Switching to Direct Debit to collect client payments can revolutionise your business.
From boosting your cash flow and improving customer service levels to dramatically reducing your administrative workload, the benefits of Direct Debit are unrivalled.
Sceptical? Let feedback from professional services firms who have a Direct Debit scheme with FastPay convince you:
“We don’t know how we ever survived without it.”
“Without doubt, the single best thing I’ve ever done for my business.”
“We just couldn’t or wouldn’t want to live without their very simple and highly effective collection system.”
“I can’t believe how much it transformed my working day … it just takes away all the stress.”
Indeed, making the decision to change to Direct Debit could boost your turnover by an impressive 300%.
A bold claim backed up by telecoms specialist Sean Reynolds whose company enjoyed exactly that tangible result by switching to a Direct Debit payment method with FastPay.
“It’s proved to be the best solution we could have hoped for and we couldn’t operate our business without it.”
But how can something as simple as asking clients to complete a Direct Debit Instruction have such an impact?
Why Switch to Direct Debit?
Professional services firms who choose to collect regular customer payments by Direct Debit enjoy unparalleled flexibility.
From IT providers to telecoms suppliers, they all know that the invoices they issue will be paid at the expected time. The right amount will appear in their account on the right day.
No waiting around for cheques to arrive in the post, no wondering why a Standing Order hasn’t been processed and no chasing clients to take credit card details over the phone.
Instead, by outsourcing the collection process to a professional bureau, they are reassured that everything is being taken care of and can focus on other aspects of their business. No hassle, no headaches, just convenience and peace of mind.
Positive cash flow
For Steve Holloway, director at Median Accountancy & Taxation Services, Direct Debit provided positive cash flow for the first time in his company’s nine-year history.
Previously, he’d always been owed between £5-10,000 at any one time but had been put off asking customers to set up Standing Orders because of their inflexibility.
Instead he did some research and discovered that a third party could set up a Direct Debit scheme for him: his partnership with FastPay began.
Steve said: “Within three months I had about 90% of my clients signed up and was a collecting a similar percentage of my fees each month. Most clients saw the new facility as a benefit as it enabled them to budget better for the future.
“It’s reduced my administration significantly. Previously, to increase fees for each client every year was a huge task but now I just notify them of the increase in the monthly Direct Debit and let FastPay do the rest.
“It’s all worked faultlessly since day one and the cost really is insignificant compared to the huge benefits.”
Reduced Admin Burden
Jennifer Spencer, director at virtual reception service Real Time Reception, has also put unpredictable cash flow and time-consuming admin chores behind her.
She said: “Prior to using FastPay, our customers paid us when they remembered or wanted to. We spent an inordinate amount of time sending reminders and watching our bank account.
Some would pay immediately but it soon became clear that there were some late payers and some never payers. It was impossible to plan or budget as we really never knew what monies were available to us."
“We knew we needed Direct Debit and we approached our bank, but we were too new and too small - yet we needed the stability. We found FastPay through Google and we have never looked back.
Our existing clients were happy to change to Direct Debit, some of them asked why we hadn’t done it before, and all our new customers are automatically signed up to Direct Debit."
“I rarely need to chase payments now. I know what date monies will enter our account and I can budget effectively. I can spend my time and energies more effectively too, keeping customers and staff happy. I can’t imagine how we would manage any other way.”
Switching to Direct Debit is a straightforward solution
Some professional services firms think the only way to access Direct Debit is via their bank: an expensive method of harnessing its power that is only available to more established businesses with high turnover.
When UK Telecoms Solutions met with their bank manager to explore the possibility, they were told about the high risks involved and that, as a new business, they wouldn’t qualify.
Director Julie Jerrum said: “As a telecoms provider it’s essential to have a Direct Debit facility to invoice multiple customers varying sums on a monthly basis. Without it, chasing payment would involve costly resources and negatively impact on our cash flow.
“When I set up the business’ bank account, I wrongly assumed the bank would provide a Direct Debit facility for us.
“Instead, I contacted FastPay on the recommendation of one of our suppliers. I was expecting a painful, complicated process, but was very pleased to be proved wrong.
“The set up was fast and the process was very straightforward. They provided me with simple-to-follow instructions that covered everything I needed to know. I send over one spreadsheet each month with the information they require and the rest happens like clockwork.
“In the two years I’ve used FastPay they’ve never made a mistake and all charges have been exactly as they promised. Their attention to detail and professionalism has helped us concentrate on our core business and build a successful company.”
Switching to Direct Debit can make a major difference to your client relationships: conversations can positively focus on your service rather than awkwardly focus on an overdue invoice.
Andrew Long, accounts manager at HR consultants Time Associates, says their client relationships have been transformed: “Every month our aged debtors sheet looked disastrous. All wonderful clients, we enjoyed working with them, they enjoyed working with us, but when it came to payment it was seriously threatening to rock the boat.
“The reasons for late payment were fantastic, we’ve heard them all. But as we were working with sole traders, mostly it was down to forgetfulness or a holiday looming on their part.
“As they were such small organisations, we also felt their behaviour was hindering their cash flow as much as ours and therefore we had to find an alternative route for payments.
“After one year, we have the process down to a fine art. Very little communication is required with FastPay: I send a file, they confirm the details, they collect the money, they pay us and naturally they send us a small invoice. This invoice is considerably less than the amount of time we were spending on chasing money.
“The key advantage however is that is enables us to deal with our clients about the work we do rather than discussing money and this massively improves the business relationship.”
Making the change to Direct Debit will significantly streamline your payment processing system, acting like an automated credit control department. All your clients need to do is complete a Direct Debit Instruction to come on board
Its flexibility and ease-of-use appealed to SME IT Solutions. Rachel Piper, PA to the managing director, said: “Before we introduced a Direct Debit scheme to our recurring service customers, they were paying by Standing Order, BACS, cheque or online bank transfer.
“Very often we would have to chase payment for small invoices which was both costly and time-consuming. We wanted to automate our recurring income, choose our payment dates and generally make the procedure easier for both our customers and our business. FastPay has helped us to move towards this."
“We found FastPay easy to set up and had plenty of guidance from their staff. FastPay has proved to be the solution we hoped for and we would definitely recommend it to other businesses.”
Standing Order vs Direct Debit
Many professional services firms who have made the change to Direct Debit with FastPay had previously encountered Standing Order stumbling blocks.
IT support company Amazing Support was one of them. Director Jamie Claret said: “Historically, we had relied on Standing Orders. These were a pain as when the amount changed (or the VAT rate changed) we had to get clients to submit new forms to their own banks, which of course never happened.
“We’d been trying for many years to set up a Direct Debit service through our bank so that we were in control. But we were told that we had to be a very large organisation before they would even look at us."
“We were up and running with FastPay very quickly and the system is now really smooth. Our cash flow has improved immensely and we have to spend far less time on credit control.”
Alan Clark, managing director at copiersandprinters.co.uk, agrees and said: “Because our invoices can be monthly or quarterly and of varying amounts each time, plus the need for annual increases, it was clear that the restrictions on other methods such as Standing Orders were a non-starter.
“Direct Debit allows us the freedom almost to use FastPay as our credit control department: they collect money in our name on our behalf. Without them, we’d have to chase many invoices which would mean we couldn’t get on with building future sales which is the only way our business will grow.”
Making the change to Direct Debit can only have a positive effect on your business. As a straightforward solution to collect money quickly and efficiently, its numerous benefits will put you and your business back in control.