Getting cash from your customers part 5 – direct debits: what are they and what they can do for you…..
Author: Russell SmithMarch 29, 2012
My mother hates direct debits.
I believe she pays for all her bills by cheque – phone, gas, electric. Despite the powers that be at the utility companies with all their marketing brain power coming up with various enticements to get my mother to switch to direct debits, they have not managed it, they have not even come close.
My mother believes that to make a switch to direct debits means giving anonymous companies access to her bank account. She hates the idea of someone taking money out without her doing anything.
My mother is right, this is what direct debits. Fortunately for you, my mother is in the minority.
Direct debits can indeed give you the authority to take money from your customer’s bank accounts at a pre-determined date but crucially, with the expressed permission of the customer (which my mother won’t give but the vast majority of your customers will).
From your point of the view as the business owner, this makes collecting cash very simple. It almost completely eradicates the need for credit control in the traditional sense.
But it’s really good for the customer too. They don’t have to raise payment every time you present an invoice, they just have to agree to the direct debit and then they need take no further action. Personally, I really dislike having to go through the annoyance of paying my suppliers, them chasing me and then doing a bank transfer. It’s just another task on my to-do list which needn’t be there if I was on a direct debit.
The only real downside of a direct debit is the cost. Standing orders are free but they are very inflexible and it is up to the customer’s efficiency whether or not they are completed correctly. But the cost of direct debits is a fraction of what it used to be.
If you’d like to know more about direct debits feel free to email me at firstname.lastname@example.org.
Well, that’s it for the getting cash from your customers series of blogs. Tomorrow….who knows, I’ll surprise you!