I am currently doing automatic payments but the way that things are setup I have to go to my card processor each time a customer makes a change (expecailly resellers) and modify the amount charged.

I have found a great software http://www.voxel.net/projects/cbms/ for webhosts. It will allow me to send an invoice to each user each month and I can create a html page that the customer can make payment via paypal or with my credit card company.
The only draw back is that when a payment is submitted I would have to post it to the customers account.

For hosting companies that have had this problem which do you all think is a better way to go?

I am running cobalt servers so the option of getting something like cpanel is out.

cbms will be available with automatic credit card processing very soon. it will also have a complete interface overhaul and will be integrated with our support tool.

fyi.

Have you checked out the Smart Hosting Tools control panel (http://smarthostingtools.com). I am not sure if it is avalible for cobalt servers but I think they might be able to get something for you. They have an automatic billing add on for only $100 more. Check it out.