Autopay | B2B Finance Glossary

What Is Autopay?

Autopay, also known as an automated debit payment, is an automated process that allows bills to be paid automatically every time there is a billing cycle. Autopay is usually processed a full 2 days before the payment due date so that the payment goes through on the actual day it is due. Autopay payments can be made using any bank or credit account, including checking, savings, money market, or credit cards.

What Is the Difference Between Autopay and Scheduled Payments?

Autopay allows for automatic payments that recur continuously. Payments paid through autopay are set up and occur on the same date of every billing cycle. Scheduled payments, on the other hand, are individual payments scheduled for a specific date; setting up the scheduled payment occurs before the payment is due. Scheduled payments are manually set up on the date chosen by the payer (typically before the payment is due), while autopay payments are automated and recur repeatedly.

What Is the Difference Between Autopay and Bill Pay?

Bill pay is an offering made available by banks. It is very similar to autopay, but it has a critical difference. When using autopay, a payer must give a company permission to access his or her bank account or payment method to automatically charge the payer at the time of every billing cycle. With bill pay, the payer gives his or her bank permission to pay a company monthly.

These methods give the payer the same result, but each operates through a different process.

How Does Autopay Work?

To use autopay, a payer must provide his or her specific payment information, such as his or her routing and account numbers. This makes it possible for the payee to automatically charge the payer what is due for the payment during every billing cycle. Remember, autopay payments will usually process two days before the scheduled due date, so they go through on the actual date.

There are three different autopay options available to payers who want to make a payment this way, but note that these options primarily apply to autopay when it comes to credit card payments:

• Paying the minimum. Paying the minimum balance due via autopay makes it possible to pay your bills on time and eschew late fees. However, this setup also has a downside: paying only the minimum amount due at every billing cycle will still incur monthly interest.
• Paying a fixed amount. If payers choose to pay a fixed amount during every billing cycle, they will pay off a larger debt than if they were just to pay the minimum amount due. This option allows payers to select a fixed amount that works well for their budget and set up recurring payments via autopay.
• Paying the full balance. Paying the full balance due through autopay can help payers pay off debts such as credit cards whenever each billing cycle occurs. However, payers should ensure enough funds to cover these payments; otherwise, they will incur overdraft fees.

How Can A Payer Set Up Autopay?

Autopay can be set up in three steps:

1. Sign up for autopay to pay recurring bills. Set up or log into the account associated with the company you’re enrolling in autopay with. This usually requires you to enter standard verification information such as your name, address, and contact information.
2. Provide all necessary payment information. If you choose to make direct deposit payments, you must provide your bank’s routing and account number associated with the account you want the funds withdrawn. Providing this information allows you to give permission to the company accepting your autopay payments that you consent to have them make automatic withdrawals from your account every billing cycle.
3. Set up the payment amount via autopay. Certain payees will allow you to select the period you’d like the payment debited from your account. The standard billing cycle is set on a monthly basis, so it’s possible for some payers to choose the first, last, or fifteenth day of the month for their autopay payments to debit. Some companies will allow you to customize your autopay payment schedule even further so that you can make sure you’re making your autopay payments after you get paid.

Autopay For B2B SaaS Offerings

Today, many B2B SaaS offerings on the market provide products and services to companies on a recurring basis. These products are designed to optimize business functionalities better and have become essential to the way business is run in the digital age.

These offerings can automate HR, marketing, and accounting processes regularly, requiring their clients to pay for them on a subscription. Autopay is available for many of these services, which means companies can easily set up recurring payments to pay for the SaaS offerings they need continuously.