Direct Debit for small business in a nutshell:
You know how sometimes it takes a long time for businesses to get paid by their customers?
Well, Direct Debit can help with that. Direct Debit is like when you set up automatic payments for your utility bills, Netflix, or Amazon Prime every month. It's a way for businesses to get paid automatically on a specific date without needing customers to authorise each payment. It's great for businesses that send bills regularly, offer payment plans, or have subscriptions.
Before, it was hard for small businesses to use Direct Debit, but now there are companies like GoCardless that make it easy. We handle all the paperwork and notifications, so you don't have to worry about it. We even work with lots of different software to make it even easier for businesses.
Direct Debit has a lot of benefits for both businesses and customers. It makes sure businesses get paid on time, helps with cash flow, saves time, and makes things more convenient for everyone. GoCardless even lets businesses collect payments in different countries and currencies.
Direct Debit can help small businesses get paid faster and easier. It’s quick and easy to set up with GoCardless, and businesses can get paid on time and not have to do manual paperwork.
Waiting on customer payments can be one of the biggest pain points for any small business. Three in five UK businesses are owed money from late payments, fuelling stress and cash flow problems. Small businesses in south-east and east of England, and Northern Ireland are more likely to experience late payments.
However, it’s not all doom and gloom. You can make one simple change to eliminate the stresses of getting paid late: switch your payment collection method to Direct Debit.
Direct Debit for small business
Like a personal Direct Debit for monthly bills, a small business Direct Debit works the same way, ensuring that payment will be made on a set date. Direct Debit removes the need for customers to view, approve, and action any invoices you send, so you don’t need to wait around for clients to authorise payment upon receipt of a new bill – the payment is made automatically.
Despite the obvious benefits of offering Direct Debit as a payment method, it has traditionally been difficult for small businesses to access and offer to customers.
Is Direct Debit right for your business?
Direct Debit can be a great fit for a business - but is it a great fit for YOUR business?
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Why was it so difficult for so long? There are numerous requirements for setting up Direct Debit via banks and bureaus that most small businesses will find arduous. Once approved, setting up Direct Debit as a payment option with these type of providers can be a complicated task.
However, there are now several Direct Debit providers offering services for small businesses that make set up and management quick and easy.
GoCardless offers small businesses a quick and easy way to set up Direct Debit and offer it to customers in minutes. There are no setup or management fees and no mandatory commitment periods. Try GoCardless today.
Direct Debit or standing order?
Standing orders are regular payments set up by the customer. This puts the customer in control of their recurring payments. In contrast, Direct Debit is set up by businesses with the permission of the customer (who is protected by the Direct Debit guarantee). Unlike a standing order, Direct Debit guarantees that you get paid, although it’s worth noting that Direct Debit indemnity means customers maintain the right to cancel any payment and receive a refund.
You can learn more about the differences between standing orders and Direct Debit here.
When to use Direct Debit collection for small businesses
Direct Debit is used for regular and recurring payments, making it an excellent choice for many businesses.
Businesses that need to be invoiced regularly
The best Direct Debit for small business makes life easier for both the payer and the payee. If you have clients who need to be billed regularly, Direct Debit not only ensures you get paid on time but also saves your customer from doing any additional admin, which is always appreciated.
Businesses offering payment in instalments
If you offer goods or products that customers can purchase in instalments, it’s in your interest to ensure they don’t fall behind on their payments. As a result, Direct Debit is the perfect payment option.
Subscription-based businesses
If you’re providing an ongoing subscription service, Direct Debit is a highly suitable payment method to prevent customer churn.
In certain locations and industries, it's important to understand customer payment preferences, GoCardless conducted a study here to identify trends.