Managing Direct Debits for Businesses

One of the challenges businesses face has always been cash flow. Most small business owners don’t have huge cash reserves. In order to invest in new materials or pay salaries, they need receivables to turn into cash – sooner, rather than later. Of course, business owners help themselves when they make it easier for customers to pay for their goods or services. That’s how direct debits can benefit both customers and business owners.

Direct debits are transactions straight from the customer’s banking account to yours. They don’t have to write a check or call in their credit card number. Increasingly, people want to shop online, even for groceries, shoes and stamps, and pay instantly with direct debit.  They also want to be free from worrying about their auto loans, mortgage payments, childcare bills and utilities, which makes setting up recurring direct debits incredibly appealing.

What’s even better than keeping your customers happy as they pay for your goods and services? The reduction in administrative expenses and increase in repeat business when customers can pay quickly and easily, and you don’t have to deal with late or missed payments!

Here are some tips for successful use of direct debits with your small business:

• Consider the value of your money. There are small fees typically associated with direct debits, but they’re minimal, especially when considering you’ll save on trips to the bank, on follow-up of missing payments, and on the lost use of your money while you waited for it to arrive.

• Keep it simple. There are multiple ways to incorporate direct debit into your business, from creating a custom shopping cart as part of your web design – including the necessary security measures for your customers’ information and coordinating with all the possible banks involved – to using a direct debit service such as London & Zurich which takes care of all these aspects for you.  What will work best depends on your business model, but keep it as simple – and therefore low-cost – as possible.

• Stay Safe. Direct debits made through a service like London & Zurich are guaranteed, so you don’t have to worry about anything. Customers should also feel comfortable, as the rates of fraud with direct debit are incredibly low and there are many protections in place for consumers as well as sellers.

• Clearly describe the product or service being provided. Clarity will reduce the chance of any possible dispute with the customer and pave the way for quick resolution if there is.

• Keep records of sales and shipments in the case of any dispute with a customer. While it doesn’t happen often, you want to be prepared. Direct debit services will minimize any hassle in ironing out an issue with a customer, but make your life easier with a bit of forethought.

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In short, direct debits make life easier for customers, who can auto-pay bills and purchase products readily. Direct debits make life easier for small business owners, who can reduce costs, increase the speed at which receivables come in, and increase good will and repeat business through ease of payment.  It’s a win-win. And that’s the best kind of business.