A Guide to Direct Debit Collection for Small Businesses

Most businesses aspire to keep on top of their financial situation with positive cash flows. A positive cash flow is where an organisation has adequate financial resources to cover all outgoings. 

In order to secure a positive cash flow, businesses need a reliable payment system that customers find easy to use. Small businesses often suffer late payment issues with invoice payment delays and long payment terms. 

These have been recognised as causing serious cash flow issues that are major barriers to small business growth. Recent data shows that 48% of UK businesses find it difficult to negotiate payment terms which suit them and their customers.

As a result, many small and medium businesses (SMEs) integrate Direct Debit payments systems into their business so customers have a simple way to pay and compliance regulations are met. 

Contents

• How small businesses benefit from setting up Direct Debits.
• What are your small business options?
• Find your ideal Direct Debit system with Interbacs.

How small businesses benefit from setting up Direct Debits

When it comes to arranging a clear way to collect payments, it actually doesn’t matter if you are a large or small organisation. All businesses need a free flowing source of revenue. However, small businesses may not have the significant cash reserves that a larger organisation has to support leaner periods. 

In fact, UK businesses have had to navigate uncertain economic conditions, with around 30-35% of SMEs viewing their economic environment as a major obstacle to growth. With a controlled Direct Debit payment system in place, businesses can predict revenue levels and met growth targets. 

There are a variety of benefits for small businesses when they use a Direct Debit payment collection:

• Predictability

As Direct Debits are set up with a payment collection date, businesses know when this money will be received. This helps to pay overheads on time and meet financial expectations. 

• Flexibility

Your business may provide products that require different payment options, such as subscription services. Using a Direct Debit payment service can help you offer products at different price points that customers can pay for through a simple set up process with their bank. 

• Cost effective

It’s likely that small businesses are looking for a method of cutting transaction fees to make their payment system work better for all stakeholders. In comparison to credit card charges, Direct Debits are much more economical as they typically have lower processing fees. 

What are your small business options?

Being on top of the detail is an essential part of managing a small business. Knowing the different Direct Debit options available helps you make an informed decision that best suits you and your customers. 

There are two main types of Direct Debit payment systems:

• Bacs Approved Bureau

If your business already has its own SUN (Service User Number), you can access a Bacs Approved Bureau to help you manage DIrect Debit payments. A Bacs Approved Bureau, like Interbacs, supervises payments so you avoid the administrative burden involved. 

A Bacs Approved Bureau is an organisation that has bank approval to submit payment instructions using Bacs software on behalf of its customers. All Direct Debit bureau providers are vetted by Bacs and need to be authorised by a sponsoring bank. 

• Direct Debit Facilities Management

A Direct Debit Facilities Management service is ideal for small businesses as they don’t need a SUN to operate and can use the management service’s SUN instead. This service enables businesses to collect Direct Debit payments without the sponsorship of a bank. 

In a similar vein to an approved bureau, Direct Debit Facilities Management, such as Interbacs, should also handle all of the administration and monitoring processes for you. Partnering with a Direct Debit Facilities Management service gives you the security of an experienced Bacs team.

Find your ideal Direct Debit system with Interbacs.

As Interbacs is both a Bacs Approved Bureau and Bacs Affiliate, we are experienced in Bacs rules and their application for Direct Debit payment systems. As one of the very few UK companies to achieve Bacs Affiliate status, we also have a say in the future of electronic payment processing in the UK. 

This gives us the opportunity to influence regulatory changes within the industry to support your business and customers. With this level of expertise, we give you the best available current advice regarding your Direct Debit payments and ensure you have the most appropriate system in place. 

With a proven track record in successful Direct Debit management for all types and sizes of businesses and with a compelling industry reputation, Interbacs are well positioned to support all of your business account needs.

Ready to make the switch? Contact Interbacs today for a personalised consultation and discover how we can optimise your direct debit processes.