Collecting invoices by Direct Debit – what does that say about your company?
Paying bills by Direct Debit is now so commonplace and accepted that we barely give it a second thought. It has become the default payment method for nine out of 10 UK adults and has been part of our lives for 50 years.
So, apart from being a tried, tested, and trusted way of collecting payments, how else can Direct Debit benefit your company?
Well, Direct Debit is recognised as one of the most trusted brands in the UK. We have come to rely on it to collect our invoices (if you are a business) or to pay regular bills (if you use it as a consumer). The simple fact is that Direct Debit is trusted – and that is important.
If your business collects the money it is owed by Direct Debit, then that feeling of trust and rock- solid reliability ripples out to you as well. Your business is automatically associated with all the positive attributes of trust, reliability, and probity. Your reputation is enhanced.
Also, being paid by Direct Debit allows your company to ’punch above its weight’. You see, most SMEs think that collecting money they are owed is only for large companies. They tend not to associate accepting Direct Debit payments with smaller companies.
The fact is that all the benefits of Direct Debit are available to companies of all sizes – the majority just don’t know it.
So, if you are one of the savvy SMEs who know that being paid by Direct Debit is open to them, you will be perceived by your customers and competitors as being larger than you perhaps are. And that is no bad thing.
Here is another intangible benefit. By insisting that your customers pay on time and in full by Direct Debit, you are sending a clear unequivocal message that you are fully committed to protecting your cash-flow. You demonstrate that you take your busines finances seriously and that you expect be paid for the work your company has done as the invoice falls due.
If all that weren’t enough, here is another significant advantage to companies who collect Direct Debit payments. Every month you have a clear snapshot of the financial health of your customers, all of them.
Occasionally, a company may undertake a credit check against a customer, particularly a new one. They rarely credit check long-standing customers. The difficulty with credit checks is that they give a snapshot of how a particular company performed at a particular time. A credit check doesn’t give you much re-assurance moving forwards.
However, being paid by Direct Debit acts as a mini financial barometer every month. Every time you are paid in full on the due date, you know that customer is up to date and has funds available.
If the Direct Debit fails (because your customer doesn’t have the funds available), you will know within a few days and you can take whatever action is most appropriate. How long would you have to wait to discover you may not be paid using traditional invoicing methods?
The primary focus of taking Direct Debit payments is to provide a fool proof way of paying and being paid. However, it also brings with it a host of unintended benefits that pay real dividends to your company and its reputation.