What is a recurring invoice?

A recurring invoice is an invoice that is repeatedly sent to the same customer at regular intervals. They are used for any recurring order or service and you can set them up to repeat anywhere from 1 time to unlimited times.

This article explains who should issue recurring invoices, the benefits and drawbacks, and how to easily set them up. 

Who should use recurring invoices?

Any business that has recurring payments from the same customer should issue recurring invoices. It is not mandatory to set up recurring invoices, but it will save you time and money creating paperwork. 

Some examples of businesses who use recurring invoices include:

  • Subscription-based services & software

  • Landlords & letting agencies

  • Utility companies

  • Marketing businesses

  • Consultants

Many businesses who have repeat clients with the same order will opt for recurring invoices to simplify their invoicing. In the UK, many of these businesses also use direct debit payments to automatically credit the customer’s bank account. This not only speeds up the invoicing process, but also the payment process.

The advantages and disadvantages of recurring invoices

Issuing recurring invoices saves you time, but it can also make it easier for the customer to pay. Setting up recurring invoices saves you from having to manually create every invoice, and will reach the customer on time to ensure a speedy payment. Some benefits of using recurring invoices include:

  • Saves you time and costs related to manually creating invoices

  • Speeds up customer payments as invoices are automatically sent on time

  • Improves your cash flow by having recurring payments come through each period

If your business has recurring services, there are not many downsides to setting up recurring invoices. The only downside would be if your invoices are vague, non-compliant, or issued late. If your invoices are issued late, then the customer may be just as relaxed about issuing the payment on time.

How to create recurring invoices

To set up recurring invoices to create and send automatically, you will require invoicing software. Most paid invoicing software will offer this feature automatically. Each software will differ in the options, but the set-up should be quite simple. You will usually need to input the following:

  • All of the mandatory invoice fields

  • The date of the first invoice

  • How often the invoices will be sent (weekly, monthly, yearly, etc.)

  • How many times the invoice will recur (or which date to stop the invoices)

  • If you want the recurring invoices to automatically create and send, or if you want to manually check the created invoice prior to issuing it to your customer

Once you have set up the options for your recurring invoice, the invoicing software will automatically create and send the invoices to your customer in accordance with the options you selected. If you selected an end date, the recurring invoice will automatically end and no further invoices will be issued.

The software will automatically apply the next invoice number in the sequence and the correct payment terms for you. You can simply sit back and let the software do the hard work. 

If your business prefers to manually create invoices, you can download our free invoice templates for Word and Excel.