5 Common Recurring Billing Mistakes and How To Avoid Them

If you own or manage a subscription business, you’ve likely faced some challenges with payment processing. After all, processing a recurring payment may not be as simple as it seems. If the billing model, invoicing process, and billing process aren’t in agreement, you’ll likely face headaches regularly.

The truth is that you could be making several mistakes as you process recurring payments, and those mistakes along with the rarely discussed complexities in the payments industry could be costing your company valuable revenue and profitability. Below, we’ll discuss five of the most common recurring billing mistakes and what you can do to avoid them.

Why You Should Be Taking Care of Your Billing Mistakes

Recurring billing mistakes can lead to revenue leakages. They can drive frustration in customers by disabling them to use your products or services smoothly and uninterruptedly, causing unwarranted customer churn. And no business owner can afford to let revenue slip away.

The Most Common Recurring Billing Mistakes

Billing errors are common, especially in the case of recurring charges. Here are five of the most common mistakes and what you can do to avoid making them:

1. Not Offering Flexible Payment Options

Your business should offer a wide range of payment options for your customers. Popular payment methods include credit cards, ACH/Direct Debit, Buy Now, Pay Later, and digital wallets such as Apple Pay and Google Pay. Globally there are over 600 alternative payment methods that can be largely specific to the country/region and type of transaction being conducted. Utilizing the best payment methods for your business and customer can increase conversion rates for your business. No matter what payment method your customers prefer, you should provide them with a simple way to pay for your services.

Solution: Integrate a Payment Platform That Supports a Range of Payment Methods

If you’re limited to simply charging credit cards or only being able to take advantage of a couple payment methods, it may be time to take a look at your recurring billing software. The best solutions make it possible to integrate a wide range of payment methods into your recurring billing process, helping to ensure that your customers have the payment options they’re looking for.

To optimize your payment strategy, we advise collaborating with a payment expert. With over 600 alternative payment methods available worldwide, an expert can help configure the best approach for your specific needs. If your business operates outside of the U.S. or plans to, you will want to work with a payment provider who can recommend and enable payment methods such as the Boleto and Pix in Brazil or WeChatPay in China.

2. Focusing on Failed Payment Recovery before First Pass Approvals

Failed payments are a primary cause of involuntary churn. They occur when billing information is incorrect, customers have insufficient funds, cards expire, or technical issues arise on the business’s side. 

Unfortunately, most subscription business owners will focus on recovering those failed payments, rather than stopping it at the source and using a payment provider who can use its technology and features to increase first pass approvals. Using a payment provider that optimizes payments for approvals could significantly reduce your customer churn rate and increase collection rate. 

Solution: Implement a Payment System that Optimizes First Pass Approvals and Uses Retries for Ongoing Recovery   

A fully optimized payment system will utilize multiple MIDs and multiple acquirers for optimal transaction routing. The most advanced way to achieve a fully optimized and orchestrated payment is to have advanced real-time adjustable logic based on the merchant, card, and bank to route each payment dynamically. The most optimal and cost effective approach is to first focus on preventing the payment from failing in the first place, then implement advanced retry logic that evaluates the original payment data and the decline data and puts the retry through a rules engine to determine how to route. We recommend working with a payment provider who is your partner in success and focuses on getting you the most money from increased approvals. 

3. Ignoring Analytics and Reporting

Detailed analytics and reporting are at the center of most successful subscription businesses, and for good reason. A detailed analytics report can show you what you’re doing that’s working well and what’s failing to have the desired result. If you ignore analytics and reporting, you won’t have the necessary data to spot opportunities to optimize your payment processing and generate better revenues.

Solution: Deploy Software that Dives Deeper into Analytics and Offers More Granular Reporting

If you haven’t already, you should find a platform that ingests raw response data and daily processor reporting to seamlessly connect each transaction by unique TransactionID, ensuring every attempt receives a response and displays all responses.

Utilize the raw data consumption for unique insights into BIN, Processor, MID, MCC, and Transaction ECI Code Performance through embedded visualizations. Leverage the platform for analysis and maintain the flexibility to export raw data for ongoing review.

Recognize that data fuels payment decisions. Use a platform that delivers data and insights in API responses, Webhooks, and Portal, or can transfer raw data to popular database tools. Utilize available reports or empower your team to construct their own. Combining all these tools will maximize your business' billing potential and maximize revenue.

4. Handling Your Own Payments

The typical approach for how businesses handle their payment systems today is they either build their own in-house system or they use a solution provider with a limited feature set. The issue with building your own system is it takes up time and resources. Those resources could be better spent improving the other parts of your business. When it comes to features, the advanced features you should utilize include Network and Processor Tokens, a Real-Time Account updater, PINless Debit Routing (US Only), ECI Code Optimization, and processing based on Specific BIN and Account Ranges. A Multi-Acquirer platform will allow for ongoing optimization as different card products perform differently across different acquirers. 

For a payment system to be fully optimized, it should utilize multiple Merchant IDs (MIDs) and multi processor routing. Things like Level II and III data along with least cost routing should be built into the platform. The most optimal approach to achieving an optimized and well-coordinated payment process involves implementing advanced real-time logic that can be adjusted on-the-fly based on factors such as the merchant, card type, and bank, enabling dynamic routing for each payment. Some issuers update the models in real-time while others can take up to 90 days. It’s important to have a partner that understands the backend complexities of payments to help advise on the best merchant facing strategy. 

The topic of complex payment features segues into why it’s best to find a partner who is a payment expert to help you and your business along your journey so you don’t have to handle payments yourself. 

Solution: Consult with a Payments Expert to Learn About Your Data

To start, a payment expert can review your statements and your entire payment stack and give very valuable insights into your payment collection process beyond just rates. Aim for a quarter's analysis for optimal results. An advanced payment expert will be able to point out payment optimization opportunities that you may not be aware of.

An expert can also be useful when any payment related questions come up, which will inevitably happen. When you have a partnership with an expert, you can continuously improve your payment processes and receive ongoing support and recommendations for your specific business needs. When it comes to such a complex side of the business such as payments, having an expert on your side can make a huge difference for your bottom line. 

5. Using a Billing Platform that can’t Scale with your Business

Most companies, especially enterprise size, will either build their own system or use a payment provider who may not be able to scale with them as they expand. 

Some billing and subscription management platforms still only offer what leading businesses would consider to be archaic tools. Many of these require significant human involvement, which can lead to human errors.

Unfortunately, these companies often stay with these systems for one of two reasons:

• They fear change and the process of implementing new processes.
• They’re under the false belief that today’s leading subscription payment technologies are too cost-prohibitive for small business owners.

Solution: Use a System that Scales with You

Using a payment system that scales with your business is vital for seamless growth and operational efficiency. Such a system offers flexibility to adapt to changing transaction volumes and customer preferences without incurring unnecessary fees and expenses. By ensuring smooth transactions regardless of volume or complexity, it enhances customer satisfaction and loyalty. 

Moreover, scalable payment solutions typically come with advanced security features and compliance measures, safeguarding your business and customers as you expand. With the ability to integrate with other essential business systems, a scalable payment system streamlines operations and provides valuable insights, empowering your business to thrive in a dynamic market environment. 

How Revolv3 Can Help Avoid Recurring Billing Mistakes

Many payment companies promise increased revenue and reduced churn rates, but often fall short in providing tailored solutions for different payment types or processor options.

In contrast, Revolv3's approach stands out due to its meticulous treatment of each transaction and the ability for the merchant to tailor configurations. Revolv3 only charges for successful transactions.

Chat with an expert about how Revolv3 can help improve your business today.