Auto-renewal

What is Auto-renewal?

Auto-renewal (also known as autorenewal or automatic renewal) is a billing model in which a customer’s subscription to a service (like a software subscription) is automatically renewed at the end of an agreed upon period of time. In general, the agreed upon duration for auto-renewal of contracted subscriptions range from weekly, to monthly, or yearly.

Auto-renewal billing models rely on the agreement of a customer to allow a service provider to store their credit card and billing information, and then automatically bill the customer to auto-renew their service subscription once the duration of their current subscription has ended. Auto-renewals allow customers to effortlessly continue their subscription services without service interruption. The auto-renewal terms are typically agreed upon when the customer agrees to auto-renew their subscription.

Are auto-renewal contracts legal?

Auto-renewed contracts are perfectly legal when both the customer and the service provider have agreed upon the terms of the subscription price, frequency of billing, and duration of service. Typically, the service provider will provide a legally binding auto-renewal contract for the customer to sign/e-sign/certify in writing or legally binding digital formats.

Can customers dispute auto-renewal charges?

In short, yes. It is possible to for customers to dispute auto-renewal charges. This is especially true if the customer has proof from their bank or credit card company showing that they were billed outside of the bounds of an agreed-upon subscription contract; i.e., if they were double-charged for a monthly service subscription fee and can prove it with bank or credit card statements, or if they can prove with proper documentation that they never agreed to an auto-renewal subscription in the first place.

If customers do not have proper documentation proving they were charged outside the bounds of a service agreement, they can also file a dispute to auto-renewal charges; however, the chances of the dispute ending in their favor are reduced.

Related solutions

Sage Intacct subscription billing software supports customers in SaaS businesses, enabling you to easily bill auto-renewing subscriptions, report, and forecast billing and revenue.

Whether your business needs greater automation in subscription-payment processing and billing, automated revenue recognition, or a seamless data flow between Salesforce and your financials, Sage Intacct subscription billing software can automate complex revenue recognition models for improved business outcomes.

Related resources

 

Accounting and Financials Glossary >