Definition
Autopay is an arrangement in which a client authorizes a business to charge their card or debit their bank account automatically each time an invoice is due. It is common for subscriptions, retainers, and recurring services because invoices are paid on time without the client having to take action each cycle.
Also called: Automatic payments, Auto-pay, Card on file, Direct debit
Autopay in practice
Get clear written authorization covering the amount or how it is calculated, the frequency, and how to cancel. Send each invoice or a receipt before or when the charge is made so the client can see what was billed.
Frequently Asked Questions
Does autopay reduce late payments?
Yes, significantly for recurring invoices. Failed charges still happen when cards expire or accounts lack funds, so watch for declines and ask clients to update their details promptly.
Can a client cancel autopay?
Yes. Clients can usually withdraw authorization at any time, and card and bank rules often let them dispute charges they did not approve. Explain how to cancel in your authorization form and confirm cancellations in writing.
Related terms
- Recurring invoice A recurring invoice is an invoice that is generated automatically on a fixed schedule, such as monthly or annually, with the same client, line items, and terms each time.
- Retainer A retainer is a recurring fee a client pays to reserve a professional's availability or to prepay for a set amount of work each period.
- ACH transfer An ACH transfer is an electronic bank-to-bank payment in the United States sent through the Automated Clearing House network.
- Billing cycle A billing cycle is the regular interval at which a business issues invoices for ongoing services, such as weekly, monthly, or quarterly.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.