If you have customers who pay you monthly, have you let collecting payment become a hassle? There are so many ways to collect payments. Maybe you are still taking cash or checks or maybe you have moved to some fancy tech solution. Maybe you use QuickBooks Online invoicing and you are just sick of sending out the same receipt month after month and waiting 30 days or more for payment.
There is mixed information out there on the web, but it is totally possible to set up automatic monthly recurring ACH payments (i.e. bank drafts) from your customers in QuickBooks Online. I’m not sure why QuickBooks makes this feature so difficult to find, but it really is possible to do and not difficult to set up or manage.
Who Can Benefit from Automatic Recurring Payments
If you charge the same amount every month to your customer, over a period of time, this is a perfect solution to make things easier for everyone. This works great if you need to collect payment for:
- Music lessons, or any other sort of lessons
- Preschool or other tuition payments
- Therapy sessions of any sort
- Landscaping or housekeeping services
- Bookkeeping or monthly professional services
- Monthly membership with a yoga or fitness studio
- Subscriptions, for software as a service, or anything else!
Why Set Up Automatic Payments
First, you will look more professional to your customer. You are actually providing them with more value by making it easier for them to pay you.
Two, you will save yourself time and admin costs, compared to collecting payments in a more manual way.
Also--you will get paid on time every time! No overdue accounts receivable, no more chasing invoices. Wahoo! Your cash flow will thank you.
First, Get your Customer’s Signature
You MUST get authorization from your customers before charging them automatically. Here is an ACH Authorization Form that you can customize with your own logo and business name. When you are signing your client up for services, simply include this form with any other registration forms. You can make it optional, but I would suggest you make it mandatory. Use this script:
“In order to serve our customers better, we have set up a secure system for collecting payments automatically. We offer automatic recurring ACH payments directly from your bank account at no cost to you. The amount will come out on the first of each month.”
Then, Set It Up in QuickBooks
The first thing to do is to create a new Sales Receipt. (If you don’t know the difference between a Sales Receipt and an Invoice, read this.) To create the Sales Receipt, in your QuickBooks file, go to the Gear Icon and then click on Sales Receipt.
Set up the fields for Customer name, email, product/services, etc. For Payment Method, choose. QuickBooks Payments-Bank (it’s near the bottom of the list!). Check the box that says you have authorization.
Click on the button to add banking info (and again click on the box that you have authorization).
Now, go down to the bottom of the screen and click “Make Recurring.”
This will take you to a screen where you can set up the schedule for the payment. By choosing “Scheduled” rather than “Reminder,” QuickBooks will create the transaction for you automatically. I suggest setting it to create 0 days in advance and to automatically send emails.
Side note: to change the message that goes out with your Sales Receipt, click on the Gear Icon > Company Settings > Sales > Messages.
On this screen, make sure you check the box (again) that you have authorization and would like to process this transactions. This means that when QuickBooks create the Sales Receipt, it will actually push through the ACH payment. If you don’t check this, you’ll end up with a Sales Receipt in QuickBooks, but no money. 🙁
Note: when you have set up this recurring sales receipt, you have not set up an actual transaction--just scheduled one for the future! If you need to run a transaction now, I would do that Sales Receipt first, process payment, and then save and set up the next one as a Recurring Transaction.
In the future, if you need to find your Recurring Transactions to make edits to them or cancel them, you will find them under the Gear Icon > Recurring Transactions.
Now, just walk away, and let the system do its thing!
When QuickBooks processes transactions in this way, you would expect a big flashy confirmation message of some sort to come on the screen. There isn’t any such thing. It’s kind of a let down, but believe me, the transaction went through and you should get a confirmation in your email. Two other places you can check in QuickBooks to make sure your money is on the way:
The first is Sales (left hand menu) > Deposits.
The second is to go to the Gear Icon > Company Settings > Payments > Manage Account. This brings you to your actual QuickBooks Merchant account where you can run reports, make changes, etc.
Recurring Credit Card vs Recurring ACH?
You can also set up recurring credit card payments in a similar way. However, if you can get your clients on recurring ACH, I suggest that for two reasons. One, there is no fee for recurring ACH, but credit cards will run you about 3%. Two, you don’t have to worry about chargebacks. If there is a dispute about payment, the client will have to come to you directly to resolve it rather than simply having the credit company issue a chargeback.
How long will it take to get my money?
This is unfortunate, but it takes about a week for QuickBooks to deposit the money in your account. Kind of a bummer, but I’m willing to deal with that because I like everything else about this system.
It runs on its own, it's customer friendly, and will give you one less thing to worry about as you work on growing your business.
So there you have it, that's how you crate automatic payments in QuickBoos Online. Your challenge now is to take a look at your client list and write out a list of those that you would like to move on to automatic payments and get the process going. Take a moment and think about how you and your company (and your clients!) will benefit from automatic payments and if you hit any problems, feel free to contact me or comment below!