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Many businesses choose to automate payment collection through Direct Debit: but what exactly is the benefit?
5 reasons to start taking payments by Direct Debit
20 February 2019
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4 minute read
According to research, almost half of small business invoices are paid late in Australia. This has a huge impact on cash flow, and means business owners are having to spend extra time, money and resource chasing payments.
For these reasons, many small businesses are looking to automate payments with Direct Debit.
In this guide, we look at the ways Direct Debit can help your business.
1. It gets you paid on time
With Direct Debit set up, the whole process of payment collection is taken care of automatically so your clients won’t miss paying you again.
Collecting your business payments by Direct Debit, means you can set up payment once with a regular customer, and then automatically pull payments from their bank account each time a payment is due – allowing you to reliably ensure you get paid on time.
2. It saves you time on admin
From cashing cheques, to chasing clients for new card details, to checking your statement for that standing order payment, to manually reconciling your payments – processing payments can be an admin heavy task.
With Direct Debit, once a client is set up, all of their future payments are taken automatically each time they are due. And if the payments are set up to come from your clients current account, they’re much more reliable too - so you don’t have to worry about updating customer payment details.
Trayde Mackenzie, Team Leader, at Diligence Bookkeeping says:
“I used to spend 2-3 hours a week chasing clients. That’s already halved, with only 20% of our client base paying by GoCardless for Xero so far; when we move the majority across, I anticipate time savings of up to 3 hours a week.”
3. It’s flexible
Direct Debit can be used for payments of both fixed and variable amounts. This makes it more flexible than bank transfers or card payments because you can easily accommodate any changes in fees or additional costs for one-off or ad-hoc projects – without your customer having to action anything.
You can also change the date and frequency at which payments are taken.
4. It’s safe for you and your customers
The BECS Direct Debit scheme offers certain customer protections. These protections allow customers to cancel a Direct Debit request and receive a refund for any payments take fraudulently or in error.
Direct Debit also allows your customers to set up the Direct Debit authority, and then trust that their payments will be taken on time, each time they are due. They will be notified of any future payments, without the hassle of having to re-enter bank details or action the payment.
5. It can integrate with your billing platform
Direct Debit payments can integrate in to the platforms you already use to manage your business. GoCardless, for example, seamlessly integrates with platforms like Xero – this means no more manual reconciliation of payments.
BizCore 360 has been offering Direct Debit through GoCardless for Xero, Owner, Tamara-Lee Beveridge says:
“GoCardless integrates perfectly with Xero. I never need to spend time on reconciliation, as the payments, including the fees are processed and reconciled automatically in Xero. This was a huge plus."
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