Recurring Payments Test The Accounts Receivable Modernization Waters

From subscription clothing services for consumers to software products for businesses, the recurring billing business model saw a resurgence last year as organizations looked towards business model flexibility to remain in operation.

With the economy inching towards normalcy, Recur360 President and CEO Andrew Abrams says this model — and payments digitization overall — only continues to grow.

Yet for B2B organizations that need to provide a streamlined and hassle-free invoicing presentment and recurring payments processing experience for their end-customers, the entire accounts receivable workflow can be thrown into disarray without adequate automation.

In a recent interview with PYMNTS, Abrams discussed the roles that application programming interfaces (APIs), data integration and automation technology can play to help businesses embrace a recurring billing revenue model and overcome some of the most prominent challenges of enhancing the payment experience — for payee and payer alike.

Driving ACH Transactions

For years, card payments have been the payment method of choice for recurring payments. For consumers, cards can promote efficiency and security, allowing payers to provide card details to automate recurring transactions without having to share sensitive data.

Businesses have begun to follow suit, particularly for their growing roster of remote working-friendly software solutions, as organizations embrace commercial card products for B2B payments.

Yet a recent change among card networks has businesses that bill on a recurring basis to rethink the card acceptance strategy.

“Credit card interchange rates went up last July,” said Abrams. “The cost of taking a credit card as a form of payment went up for the merchant.”

In a shift unique to B2B payments, organizations on the receiving end of recurring invoices grew more comfortable providing bank details to support repeat, automated ACH transactions. Abrams noted that because business customers can also experience the pain of costly card acceptance — an experience consumers don’t face — there was less resistance in the B2B space for firms to provide bank details.

Plus, he said, business customers also acknowledged that by enabling ACH transactions, they would not have to absorb the pass-through fees that some merchants can charge for accepting cards.

Easing Recurring B2B Payments Friction With Data

Digitizing and optimizing the transaction method itself is only one piece of the puzzle when it comes to recurring transactions, however.

For many B2B merchants especially, finding payment service providers that can support payments acceptance is challenging.

“When you apply for any sort of payments account, it goes through an underwriting process no different than if you’re trying to get a credit card,” Abrams explained.

For newer businesses that are selling services, not products, that underwriting can be a barrier to payments acceptance as there is no physical good that a customer can return if they seek a refund.

Yet with the rise of recurring billing and digital business models, it’s imperative for organizations to quickly and seamlessly have access to payments acceptance technology and to support a friction-free onboarding experience.

As part of its quest for such capabilities, Recur360 recently announced a partnership with Paya, a collaboration that Abrams also said supports the need for more robust transaction data to enable integration, workflow automation, reporting and reconciliation. Combined with Recur360’s existing tools to help QuickBooks users invoice and accept payments on a recurring basis, the team-up can further support businesses across a variety of product and service categories to enable recurring transactions.

“Our focus with our technology is on automating the whole invoice generation, payment processing, customer notification and accounting and reconciliation experience,” Abrams said. “The more that that’s automated, the more people can focus on running their business as a merchant … and the better the API, the better the automation, the better the experience.”