automated Billing Software

    Security is paramount in automated billing software to protect sensitive customer data and ensure secure transactions. These systems handle a wealth of confidential information, including payment details and personal identification, making robust security measures essential. 

    Here are some key security measures commonly implemented in automated billing software:

    • Secure Socket Layer (SSL) or Transport Layer Security (TLS) encryption protocols encrypt data during transmission, preventing unauthorized access or interception by malicious actors. Additionally, data stored within the billing system should be encrypted at rest, safeguarding it from unauthorized access in case of a breach.
    • Tokenization is employed to replace sensitive payment data, such as credit card numbers, with unique tokens. This ensures that sensitive information is never stored within the billing system, reducing the risk of data breaches. 
    • Of course, there’s adherence to PCI Standard. Automated billing software providers must undergo regular audits to ensure compliance with these standards.
    • Role-based access control (RBAC) allows administrators to assign specific permissions and privileges to users based on their roles and responsibilities. This ensures that users only have access to the data and functionality necessary to perform their job duties.

    The power of the right automated recurring billing software

    There’s sometimes resistance from your clients to sign up for automated recurring payments, but by demonstrating the significant benefits for your customers, you can encourage uptake.

    For your business, an automated recurring payment solution is a powerful tool for scale. The software can help with:

    • streamlining the entire subscription management process,
    • reducing late or missed payments by up to 700%,
    • recovering leaking revenue from things like human error, and
    • simplifying variable recurring billing.

    Your subscription business should be making automated recurring billing a priority. If your customers are hesitant to leave their payment information on file, it’s in your business’s best interest to run an educational campaign to teach them how they can benefit, too.

    Plus, it never hurts to sweeten the deal using some of the tactics above.

    Do you need recurring billing and subscription management software? Contact one of our experts at [email protected], call or check out the Stax Bill free trial.

    FAQs about Automated Billing Systems

    Q: What is an automated billing system?

    An automated billing system is a software solution designed for businesses to manage the invoicing and payment process efficiently. It automates repetitive tasks associated with billing, such as generating invoices, sending them to customers, tracking payments, and following up on overdue accounts. This system integrates with other business systems (like CRM, accounting software, and payment gateways) to streamline the entire billing cycle, reducing manual data entry and minimizing errors.

    Q: How do I automate my billing?

    To automate your billing, you first need to identify  the specific billing processes you want to automate, considering factors like invoicing frequency, payment methods, and reporting needs. From there, choose a billing automation solution that fits your needs. Depending on your business, this could include features like invoice generation, payment processing, integration capabilities with your existing systems, and scalability. Once you’ve selected the software, configure it to your process and launch it. 

    Q: What is bill automation?

    Bill automation refers to the use of technology to execute the billing process without manual intervention. It encompasses the creation of invoices based on the purchase history or service usage, delivering these invoices to customers, processing payments received, and handling follow-ups for overdue payments automatically. This automation aims to increase accuracy, save time, and reduce operational costs within a business’s billing operations.

    Q: What are the benefits of automated billing?

    Automated billing can help lower your admin costs. It minimizes the time and resources spent on manual billing tasks. It can also reduce human error, particularly around invoice creation and payment tracking. More importantly, bill automation speeds up the billing cycle by promptly issuing invoices and following up on payments, leading to quicker receipt of funds.

    Written by:

    Donna McPhee
    Donna McPhee
    Customer Success Representative, Stax Bill

    Donna is part of the Customer Success team at Stax Bill. Donna has a strong track record of success of translating business process gaps and impediments into workable client-specific solutions across the subscription management and cecurring billing business model.