Small business (SMB) accounting company FreshBooks is introducing a new feature to support recurring revenue automation for the services industry.
In a press release on Thursday (June 27), FreshBooks announced FreshBooks Retainers, a tool that enables companies to collect recurring client payments in advance to stabilize and smooth their cash flow and financial reporting. The tool enables service providers to more efficiently invoice and track project management, the company said, reducing the administrative burden for companies that work on retainer.
“Along with helping you run a more profitable business, retainers-based arrangements help you better serve your clients,” said Mike McDerment, CEO and co-founder of FreshBooks. “This elevates your relationship from service provider to trusted partner — and that’s where the magic happens.”
The rise of gig workers and the freelance economy, plus the proliferation of Software-as-a-Service (SaaS), have introduced new challenges for entrepreneurs and small businesses to collect payments while working on retainer.
Other FinTech firms have introduced tools to tackle this issue, too. Earlier this year, Stripe launched Stripe Billing to address the challenge of recurring revenue for SaaS and other subscription-based companies. The solution enables SaaS companies to invoice their clients, and remain compliant with tax requirements.
“SaaS, subscription and recurring revenue business models have become a major force for economic growth … however, for the vast majority of companies, running a business and subscription system at any scale is both laborious and costly,” said Research Director Jordan McKee at 451 Research in a statement at the time.
“I think the biggest challenge with recurring payments is managing them,” he said at the time. “Often, businesses start offering regular payments, whether for subscriptions or retainers, and don’t realize the administrative overhead.”
Automation and recurring invoice solutions can address much of that challenge, he added.