Making Payments With Direct Debit
Posted: 13/Aug/2019

Direct Debit is recognised as the easiest way to make, or collect, regular payments. Here are four reasons businesses and organisations can benefit from direct debit, according to www.smartdebit.co.uk.

Direct debit improves your cash flow
With Direct Debit, you know how much your customers will pay you and when that money will be in your account – not just next month, but every month. That makes forecasting easier, supports medium term planning and allows you to optimise your outgoings.

Direct debit reduces the cost and complexity of payment handling

Direct debit takes a lot of the manual effort out of getting paid. It means you don’t have to produce, and chase, all those individual invoices. It reduces the number of payments you need to collect by phone, cheque or other means. And it can simplify accounts, reconciliation.

Your customers expect to pay by direct debit

Customers are used to direct debit. They trust it, as a means of keeping up with their bills – with minimal hassle.

 Direct debit can help decrease churn

Once customers have signed up to pay by direct debit, they keep paying by direct debit – the agreed amount, on the agreed date, unless either you or they specifically request that the payment changes. That encourages customers to stay with you and use the service or product they are paying for.

According to cleardirectdebit.co.uk, a direct debit is an instruction from a customer to their bank authorising an organisation to collect varying amounts from their account. This can be used to ensure regular, safe and efficient payments of anything from household bills to charitable donations.
 
As this definition suggests, one of the benefits of direct debits for both collecting organisations and their customers is the fact that once the customer gives authorisation, the collecting organisation can manage the process.  The collecting organisation needs to inform the customer in advance about the direct debit payment amount and timing, but once done, they have the ability to collect varying amounts and on varying collection dates as required.  This is far quicker and much easier than waiting for the customer to send payments by cheque or cash – or to remember to go online and make a payment.   The organisation retains control and can plan when funds arrive in their account and the customer has the peace of mind of knowing that he or she won’t miss a payment.

The flexibility in amount and collection date (compared to a fixed amount and date with a standing order) allows direct debits to be used for payment of a range of goods and services.

Many organisations offer incentives for individuals to pay by direct debit and an impressive amount of savings can be made by doing so.  Plus, the transaction is the only payment method covered by a no-quibble guarantee that ensures a full and immediate refund should a payment be taken in error.  Not quite the case with other payment methods such as online transfers and credit cards.

For customers, it is the direct debit guarantee and the convenience that is most appreciated.  For collecting organisations, the control is attractive but so is the cost-saving, with direct debit often a significantly cheaper way to collect money (vs cheque or cash).  Whatever the most persuasive benefit however, it is clear that direct debit is here to stay and it’s in fact a growing payment option.

According to www.directdebit.co.uk, Whether using Direct Debit to pay your household bills or business costs, the benefits are the same and worth the few minutes it takes to set up a Direct Debit.

It spreads the costs

Paying your regular bills or business costs by direct debit allows you to spread costs over a period that you agree with the organisation you are paying.

It is guaranteed

Direct debit payments come with a guarantee, so you are automatically protected by three important safeguards:

An immediate money back guarantee from your bank in the event of an error in the payment of your direct debit,

advance notice if the date or amount changes and

the right to cancel at any time.

It can save you money

Businesses find direct debit just as convenient and efficient as consumers. For this reason, many offer discounts in return for you paying by direct debit.

Discounts vary, but overall direct debit savings can add up to a substantial amount each year. It pays to check when you get a bill to see how much you can save.

  It gives you peace of mind

Direct debit is one of the safest and most reassuring ways of paying your bills:

Payments are made automatically, so bills are never forgotten, lost in the post or delayed by postal problems and there is no risk of late payment charges

Organisations using the direct debit scheme have to pass a careful vetting process, and are closely monitored by the banking industry

The direct debit guarantee protects you and your money. It is offered by all banks and building societies that take part in the scheme.

It saves you time

Modern life is hectic – but direct debit helps. It takes away much of the hassle associated with paying bills, and puts an end to queuing at the bank and filling out cheques. You will find it easier to stay on top of your bills, and you will know exactly how much money is going out each month. For businesses paying by direct debit also means reduced workload and paperwork for your finance department.

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