As one of the UK’s army of chartered accountants, you know the importance of healthy cash flow within a business.
And making sure your own clients pay on time for their monthly PAYE services and end of year accounts is a battle you fight hard to win.
Some pay promptly, some need frequent reminders. Some can be counted on to meet your payment terms, others cite their own cashflow challenges for not paying your bigger bill at year-end.
If you’re frustrated by the unreliability of these regular payments and the uncertainty they cause your own bottom line, Direct Debit can lead you and your fellow chartered accountants to victory.
It’s a flexible, reliable and trusted method of collecting from your clients.
And by enlisting the help of a Direct Debit bureau, you can outsource the management of your clients’ regular payments to make the process even easier.
But as a chartered certified accountant, you then have a unique dilemma. Do you conveniently combine your fee for completing your clients’ end-of-year accounts with their regular monthly Direct Debit payment?
Or, because their finances might be tight at this time of year, do you issue a traditional invoice and risk jeopardising your own cashflow?
Satisfying your customer base, keeping them happy while ensuring your own cash keeps flowing, often places a certified accountant in a difficult position.
Happy customers equal loyal customers who stay with you and spread the word about your firm, fuelling growth. When a business is trying to find a chartered accountant, personal recommendation goes a long way and reputation is all.
So, you’re faced with a contest between customer loyalty and business efficiency. Client retention and lead generation, or cashflow and financial survival? Hobson’s choice – not an ideal business challenge.
But it doesn’t have to be this way. Direct Debit’s flexibility is just one of its business and customer benefits. A flexibility that will allow you to bill efficiently, boost customer loyalty and build your business without compromising.
How? let us explain.
Embracing the Flexibility of Direct Debit
Your customers have got used to receiving separate invoices from you. They may think Direct Debit is unsuitable for their monthly PAYE service payments as there is also a year-end bill to pay. They may not be aware that it’s possible to spread the payments and combine the two.
To show them otherwise means embracing Direct Debit’s unrivalled flexibility.
For chartered accountants, this can involve offering flexible terms for the large annual invoice for completing year-end accounts and a tax return. Direct Debit’s payment scheduling tool will allow you to vary the date to take payment and fit in with your customers’ accounts cycle.
Because you have to give advance notice of any changes to a Direct Debit, this higher bill won’t come as a nasty surprise.
Direct Debit and the business efficiencies it provides result in a cost saving to you which you can then pass on to your customer as an incentive to use it.
For example, if they combine their monthly Direct Debit with their year-end bill, they get a 5% discount.
You can also offer to spread the cost over a 12-month period, incorporating it into their monthly Direct Debit for your PAYE services.
If your customer flags that they’ll struggle to pay it in full right away, you could even provide a payment holiday, if your cashflow allows.
The key is operating in a way that is as flexible as the Direct Debit itself, to enable a payment system that offers predictable cashflow and satisfied customers who have choice and control over how they pay you.
If any of their contacts are on a quest to find a chartered accountant the great service that Direct Debit facilitates will make them more likely to recommend you.
Now we explore the other ways Direct Debit can help you as a certified accountant.
Billing for Business Efficiency
As a chartered certified accountant subject to strict industry standards, the need to manage the billing process smoothly and securely is paramount to ensuring your business does not fall foul of the regulators.
Encouraging clients to pay for monthly, quarterly or annual service charges by Direct Debit not only maximises cashflow, but it minimises staff time spent on chasing late payments and reconciling accounts.
Here are the top features of using Direct Debit management that will contribute to your accounting revolution and continuous cashflow:
1. Automation to Streamline Your Accounts Process
Automation may seem like ceding control of your finances to another body. But it is, in fact, the secret of a smooth, efficient payment system.
Once a Direct Debit mandate has been set up with a customer, payments will arrive on the agreed date. No more waiting for cheques or Standing Orders to clear. No more valuable staff time spent on the phone noting down credit card details.
With a Direct Debit bureau processing payments on your behalf, the day-to-day admin hassle is removed, leaving you free to focus on delivering a quality service to your customers.
Automated reconciliation gifts time to your team.
Bacs reports are automatically downloaded to give you a complete overview of payments. When you use these alongside your in-house system there is no more double-keying of data or chasing late payments, vastly reducing the reconciliation burden on your admin staff.
Added to this, Bacs reports supply your business with a complete audit trail and help provide a real-time financial picture. Client databases are automatically adjusted as payments are made, reducing the chances of human error, as well as helping establish a predictable cashflow and making financial forecasts more precise.
Automation does not mean inflexibility though and Direct Debit payment scheduling is the real jewel in the administrative crown. It enables you to easily vary payment amounts, dates and frequencies, with customer permission. This allows Direct Debit to be used for fluctuating monthly amounts and one-off larger bills.
This enhances your customers’ experience at a stage where many businesses’ service quality falls down. The flexibility you can offer your customers at billing time will set you apart from your competitors, and put you at the top of the list when potential customers attempt to find a chartered accountant who understands their business needs.
2. Regular Reporting to Tackle Problems Quickly
Complementing the automated reconciliation function is the pro-active reporting feature built into the Direct Debit management software. Gone is manual identification of missed payments, and in its place are regular, comprehensive reports which will reassure you that invoices are being paid as they should.
A notification will also be raised if a payment has not been made or if an instruction has been unexpectedly cancelled. This leaves your accounts team free to deal with any potential payment problems quickly and efficiently, armed with a full client account history at the click of a mouse.
3. Keeping Costs Simple
Remember that paying for your new supplier will improve your bottom line rather than taking money away from it. Your accounts team will be spending far fewer hours chasing up late payments and resolving issues because Direct Debit and your chosen bureau will be taking care of everything.
Direct Debits can be processed by a bureau for as little as 3p per transaction. At FastPay, these will be invoiced as a total amount rather than on a transaction by transaction basis. Another reconciliation load lifted.
Every bureau has a different fee structure. Some companies will have higher set-up fees, others will have higher collection charges, some will have various hidden costs, others will have a monthly fee.
FastPay guarantees a truly transparent pricing structure with detailed cost breakdowns listed on their website. There are no hidden costs, no monthly or annual fees and you can take advantage of a flexible pay as you go system.
With free email and phone advice, collection volume discounts and straightforward invoicing, they can also guide you through any bespoke cost for your business.
4. Software Integration
The accounting software your team relies on each day can easily be integrated with Direct Debit: automatic reconciliation and effortless streamlining at your fingertips.
You can simply connect your online payment gateway to your online accounting system and your bureau’s. Direct Debit solutions unlock the full potential of your business by allowing you to integrate as much or as little as you like via APIs and platforms such as Xero and Sage.
Rich in functionality, embracing this technology opens a whole world of digital possibilities.
All transactions flow seamlessly within the system, increasing payment efficiency, saving admin time and giving you a real-time cash overview.
Your accounts team can say farewell to double-keying information into two different programmes, the high risk of data entry errors and repeated exporting of spreadsheets.
Combining the logic of Direct Debit with the power of these integrations will become an invaluable part of your business’ growth.
You can also be assured that the software used by Bacs-approved bureaux has been rigorously-tested for integrity and confidentiality.
It has bank-grade security, even on the move. You can also set strict access permissions internally and limit the functions any specific user can access.
Dazzling Customer Benefits
Direct Debit doesn’t just provide efficiencies for you as an accountant, it adds real value to your clients too.
There’s a smorgasbord of benefits that should whet the appetite of cash-conscious business customers and persuade them that using Direct Debit to pay your fees is the smart choice.
And once they find a chartered accountant who offers them the unrivalled business benefits of Direct Debit to manage their payments they are likely to stay with you.
Offering Direct Debit as an option will give your customers the confidence that they can remain in full control of their finances.
Its flexibility means that they can choose their payment date and change it at any time. This means that they can efficiently manage their own cashflow and prioritise your payment within their budgeting.
These benefits can’t be found in alternative payment choices such as Standing Orders and are a big selling point when encouraging your clients to make the move.
Whether it’s an individual or business paying your invoices, Direct Debit allows them to spread costs over any period that they agree with you. For any business using a chartered certified accountant for monthly services such as payroll, or quarterly auditing services, splitting the cost equally over 12 months can mean stability and certainty when it comes to their financial planning.
2. Hassle-free Set-up
You can reassure your clients that setting up a Direct Debit for regular monthly payments couldn’t be easier. All they need to do is complete a Direct Debit Instruction, either online, over the phone or via a paper mandate.
Complete this one-off process of authorisation to take payments and they’re done.
3. Say Goodbye to Late Payments
Instead, say hello to timely payments and money in the bank.
Once they’ve filled in their mandate, your customers can sit back and relax: their payment is being taken care of by you and your bureau.
No need to remember payment dates or the amount, they’ll know that their bills are being paid automatically. They’ll never receive late payment penalties from you and won’t flip into their overdraft because you’ve cashed their cheque on an inconvenient day.
Using Direct Debit means they’ll avoid any interruption to receiving your service and be spared any awkwardness when you remind them to pay up.
Not only is Direct Debit efficient for your business, but it means a reduced workload and paperwork for your clients’ accounts department too. No more manually responding to each invoice, they’ll be freed up to focus on other aspects of the business.
The correct payment amount will be taken on the agreed date with no fuss and no unnecessary admin burden.
5. Safe, Secure and Guaranteed
With bank-level security, Direct Debit is an extremely safe way to pay. A combination of encryption and firewalls ensures that customer information is protected. In addition, all payments are covered by the Direct Debit Guarantee.
Direct Debit doesn’t just reassure your customers that payments have been made successfully, it offers unbeatable levels of security. As the most secure form of payment available, the chances of fraud are highly unlikely.
The Direct Debit Guarantee provides the following safeguards:
- you’re completely covered by your bank should there be an error in the payment of your Direct Debit
- you’re given advance notice if the date or the amount changes
- you have the right to cancel at any time
What’s the Alternative?
One of Direct Debit's most powerful features is its flexibility.
Used to make accounting easier for you and your clients, it’s the key to both happy cashflow and happy customers.
In comparison, cash, card payments and cheques all put pressure on the accounts teams in both businesses and are time-consuming, subject to human error and, potentially, charges.
In the automated payment arena the other main player is the Standing Order. While this achieves the same result as a Direct Debit payment- money transferred automatically from your customer’s bank to you on an agreed date - the similarities end there.
A Standing Order is an instruction from a customer to their bank to pay a fixed amount to you on a regular basis. Any changes are in the hands of the customer, including alterations to the amount, timing of payment and frequency.
With Direct Debit your customer is authorising you to collect money from their account. You can change the amount, date and frequency of collections, provided you’ve informed them in advance. So it can easily be altered to miss a month, or cancelled and reinstated if the service you provide changes.
And if you’re using a Direct Debit partner bureau, the admin hassle for you is negligible - and for your client it’s non-existent.
The alternative is for them to use a Standing Order. Here, the onus is on them to set it up and it can’t be easily altered to allow for fluctuating amounts. Its inflexibility means that for a change to be made to any of the payment parameters set at the outset, a new Standing Order has to be set up by your customer through their bank.
There is also an increased risk of payment issues, potentially causing conflict, and definitely causing time to be spent resolving them.
Couple that with the prospect that they may incur late payment penalties if they don’t keep a close eye on their bank account and the benefits of Direct Debit over a Standing Order for your customers are overwhelming.
Have you been persuaded that harnessing the power of Direct Debit to manage your payments has ample benefits for both you as an accountant and your customers?
It’s clear that there is an answer to ensuring both business efficiency and customer loyalty thrive, and that there’s no need to sacrifice growth in the future in favour of financial stability in the now.