What is a direct debit and what are the advantages to your business?
Since its introduction in 1964, direct debits have fast become one of the most popular methods of collecting and paying bills. 73% of household payments are paid by direct debit and majority of people have multiple direct debits set up on their accounts.
A direct debit is an instruction from a customer to their bank authorising an organisation to collect an agreed amount from their account. Once set up and authorised, the direct debit system allows a business to draw payments directly from the bank account of their customer.
But what are the benefits of using direct debits to you as a business?
Bulk direct debit collections are by-far the cheapest way to collect funds, especially compared to recurring card payments.
As all payments through direct debit are electronically collected by your bank, once set up, you can focus on running your business without manual processes.
Using a customers bank rather than card details means that direct debits rarely fail as these do not usually change. Coupled with evading manual process errors, direct debits provide your business with the piece of mind that you will receive your payment on time and in full. In the event that individual collections do fail, as a result of insufficient funds, closed accounts, cancelled mandate etc, you get notified by Bacs as to when and why this has happened.
Putting you in control
Direct debits put you in control of the regular payments enabling you to set the frequency and amounts. With the flexibility to change collection dates and amounts quickly and easily, it means companies can adapt to changing circumstances. Unlike standing orders, you have full control over what is collected, and when, subject to compliance with Scheme Rules.
Premium security and protection
Direct debits are controlled by built in safeguards and there are a number of security processes and verifications which have to be adhered to. As a result, it is the most secure way to pay in the UK.
Time is on your side
Everyone loves the gift of time and with no more wasted manually chasing payments or sending invoices, you can focus on running your business.
In our next blog, we explore how direct debit management systems can transform your direct debit processes.
If you are interested to see how direct debits can benefit your business, request a complimentary review of your processes with one of our experts.
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