Recurring Billing

Recurring billing involves charging a customer at regular intervals, such as monthly or annually, for a product or service.

What Is Recurring Billing?

Recurring billing involves charging a customer at regular intervals, such as monthly or annually, for a product or service. Recurring billing is often used for subscription-based services or products, where the customer agrees to be billed on a recurring basis until they cancel the subscription or service. The customer may be charged automatically, such as with a credit card, or billed through an invoice.

Abstract circle with halftone dots as arrows to represent recurring billing.


What Is Recurring Billing Software?

Recurring billing software is a type of software that automatically charges or invoices customers on a recurring basis. This software typically integrates with payment gateways, CRM or other business systems, and can include features such as billing history, invoicing and reporting. Recurring billing software is particularly useful for companies that offer subscriptions or usage-based pricing.

For more complex pricing structures, recurring billing software often integrates with CPQ systems for pricing and product information. The software might also integrate with ERP systems and inventory management systems to automatically update stock levels and track product usage.

Recurring billing software can also integrate with business intelligence systems to provide real-time visibility into customer behavior, usage and revenue trends. This can help businesses improve services and offer upsells at the right time. In addition, recurring billing software can integrate with marketing automation systems to trigger actions such as sending emails or texts based on a customer’s billing status.


What Are the Benefits of Recurring Billing for Your Business?

Cost Savings

Automating the invoicing process reduces administrative costs, saving time and resources that can be allocated to other important tasks. The software sends automated reminders and processes payments without human intervention, which reduces the need for manual labor and saves businesses money.


With subscription-based models, customers can easily adjust their subscriptions to meet their specific needs. They can change their plan, add or remove services, or cancel their subscription with just a few clicks. This flexibility helps businesses cater to individual customer preferences, leading to increased customer satisfaction and retention.

Predictable Payments

Recurring billing software ensures that payments are collected on a regular basis, reducing the risk of missed or late payments. This predictability helps businesses plan their finances better and avoid cash flow issues that may arise from irregular payments.

Improved Financial Planning

Stable cash flow allows businesses to better plan and manage their finances. The software generates revenue automatically, which helps businesses know what to expect, when to expect it, and how much to expect. This allows them to make better financial decisions and allocate resources more effectively.

Additional Features

Recurring billing software often includes features like different pricing models, coupon management, free trials, prorations, add-ons, and overages. These features enable businesses to offer customized pricing and promotions to attract and retain customers. The software lets businesses choose the pricing model that works best for their business, such as flat fee, per-user, or usage-based pricing.

Enhanced Customer Experience

Customized pricing and promotions can be offered to attract and retain customers. Businesses can offer free trials, provide add-ons, and offer discounts to keep their customers happy. This leads to increased customer loyalty and retention, which is essential for the long-term success of any business.


How Is Recurring Billing Software Different from Other Billing Systems?

Recurring billing software is distinct from other billing systems due to the unique set of features and capabilities it offers. This software has been designed specifically to streamline and automate recurring charges and subscription billing processes, resulting in enhanced efficiency and reduced manual efforts. This level of automation can cover tasks such as invoicing, payment processing, and collection cycles.

An important distinction of recurring billing software is the subscription management features it includes. This software allows businesses to easily create, modify, and manage subscriptions for their customers, offering options for billing frequency, pricing tiers, and add-ons. The flexibility provided by this feature empowers businesses to tailor their subscription and pricing strategies to meet individual customer needs, including offering different pricing models, free trials, discounts, and promotions.

Recurring billing software is also equipped with dunning management capabilities, aimed at handling failed payments and addressing payment issues with customers. These systems can automatically retry failed payments, notify customers of payment failures, and initiate communications to resolve payment issues in a more efficient manner. This proactive approach can help businesses reduce revenue loss and maintain positive customer relationships.

Recurring billing software offers another key advantage in the form of integration and scalability, seamlessly integrating with other systems such as accounting software and CRM tools. This integration allows businesses to gain centralized access to billing and customer data, streamlining their operational processes and improving their ability to track financials and manage customer relationships.


What Are the Data Challenges with Recurring Billing Software?

Handling Large Volumes of Data

Recurring billing software must be able to handle and process a significant amount of data related to customer billing information, payments, usage, and subscription tiers.

Managing Multiple Integrations

Recurring billing software needs to seamlessly integrate with other business systems, such as CRM and accounting software, to ensure efficient data flow and accuracy.

Processing Usage-Based Charges and Complex Pricing Rules

If a business charges based on usage or has multiple pricing rules, the recurring billing solution must be capable of accurately processing and reflecting this data to avoid billing errors.

Ensuring Data Accuracy and Real-Time Processing

Accurate data processing is crucial to prevent billing errors, disputes, and revenue loss. Real-time processing allows for immediate identification of any issues or trends, such as potential customer churn.

Auditability and Traceability

Businesses that have partnerships or need revenue allocation to specific offices or subsidiaries require clear records that demonstrate how a service was used. These records are necessary for revenue sharing, compliance, and data security purposes.


By addressing these data challenges, recurring billing software can improve billing accuracy, streamline processes, maintain customer satisfaction, and comply with regulatory requirements.


What Are the Emerging Trends in Recurring Billing?

Usage-Based Billing

Traditional flat fee subscription models are being complemented or replaced by usage-based billing models. This trend allows customers to pay based on the actual amount of product or service they consume, providing greater flexibility and cost control.

Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML can be utilized to automate billing tasks, analyze customer behavior and patterns, optimize pricing models, identify potential fraud or billing errors, and personalize billing experiences. By analyzing large volumes of data, AI and ML algorithms can generate insights and make predictions to improve billing accuracy, efficiency, and customer satisfaction.

Automated Dunning Management

Dunning refers to the process of communicating with customers about failed payments and encouraging them to update their payment information. To reduce manual effort and improve payment recovery rates, many recurring billing software now offer automated dunning management. This includes sending personalized reminders and notifications to customers, facilitating payment updates, and managing failed transactions more efficiently.

Enhanced Analytics and Reporting

Increasingly, recurring billing systems are incorporating advanced analytics and reporting capabilities. These features provide businesses with valuable insights into customer behavior, revenue trends, and churn prediction. By leveraging these insights, businesses can make data-driven decisions to optimize pricing strategies, identify growth opportunities, and improve customer retention.

Subscription Marketplaces

With the rise of subscription-based services, subscription marketplaces are gaining popularity. These platforms act as intermediaries, bringing together multiple subscription offerings from various businesses in one place. Customers can easily discover, compare, and manage their subscriptions on these marketplaces, simplifying the billing process for both customers and businesses.


Related Terms

Churn Rate


Recurring Revenue

Retention Rate

Subscription Pricing

Tiered Pricing


How Does DigitalRoute Work with Recurring Billing Software?

DigitalRoute partners with several providers of recurring billing software in order to solve some of the data challenges involved with recurring billing. DigitalRoute helps them extend the capabilities of their software, particularly when it comes to high volumes of data, complex pricing rules, built-in error correction and full data traceability.

In these situations, DigitalRoute’s software automatically collects customer usage data, enriches it with data from other business systems, then sends clean usage data records to the recurring billing software. The data can also be sent to business intelligence systems to improve analytics and be used to ensure that customers do not exceed usage levels.

DigitalRoute’s software includes dynamic error correction as part of the usage-based workflow. Any usage that cannot immediately be validated is automatically pushed to error correction subsystems to capture billable behavior.


People also ask

  • What is variable recurring billing?

    Variable recurring billing allows for flexible pricing based on usage or specific metrics, ensuring customers pay for what they use, commonly used in utility services and software platforms.

  • How can I automate recurring billing for my business?

    You can automate recurring billing by choosing a software, setting up pricing structures, integrating billing, securing customer data, and managing subscriptions.

download report

Get the ultimate guide to
monetizing usage-based services

Download the guide

Unveiling 2024's Software
Industry Game-Changers

Get notified!
Get a free demo