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Issuing Recurring Invoices In Advance: The Pros and Cons

In the accounting for a business, there is this situation: A recurring invoice.

The Pros

A business can issue a recurring invoice to a customer at fixed intervals each time with an identical amount. For example, the business invoices the customer for $100 on the very last day of each calendar month. Such an invoice (which happens month after month) is usually for a subscription, a lease, a service contract (for the next twelve months).

  • One such example is a landlord of a property may issue a rent invoice to all her lessees each month.
  • Another example is a media company may charge a fixed monthly fee to all the customers who have purchased one of the online magazines via paid subscriptions.

All these invoices are considered recurring invoices because they have the same amount, and are issued on a repetitive basis.

Usually when you have to do these invoicing manually, they should be done when the time is very close to the end of each month. What if a business has over a couple of hundreds (or even a few thousands) of customers with recurring invoicing? This puts a lot of timely work pressure on staffs who are to issue the invoices.

However, this can be avoided by simply issuing all the recurring invoices in advance. Issuing an invoice in advance may lead to some customers preparing to make the payments earlier. This may be a side benefit for a business doing such.

The Cons

One downside with issuing recurring invoices in advance is that you must make sure the prices of the service has not been changed before the issuing of all those early invoices. This sometimes can happen because with a contract, even between a business and a customer, they may discuss, re-discuss and negotiate terms of their service. A customer may need more services from a business, and the business will increase the monthly price of the service package to cover the cost. The only thing you can do is to make sure to review all the related contracts before issuing the invoices.

Using Accounting Software

With the Xero accounting software, it can make it much simpler to set up all the invoicing.

In technical terms, Xero runs on a cloud platform. It means the data that you provide through Xero is kept on a set of remote computers (or computing cloud). Whenever needed you can access this data from anywhere, as long as you have a computer or mobile phone that lets you access the internet through a web browser.

When using Xero, the hard part is usually the initial setup. Once the setup is complete, your business will benefit from being able to track inventory, manage stock, and add items quickly at anytime from anywhere. The dashboard reports also provide a great way for anyone to review and analyze the bookkeeping, internal control, invoicing, and more.

Emily Carter: Emily, a trained environmental journalist, brings a wealth of expertise to her blog posts on environmental news and climate change. Her engaging style and fact-checked reporting make her a respected voice in environmental journalism.