Although we do NOT force annual payments, there are definitely several benefits for the hosting company when the client does pay in advance.

I know that most shared/reseller plans are priced with the assumption that the client will stay for a period of time. It can take months to return a profit on a single customer, so if they pay ahead of time, then it guarantees that they are not a loss from the start.

Also, as others have said, there is much less hassle for both the host and the client in regards to billing for an annual plan. Its much easier to collect once every 12 months rather than every 30 days.

But, as a client you must be sure that you are not paying annually to a 12 year old who is running a hosting company out of his basement, who will close up shop 3 weeks later