× Freshbooks App Logo
FreshBooks
Official App
Free - Google Play
Get it
5 Min. Read

What Is Automatic Bill Payment? Get Paid Faster with Auto Bill Pay

An automatic bill payment is a money transfer scheduled by a customer to pay a business for a single or recurring bill. It’s common for customers to schedule automatic bill payments on a monthly basis for set charges, such as phone and internet bills. For business-to-business transactions, automatic bill payments usually involve a client paying a business for a set service each month. For example, a client could schedule an automatic bill payment for the first of each month to pay a freelance marketing consultant for a standard social media management fee.

These automatic bill payment topics will help you understand the concept and how it helps small businesses:

How to Set up Automatic Bill Pay

How Do Automatic Withdrawals Benefit Businesses?

How to Set up Automatic Bill Pay

If you’d like to better understand how your clients can pay you using automatic bill payments or if you’re interested in paying your own vendors with the service, here are three methods of setting up automatic bill pay:

Automatic Bill Payment Through Your Financial Institution

  1. Login to your bank’s online banking portal, through its website or mobile app.
  2. Navigate to the Bill Payment page of the site.
  3. Click “Add A New Payee.”
  4. Enter the company name.
  5. Add your account number with the company.
  6. Schedule a single payment, or use automatic bill payment to schedule recurring payments according to a set schedule.

Note that these are general guidelines that apply to most banking institutions, but the steps may vary slightly from bank to bank. If you have trouble, contact your bank directly for assistance setting up automatic bill pay.

Automatic Bill Payment Through a Business Website

Setting up automatic bill pay directly through a business’s website is another option, but the process to do so varies widely from business to business. Here are the basic steps you’ll need to follow, but if you have trouble setting up the service, contact the company directly for assistance.

  1. Login to your online account on the business’s website or mobile app.
  2. Navigate to the Billing or My Account section of the site.
  3. Click on the option for Automatic Bill Payments or Recurring Bill Payments.
  4. Choose your payment method, whether it’s a credit card or online bank withdrawal.
  5. Set the payment schedule you’d like your automatic payments to follow, whether it’s weekly, biweekly or monthly.

Automatic Bill Payment Through Your Accounting Software

If you use a cloud-based accounting solution, your clients will have the option of setting up automatic bill payments using a credit card directly through your accounting software. The steps for setting up the service will vary depending on the service provider. Here’s how to set up automatic bill pay through FreshBooks:

  1. Go to the Invoices section and click Create A New Invoice.
  2. Fill out the Client information and invoice details, then click Make Recurring in the Settings panel on the right.
  3. Choose the recurring schedule by selecting a Start Date, How Often to generate invoices, How Many invoices to generate and select the Delivery Options.
  4. Click Done to confirm the invoice and scheduling details.

Your client will now be billed automatically and they have the option of setting up automatic bill payments on their end, using a credit card. Your clients can learn how to set up automatic payments here.

How Do Automatic Withdrawals Benefit Businesses?

Small businesses can benefit from accepting automatic bill payments by saving time and improving the payment experience for their clients:

Lower Business Costs

With automatic bill payments, you can cut down on the need for office supplies such as paper, envelopes and postage, since instead of sending out invoices or checks by mail, everything is generated, sent and processed online.

Save Time

Accepting automatic bill pay will save you time and allow you to focus on more critical areas of your business. Instead of generating invoices manually, sending them to clients, processing payments and following up on late payments, your accounting software can generate invoices for you automatically and your client’s credit card can be charged automatically. With the whole process automated, you’ll spend far less time on invoicing than before.

Better Client Experience

Your clients are busy and they too are looking for ways to save time. Automatic bill pay allows them to set up a payment schedule and forget it, so they no longer have to take time to process and schedule invoice payments. Auto bill pay can also lead to a better client experience because you’ll no longer have to follow up on unpaid invoices or charge late fees, which can damage your client relationships over time.

Improve Cash Flow

Automatic bill payments improve your business’s cash flow, because you no longer have to wait for payment. Instead, you’ll know exactly when payments are processed each month and the money will land in your business bank account within a couple of days. Knowing exactly when you’ll receive payment improves cash flow and lets you plan ahead for any necessary expenses.

Increase Payment Security

Because auto-pay allows clients to pay bills through verified, encrypted software directly from their credit card or checking account rather than paying cash or mailing a check, it offers increased security and peace of mind to your clients.

Environmentally Friendly

Your business can operate in a more environmentally friendly way with automatic bill payments, since everything from invoicing to payment is all done online, with no paper wasted. Offering green solutions benefits the environment and can make you more attractive to clients who are mindful about their environmental impact.

RELATED ARTICLES

Save time Billing and Get Paid 2x Faster with FreshBooks

Try FreshBooks Free