Quickbooks Recurring Payment: Complete Overview

No conversation about accounting software happens without a mention of QuickBooks. With features for businesses to create invoices, manage their payroll, track their expenses, and make accounting easy, the platform caters to small startups and big organizations alike.

Through QuickBooks recurring billing, businesses can take their financial management up a notch and automate repetitive transactions. This article will go over what recurring payments are, their pros and cons, and how to set them up on QuickBooks.

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What are recurring payments in QuickBooks?

Rent payments, subscription charges, and memberships are all examples of recurring payments. They allow businesses to automate charges on a set schedule, so they don’t need to put in the time and effort to follow up with customers every time a payment is due. They’re usually charged to a debit or credit card or directly taken from a bank account using ACH transfer.

On QuickBooks and most other software, recurring payments are set up by the customer or merchant. They’ll save their bank account or card information on the accounting platform, and funds will be transferred to the merchant during every billing cycle.

Recurring payment advantages

• Predictable cash flow – Recurring payments provide a steady and predictable revenue stream on a regular basis, which offers a leg up over one-time payments.
• Convenience – With an automated payment process, there’s no need to remind the customer to pay up or ensure the business processes payments on time.
• Less admin effort – In the same vein as convenience, there’s a lot less effort required from a business and its team to spend on follow-ups, manual invoice creation for each cycle, and dealing with missed payments and late fees. Late payments often incur more complicated consequences like debt and cash flow issues than issuing a refund to stop recurring payments.
• Better customer retention – A seamless autopay system makes using your service much easier for customers. Instead of having to remember to make payments every billing cycle, the funds are taken directly from their chosen payment method, and they’re notified and given a detailed invoice for their records.

Recurring payment disadvantages

• Disruption in payment method – If customer payment details change or they don’t have enough funds in their account, this could disrupt the billing cycle and require manual intervention. This way, there’s an increase in admin overhead as the business will need to reach out to customers and wait for them to rectify the problem.
• Unexpected cancellations – Relying on a consistent cash flow can make it more jarring when unexpected cancellations to recurring payments happen. Businesses can take a hit to their revenue projections and may need to offset the loss or adjust their budget to accommodate this change.
• Lack of monitoring – On both the customer’s and the business’s behalf, recurring payments can mean a lack of monitoring. Customers may stop using your service and forget about their billing, leading to tension between them and the business. Businesses might not notice failed transactions or payment disputes. That’s why it’s important to keep customers engaged with frequent check-ins and interactions, whether they’re automated or not.
• Setup effort – Although QuickBooks recurring billing is so easy to set up, the initial admin effort may feel offputting for certain teams or businesses. As customers also need to provide consent and fill out forms and details, they may find this time-consuming. Businesses should always provide a clear and well-managed recurring billing system that is communicative and streamlined.

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How to set up a recurring payment in QuickBooks

If you’re a QuickBooks user who could benefit from recurring payments, you can follow these instructions to set them up. Remember, all methods require you to obtain permission before initiating automatic payments.

How to set up autopay for recurring payments in QuickBooks

Autopay involves deducting money from a customer’s account on a regular cycle.¹

1. Click the Plus symbol on the main dashboard and select Sales Receipt
2. Select a customer
3. Select a product or service
4. Select a Payment Method
5. Click Make Recurring
6. Choose Scheduled as the recurring type
7. Select an Interval that you’ll charge the customer at
8. Enter the autopay Start date
9. Choose how many times you want to charge the customer
10. Click Save Template

How to set up recurring ACH payments in QuickBooks

Recurring ACH payments are taken directly out of a customer’s bank account.²

1. Click on the Gear icon from the dashboard and select Recurring transactions
2. Select New
3. Select the type of transaction and click OK
4. Choose Scheduled as the recurring type
5. Select your customer and input the information needed for scheduling
6. For the Payment method, choose Check. Use the Authorization hyperlink to provide the customer with a Bank Transfer Authorization Form
7. Check the box to make sure payment is processed every time a form is created using this template.
8. Click Save template.

How to create a recurring credit card payment in QuickBooks

1. Go to the Customers tab and select Credit Card Processing Activities.
2. Choose Set Up Recurring Payments.
3. Choose a customer or Add New.
4. Select an Invoice Type
5. Fill out the Payment Method

What is the QuickBooks credit card authorization form?

The credit card authorization form is a pre-authorized form that is required by Visa and Mastercard. Customers need to fill out and sign the form before the initial charge so there’s transparency with all QuickBooks automatic payments. You can download this authorization form once you enter a customer’s credit card information or manually select it from Create recurring payment.³

FAQ for QuickBooks recurring payments

How to set up a template for recurring transactions

Templates are QuickBooks’ easy way to set up recurring transactions, and these can be created through your dashboard. You can create one by going to Settings > Lists > Recurring transactions. From there, click New and choose the type of transaction you’re looking to create. Enter a suitable Template name, select a Type, and hit Save.

How to create an automatic recurring payment to a vendor

Automatic recurring payments to vendors is also called a “cheque” on QuickBooks. To create one, head over to QuickBooks desktop and select Banking > Write Cheque. Fill out the cheque and select Save & Close to confirm.

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Sources:

1. QuickBooks - Set up Autopay
2. QuickBooks - Process ACH Transfer
3. QuickBooks - Create Recurring Credit Card Payment