Why you should consider collecting payments via Direct Debit
By Wendy Tate, Jan 3 2017 11:00AM
If you invoice your customers or clients on a regular basis collecting payments via Direct Debit will put the running of the cash-collection process firmly back under your control. You also give your business clients a simple, straightforward way to pay you – Direct Debit is fast to set up, provides a guarantee on their funds and only needs to be set up once for the whole life of your business relationship. Here we list some of the advantages of switching to Direct Debits for collection of payments.
Increased convenience with flexible payments
Once a standing order amount is set up with the bank, only the client can change the amount paid – and even then a certain amount of prior warning is required, usually two working days before the order is due. Direct Debit allows customers to pay on a date and at a frequency that suits both you and your customer keeping payment options flexible.
You can change the price when required
With a Direct Debit mandate in place, you can change your pricing without the need for clients to amend their standing orders. Once the pricing change is agreed with your customer you can amend your Direct Debit amount accordingly.
Using Direct Debit removes cash-flow challenges
If clients forget to make payments as they become due this will have an adverse effect on the cash flow of your business and can also have a negative impact of customer relations.
Direct Debit has no expiry date
Unlike standing orders, which expire after a given period, Direct Debits are ongoing, reducing the hassle for your customers – and reducing the likelihood of clients not reviewing their standing orders and missing a payment.
Direct Debit is a simpler payment option for clients
Once clients are set up with a Direct Debit there’s no more admin for them to do. Their payment happens automatically on the agreed dates, reducing their workload. And if there’s additional work to bill for, or if prices change, they don’t have to worry about making amendments as everything is taken care of for them.
It offers protected payments for clients
Your customers have the peace of mind of being protected by the Direct Debit Guarantee, giving your clients consumer rights and protecting them from payment issues.
Integration with Cloud Software
Some modern Direct Debit systems integrate with Cloud Software, reducing administration time.
If you want some more information on this, or assistance in setting up a Direct Debit solution for your Xero software please don’t hesitate to give us a call.