How To Start Collecting Direct Debit Payments

Encouraging customers to pay for your business’s goods or services by Direct Debit can create significant advantages for your organisation, including consistent finances and clear payment processes for customers. 

The popularity of Direct Debit as a simple but reliable payment method has grown over recent years, with average monthly transaction amounts on the rise. In fact, the total monthly Direct Debit average transaction amount increased by 2% in August 2024 in comparison to August 2023, reflecting a steady and consistent growth.

Not only does this demonstrate consumer confidence in using the Direct Debit system, but it also shows that Direct Debits are a well-known and established transaction process, making them ideal for businesses to rely on when it comes to collecting payments. 

In fact, recent data indicates that 62% of customers say Direct Debit is their preferred method of payment. Businesses that offer services their customers want and need, such as a Direct Debit solution, are more likely to retain and grow their customer base. 

Knowing how to start collecting Direct Debit payments could transform your business’s finances and create stronger customer relationships. 

Contents

• What are the business benefits of Direct Debits?
• How to start collecting Direct Debit payments.
• Seamless Direct Debit management with Interbacs.
  
  

What are the business benefits of Direct Debits?

Only you will know best which payment method suits your specific needs as an organisation. However, there are multiple benefits to implementing Direct Debit payment options for both your business and customers.

• Cost and time efficiencies

The demands of daily administrative tasks related to payment collection, particularly if it’s not automated, can cost your business time and money. With a Direct Debit service, you’ll be able to hand over the management of your payment processes and enable your employees to focus on business priorities. 

• Improved financial performance

Late payments have become a substantial issue for many businesses over the last few years. Inconsistency can lead to uncertainty over your financial position, which in turn can affect your ability to achieve targets. 

Installing Direct Debit as a prominent payment method enables you to create stability as customers are signed up to pay an agreed amount on a certain date, ensuring you have clarity over revenue collection. 

• Customer convenience

Offering customers a simple and hassle-free way to pay you for your services is the golden key to capturing their loyalty. Customers don’t want to have to repeatedly arrange payments and may lose interest in your products if the payment process is not easy for them. 

Setting up a Direct Debit is a one-step process for customers, making it one of the most convenient ways to collect their payments. 

• Flexible options

It’s true to say that there is flexibility on both sides: for your business and for your customer. Once you have the customer’s Direct Debit mandate in place, you have the ability to amend payment dates or amounts, as long as customers are given enough prior notice.

Customers also have the power to cancel a Direct Debit if they decide they no longer need a good or service. They contact their bank and ask for the payment to be cancelled, which will then be passed on to you or your Direct Debit management service, so that you have the information ahead of time. 

• Enhanced security

Encryption is a feature of Direct Debit transactions, helping to secure customer data and minimising the risk of a data breach. As Direct Debits require customers to authorise payments and provide accurate confidential information, it’s less likely that fraud will occur.

How to start collecting Direct Debit payments

Learning how to start collecting Direct Debit payments can be a quick and simple process, particularly if you partner with a Direct Debit management service, such as Interbacs. 

Follow these quick guidelines to discover how to collect Direct Debits from customers: 

Obtain your Service User Number (SUN)

A SUN or Service User Number can be acquired from a sponsoring bank. This enables you to begin taking Direct Debit payments as a business. If you’re a smaller business or want to outsource the management of your Direct Debit payments to a managing company, you can use their SUN instead. 

Complete customer Direct Debit mandate form

In order to set up a Direct Debit payment, your customer will need to complete a Direct Debit mandate form that contains their banking details and personal information required to set up the payment. 

Direct Debit instructions shared with stakeholders

Direct Debit mandate forms need to be shared with your bank and Bacs, who will start processing the transaction agreement. The customer’s bank will also be informed of the agreed amount and date of collection. 

Advance customer notice

Customers have to be given advance notice of payment amount and collection date. Once this is in place, your Direct Debit management service can begin collections on the right date and deliver the payment into your bank account. 

Seamless Direct Debit management with Interbacs

What are the benefits of Direct Debit management services? Many businesses really notice when they partner with a Direct Debit management service, like Interbacs, as the cost and time efficiencies are clear. 

Every business wants happy customers who find setting up payment plans easy and stress free. With DDMS from Interbacs, your customers feel they have one less thing to worry about. 

Alongside reduced stress and convenience, customers will also enjoy security and peace of mind as Interbacs is a BACS accredited Facilities Management provider and a proven user-friendly service. 

If it’s time for your business to streamline payment solutions, visit our solution finder to secure your ideal payment solution, alongside plenty of expert practical advice.