Direct Debits have been a mainstay in payment collection for businesses and other organisations for over fifty years, and 9 out of 10 adults in Britain currently have at least one Direct Debit to pay a bill. Indeed, the average individual has more than one, and according to UK Finance, in 2020 there were a massive 4.5bn payments made using Direct Debit, equalling £1,178bn of money changing hands.
These huge numbers point to a trusted method of payment, and one which any business that accepts fixed recurring payments should be considering. There are many benefits, not just to a business, but also to customers, when incorporating Direct Debit into the relationship. Here are some of those benefits:
Depending on the card type (Debit or Credit Card, for example), total transaction fees for accepting card payments can be as high as 5%. Direct Debit transaction fees are typically around 1%. For a business which accepts lots of recurring card payments, the savings can be huge.
Around 5% of recurring card payments fail due to cancelled or expired cards, causing a big headache for businesses chasing payment. Bank details, however, are rarely changed, which is a good thing for businesses who accept recurring payments. It is worth noting that a failed Direct Debit can adversely affect a customer’s credit score, so it is in their best interests to ensure it is paid when agreed.
Once the customer has signed and agreed the Direct Debit mandate and the process has been set up, you can easily leave the automation to do the work for you and your customer. This process saves countless hours of administration work chasing and accepting card or BACS payments; hours which can then be ploughed back into more pressing work such as gaining more customers.
It is a fact that the more Direct Debits a customer has, the more they are demonstrating that they are in complete control of their finances, raising their credit scores with minimal effort, which in turn increases the likelihood of them getting credit if and when they need to apply for it, such as buying a house or a car. This is a huge benefit for many people.
Nobody likes to ask for money and nobody likes to be chased for it, so Direct Debit can easily help to maintain an amicable relationship between a business and their customer. Simply set up the initial mandate and let the relationship grow.
Knowing when regular payments are expected can have a major positive impact on a business, not least because they can then set up their own bills and payments to ensure there are no tight spots during the month. Knowing when your business is likely to have a surplus of cash will also enable you to grow it at the opportune time.
With benefits like these, Direct Debit can be a great contributing asset to the ongoing success and growth of your business, and Gala Technology can help you to begin accepting Direct Debits quickly and easily, and with fees as low as £9.99 per month (not including transaction fees), it doesn’t have to be a major shake-up to your company outgoings. Our team of experts have many years of experience in helping businesses to save money when accepting payments of any kind, so get in touch on 01709 911661, drop us an email, or book your free consultation via the calndar below and we’ll be in touch.