How Does Automated Billing Work?

Automated billing can save business owners time with invoicing

Man behind counter at dry cleaning shop reviews bills

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Most business owners would rather spend their time selling products and fulfilling orders than managing their billing process, which is why so many businesses rely on automated billing.

Automated billing systems are software packages or apps that manage billing for you so that you can focus on building and managing your business. With these systems, you and your customers can set up automatic payments from their account to yours, which can be a great convenience for both parties.

If automated billing is new to you, keep reading. Learn more about what automated billing is, how it works, and the benefits and disadvantages that it can bring.

Key Takeaways

  • Automatic billing can save businesses (and their customers) substantial time connected to invoicing and bill paying.
  • Automated billing relies on an Automated Clearing House (ACH) network for electronic funds transfers.
  • For invoicing a small number of clients or customers, manual billing may be easier.
  • When setting up your automated billing, you can take advantage of customization features.

What Is Automated Billing?

Automated billing is a computer-based process used to handle regular invoicing as well as following up on unpaid bills (dunning) and recordkeeping. Most automated billing uses a safe network called ACH, or Automated Clearing House, for electronic funds transfers. This way, customers can transfer funds electronically from their checking or savings accounts to your account.

There is a wide range of automated billing packages available. While big, integrated accounting software packages like QuickBooks provide automated billing, you’ll find other options on the market with more niche services.

Many automated billing services focus on one particular industry. For example, a software package called Curate provides invoicing options geared specifically to the needs of the events industry.

Some app-based payment systems like PayPal also provide automated billing options.

How To Set Up Automated Billing

The first step in setting up automated billing is to determine whether you really need it. 

For example, some consultants may have only a few clients per year, so they may not save time by using automatic billing. Gym owners, however, have many regular clients who are billed monthly, so a system that automates their billing can save them a lot of time. 


If your clients' needs are constantly changing, or if you have relatively few clients, it may be more efficient to bill manually.

If automated billing is right for your business, you can follow these steps to set it up.

Determine Your Needs

Depending on your industry or business model, your business may require specialized automatic billing software. Here are just a few specialized options you may want to consider:

  • Features that are unique to your industry: You may prefer an automatic billing package that includes tools for your particular industry. There are options available that cater to florists, gyms, therapists, and even churches.
  • The ability to bill internationally: Some software can help you manage compliance for international taxes, while others are useful only within the United States.
  • The ability to describe services or products in detail: Depending on your clients and your products or services, you may want to provide detailed information about your hours worked, the services or products provided, and more in an invoice.
  • Integration with your existing accounting software: If you’re already using an accounting system that can support automated billing, an easy solution is to add on a new software module. Software packages like QuickBooks are popular in part because they provide a wide range of invoicing, accounting, and bill paying through one software system.

Set Your Budget

Often, the costs for automated billing are fairly low. For example, QuickBooks Advanced Package, with automated invoicing features, is $90 per month. But if you’re looking for a lot of specialized features, the purchase price and subscription rate may be higher. 

To help set a budget for automatic billing software, try to estimate how much time and money you’re currently spending on billing and related tasks. Factor in direct costs of paper billing (like paper, ink, and postage) and indirect costs (like paying an employee to process the data).

Once you understand your current costs, you can establish a budget for purchasing automatic billing software that can help you save money.

Choose, Install, and Set Up Your Software and Data

Explore reviews of automatic billing software and read the fine print before making your selection.

Once you’ve followed specific set-up instructions from your software provider, you’ll need to migrate your client data to your new system. If you’ve chosen software that integrates with your existing system, then this may be easy. If not, it may take some time. 


When migrating your client data, maintain your older files until your new invoicing system is reliably up and running for at least a few months.

Create a Customized Payment Portal

In many cases, your automated billing software includes the ability to set up a customized payment portal for your clients. You’ll want the portal to look like it’s part of your business, so consider adding logos, slogans, and customized customer information.

Pros and Cons of Automated Billing

    • Simplifies and speeds up the billing process
    • Manages invoicing automatically and accurately
    • Provides customers with an easy online method for regular payments
    • Setting up takes time and money
    • Must be checked regularly
    • Can be impersonal
    • Costs money per transaction

Pros Explained

  • Simplifies and speeds up the billing process. Instead of writing and sending each invoice, you can allow the system to run on its own. This saves time and money.
  • Manages invoicing automatically and accurately. Automatic billing can reduce the risks related to human errors.
  • Provides customers with an easy online method for regular payments. Automated billing portals streamline online payment for customers instead of requiring you to mail them a physical check.

Cons Explained

  • Setting up takes time and money. When you purchase automatic billing software, you’ll have to pay an upfront cost and/or a monthly subscription fee. Getting the system running with your customizations and client data can take some time.
  • Must be checked regularly. Even with automation, you want to ensure your invoices are error-free. Accounting personnel should double-check invoices and payments as well as troubleshoot problems when they occur.
  • Can be impersonal. While you can usually customize your invoices to some degree to fit your branding, you won’t be able to include personal messages in each invoice.
  • Costs money per transaction. Automated billing companies often charge merchants a small percentage of each transaction.

Frequently Asked Questions (FAQs)

What information do you need to store to do automated billing?

The information you need to store depends on your business, but essentially you need the same information for automated billing that you need for any billing method. In most cases, that includes the client’s name, address, contact information, purchase history, and payment details, as well as any other relevant billing information.

How do you set up automated billing on QuickBooks?

Setting up QuickBooks is quite simple. In a nutshell, you must set up billing client by client. You enter basic information about each client, the type of transaction, the amount being billed, and how payment will be made (direct withdrawal from a bank or with a credit card). QuickBooks provides detailed set-up instructions on its website.

How do you cancel automated billing?

The way you cancel automated billing depends on the specific software package you are using. For Quickbooks, you follow a simple online process that allows you to pause or completely stop invoicing for any given client. You can then keep or delete the invoicing template for that client.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Bureau of the Fiscal Service. "Automated Clearing House."

  2. Curate. "Frequently Asked Questions."

  3. QuickBooks. "Choose the Plan That's Right for Your Business."

  4. QuickBooks. "What Are the Fees for QuickBooks Payments?"

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