ACCOUntS

How Direct Debits can help your business with its cash flow

Business owners are feeling the strain from the rising cost of living and uncertain financial markets so realising cash and ensuring customers pay in a timely manner is more important now than ever before.

shaun pegler Client Director

What is a Direct Debit and why do we advise our clients to use them?

Put simply a Direct Debit is an instruction from a customer to their bank or building society which authorises the service user to collect varying amounts from their bank account on an agreed frequency.

we advise our clients to set up direct debits as it can improve business cash flow because:

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Direct Debit cuts down the risk of bad debts, since the longer you are owed, the harder debt is to collect and the more time consuming it will become.

Invoicing with a Direct Debit authority can allow you to be paid for services as you go, rather than waiting for a client to pay when they are ready.

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Direct Debit allows cash flow to be forecasted more accurately, greatly reducing the likelihood of errors and issues within the business

When compared to other payment methods, Direct Debit can cut costs because you don’t have to wait a number of days for the funds to be available in your account.

Using cloud based software, you don’t need to the spend time reconciling collections manually

Setting up a Direct Debit system is easy, you just need to ensure you have a secure system and you understand the rules around how you take payments from customers and submit them to BACS for processing.

One of the biggest advantages is that by automating the process, there’s no need to approve invoices or authorise payments, as funds automatically leave the customer’s account helping businesses speed up their cash collection. Direct Debit works well for your customers, saving them time and effort too.

We use Xero to invoice our clients automatically via email, offering card payments as well as Direct Debit, with a link to pay by card online to take care of the transaction easily and securely. Once paid this automatically updates the client account on Xero

Some of our clients pay equal Direct Debit instalments for the work agreed upfront when they come on board, whilst for others the amount taken varies as and when the work is completed throughout the year.

If you are a client and not on Direct Debit with us, give your usual contact a call to discuss setting one up or explore your options.

Contact shaun pegler for more information by emailing shaun.pegler@randall-payne.co.uk or call 01242 776000.