What is a Direct Debit? A Direct Debit is a simple and convenient way for customers to pay their...
Is your business ready to make the switch to Direct Debit collection?
The short and simple answer to this question is: yes. Any business that collects customer payments — no matter the amount or collection regularity — is suitable for Direct Debit collection.
Many SMEs use Direct Debit management software to streamline payment collection processes, meaning fewer error risks and less payment chasing.
There are many ways to experience the benefits of Direct Debit collection, no matter the size of your business.
What benefits can your customers enjoy from Direct Debit?
Not just businesses can enjoy the benefits of Direct Debit collection. It's a well-known payment method that customers trust, and for a good reason.
Once a customer has signed up for a Direct Debit, the rest is taken care of — payments are taken automatically on an agreed date every month. These payments can reoccur at any frequency, and the payment date can also be changed if required, as long as it's agreed with the customer.
All customers need to do is fill out a Direct Debit instruction form once. After this, they can wave goodbye to sending payments manually. It's easier for both the business and the customer.
Direct Debit payments are taken on an agreed date at an agreed frequency, meaning the customer knows when money will leave their account. Having this information will allow them to budget more effectively.
Your business can also plan its finances better, as payments will reach your accounts when you expect them to.
No more late payments
Direct Debit collections are automated, reducing the risk of late payments exponentially. This means no awkward conversations or fines for your customers.
Plus, your company can save time by not having to chase payments, meaning more opportunities to focus on growing the business.
Thanks to the Direct Debit guarantee, your customers can get a full refund if any payment is taken in error. This added protection means extra trust in your business and your services.
Easy to set up
Direct Debit is a quick and straightforward process that's easy for customers to set up, saving them time in the long run.
Automation means there's no more sending payments manually. All the customer needs to do is complete a Direct Debit Instruction for the organisation they wish to set up a collection with.
Once the Direct Debit is set up, there's still the opportunity to change the payment amount without any inconvenience to your business or your customers. Your company can inform the customer what the next payment amount will be and then simply collect it on an agreed date. This means, even in the event of a payment amount change, there are still no delays regarding payments.
How Direct Debit compares to other payment methods
There are other ways to collect customer payments. However, these methods offer different advantages than Direct Debit collection.
Bank transfers are a manual payment method that customers may forget or grow tired of doing — especially if they're used to the ease of Direct Debit payments for other services. This can result in late payments, fees and extra hassle for business employees.
Direct Debit protects customers from overdraft fees by allowing payment scheduling and the Direct Debit Guarantee reassures any doubts about security.
Standing orders are regular payments set up by the customer, whereas Direct Debits can only be set up by the organisation receiving the payment.
However, unlike standing orders, a new Direct Debit doesn't have to be set up if the payment date or amount payable needs to change.
No matter if your payment amount or collection dates are variable, Direct Debit is flexible enough to meet the needs of your business and your customers. Payment intervals and payment amounts can be easily changed at no inconvenience to your customers.
Cash and cheques
Many people use cash or cheques to make payments for security reasons. However, customers utilising Direct Debit have complete control over their payments and are protected by the Direct Debit Guarantee.
By switching from paying cash or cheques, your customers will enjoy a more streamlined way to pay, removing any requirement to visit your business physically to make payments.
Is your business ready to make the switch?
Direct Debit was once available only to the largest companies. However, thanks to third-party providers and solutions, businesses of all sizes can now access the benefits.
Businesses with a Service User Number (SUN)
A Bacs Approved Bureau service may interest you if your business already has a Service User Number (SUN) but would rather outsource the hassle and expense of processing payment instructions.
By partnering with a Bacs Bureau, your business will no longer need to worry about processing payments.
These services allow larger businesses to manage payments more efficiently — an individual and the correct software can do the job. Generating these huge time savings means your focus can be invested in other business areas.
Businesses without a SUN
It's difficult for many businesses to meet the requirements for a SUN. To qualify for a SUN, your business will likely need to have been established over three years with an annual turnover of more than £1 million.
Any communication with Bacs requires a SUN — with one, businesses can set up Direct Debit payments. Despite this, there are ways for companies without a SUN to reap the benefits of Direct Debit collection.
Direct Debit Facilities Management
Direct Debit Facilities Management (DDFM) services allow businesses without a SUN to make Direct Debit collections by using a SUN provided by a third party.
Also, the payment administration and monitoring processes are handled by an outsourced team, which means your company can benefit from the support of a professionally qualified payment processing team.
DDFM is perfect for start-ups and small to medium-sized enterprises (SMEs), allowing access to all the benefits of Direct Debit, including your business name on customer statements and reduced payment administration for you and your customers.
Bacs approved software
Bacs software solutions — such as Direct Debit management software (DDMS) — make it easy for businesses to edit, cancel or create new Direct Debits for their customers.
Capable DDMS solutions offer easy-to-read reports for more-informed decision-making and eliminate human error by implementing automation into the payment process.
Software solutions must undergo rigorous testing and approval processes to be classed as Bacs approved. This type of software is perfect for small businesses looking to adopt Direct Debit collection.
I'm interested in Direct Debit collection for my business. What next?
No matter the size or requirements of your business, we have a solution that can help. We offer a range of solutions for businesses of all sizes, including Direct Debit Facilities Management, Bacs approved software and Bacs Approved Bureau services.
It's never been easier to implement Direct Debit collection for your company. If you're looking to stop chasing payments and start chasing growth, chat with an Interbacs expert.
We can walk you through the solutions that best fit your business and answer any questions. Book a chat with an Interbacs expert below.