How automatic bank drafts work.
When used with automatic payment plans, automatic bank drafts are a convenient and paperless means of allowing your MSP customers to pay their monthly bills by having funds transferred directly from their business bank account to yours, without the use of a check or credit/debit card.
Automatic bank drafts can be set up easily with your financial institution. To begin the process, your customers will typically need to sign an authorization form and provide you with a voided check, which you will then present to your bank.
One minor drawback is that it can sometimes take several weeks for your customer’s first automatic bank draft to be completed. After that, the drafts are generally processed at the same time each month.
If the amount being transferred varies from month to month, you may want to send an email reminder to your customer before the amount is withdrawn from their account. This way, your customer will recognize the charge when it is taken from their account without having to contact you for clarification.
Why auto-drafting is critical for automating your recurring billing:
- It simplifies the payment process for you (and your customers). Without the benefit of auto-drafting, you will need to send out a monthly request for payment (either electronically or as a paper invoice) to your customers and wait for that bill to be paid.This manual billing process is time-consuming (not to mention frustrating) for both you and your customers – most of whom would likely prefer not having a monthly reminder of just how much they are paying you.If your customer signs a one-year agreement with you that is broken down into monthly payments, it is much easier for them to have that payment made automatically, than having to write a check, or enter a credit card payment each month.
- It puts money in your account faster. Another downside of not having auto-drafting is the time you will spend waiting for those payments to roll in, rather than automatically flowing into your account at the same time each month.Without auto-drafting, payments are more likely to come in late – putting you in the awkward position of having to call your customers.And, while you’re waiting for your invoices to be paid, you don’t have the money you need to grow your business.
- It modifies payment plans automatically. And finally, with the addition of a solution like ConnectBooster, auto drafting can allow you to modify your customer’s recurring payment amount without having to start the entire process from scratch.You simply modify the amount to be transferred (with your customer’s approval of course) and the new amount will be withdrawn the following month.
In the end, auto-drafting takes the frustration out of the monthly billing process for you and your customers. For that reason alone, you should consider making it an essential part of your automated payment process.
Interested in adding auto-drafting to your managed service business?
Download one of our free case studies for free guidance on how to completely automate your organization’s payment processing with auto-drafting.