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Why don't more businesses use Direct Debit?

September 28, 2020

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Market insight by Luisa Grey, Director, Eazipay Ltd

Since the first Direct Debit was presented in 1970, this form of payment has become ever more popular. 2019 was a record year when more than 4.5 billion Direct Debit transactions were made with a total value in excess of £1.3 trillion.

Despite these spectacular figures, however, lots of businesses still don't use Direct Debit as a method of collecting payments from their customers. Luisa Grey, a Director at leading Direct Debit and automated payment processing company, Eazipay Ltd, has some theories as to why this might be.

At the risk of inducing a fact overload, here are a few more.

In 2012, Direct Debit payments overtook cash payments for the first time. Eight out of 10 of the UK population have at least one Direct Debit. Seventy nine per cent of people feel positively about Direct Debits - a figure which is at an all-time high. And 63% of people prefer to pay most of their bills by Direct Debit.

These statistics paint a very clear picture: the UK population is very comfortable understanding and using Direct Debits. They trust them and they want to use them more. Some businesses, however, don't seem to be getting the message and are still relying on cheques, credit cards and cash and I have a number of theories as to why this might be.

There's a perception that Direct Debit is a 'big company' product. Try and think back to your first Direct Debit and who it was set up with. I'm guessing it was probably one of the big utility companies, or maybe BT. Because of that, if you're not a PLC, there's a school of thought that Direct Debit isn't for you.

In fact, the vast majority of our customers are SMEs, and they’re all very different. Some collect Direct Debits on a monthly basis, some quarterly and some once a year. And they are all for varying amounts from just a few pounds to hundreds and thousands of pounds. Despite their differences, however, they all have one thing in common. They’ve all seen the benefits of Direct Debit.

Companies think it is difficult to start. Not true. Setting up a Direct Debit payment system is incredibly simple and straightforward and adding new clients or payments can be done in minutes. The best processing companies out there will walk you through it every step of the way and shouldn’t confuse you with unnecessary jargon.

Businesses don't see the benefits. For all SMEs – now more than ever -, control of their cash flow is paramount and a huge part of that is getting payments in on time.

Late and missed payments continue to be major issues for businesses. According to figures from Pay.UK, which runs the Bacs Direct Debit payment system, the UK SME late payment debt has risen to a staggering £23.4 billion, up £10.4 billion on the £13 billion owed in 2018. On top of that, the number of SMEs experiencing overdue payments has hit 54 per cent, which is the highest level since 2015.

Getting the money in, however, can be easier said than done. Cheques are forever 'in the post', the accounts clerk is perpetually 'on holiday', and the person who needs to sign off the invoice is always 'out of the office.'

With Direct Debit, all those problems disappear in an instant. All that's required is one signature from the customer to set up the process and the money comes into your bank on the same day every month. And if for any reason the money isn't paid, the processing company will flag it up straight away, so you know there's a problem and can deal with it straight away.

The number one reason companies come to us to set up Direct Debits is to improve their cash flow and once they join, they also see that it improves customer retention rates.

Companies think it's expensive. I’m really not sure where this perception comes from, except that in theory using any third party to collect money will carry a cost. Look at the figures, however, and it compares more favourably than the cost of processing cheques or credit card fees.

Additionally, Direct Debit enables businesses to save many hours of laborious credit control. Companies can put their employees' time to much better use, or possibly even reduce staff costs.

Luisa Grey is a director of Eazipay Ltd, one of the UK’s largest and fastest growing automated payment processing companies. Eazipay provides regular Direct Debit collection and processing services to thousands of SMEs and corporate organisations in a wide range of market sectors throughout the UK, Europe and beyond.

For more information visit www.eazipay.co.uk

See what people are saying and how we are being rated in Google reviews:

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James Simpson
SkinViva Ltd
Wonderful company. They offer a very efficient service with a quick turnaround time between Direct Debits being processed and the funds being transferred to your business. They provide good reporting that has helped our business gain a better understanding of our own clients. We've been with Eazipay for several years and all throughout that time we have received great customer service that has a very personal feel to it. It can often feel like you're their only customer!

★★★★★

Michelle
John Cashin Tuition
We have been using Eazipay for our private tuition business for approximately seven years and we couldn't be more impressed. Deciding to use Eazipay has been one of the best decisions we have made. It is so much easier for me now that I do not have to chase customers for payment, it's all done for us - like clockwork. The staff are so helpful, courteous, friendly and super efficient. A very professional service indeed. For me Eazipay are worth their weight in gold!

★★★★★

Mark Ward
Midland Tech
Midland Tech have been using Eazipay for nearly four years and the service has been excellent. It's easy to use, payments are received promptly, and customer service is very good. Emails are answered quickly, nothing is too much trouble, and everyone you deal with is very knowledgeable and friendly I would recommend Eazipay to anyone.

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Oliver Thompson
CCCit
We have been using Eazipay to take direct debit payments from our clients since 2008. As a long standing customer our business could just not run without the assurance that we are going to get paid on time. Eazipay has allowed us to grow our business without the hassles involved in collected numerous monthly payments. We really appreciate all the hard work and expertise that the team at Eazipay bring to our business. Thank you from everyone at CCCit

★★★★★

Andrew Straton
Yorkshire Dales Sailing Club
Eazipay have been collecting Direct Debits on behalf of the Yorkshire Dales Sailing Club since 2009 and we have never looked back! It has made our administration, run entirely by volunteers, so much easier and saved us large amounts of cash by not having to post reminders to members every year. Thank you EAZIPAY, you do a great job and I would (and have) recommend you highly to anyone thinking of using a Direct Debit system in the future.

★★★★★

Emma Statham
We have been using the services that Eazipay Ltd offer for some years now and cannot recommend them highly enough. in a nutshell, they offer an incredibly professional, personal , and faultless service allowing us to collect direct debit payments from some of our customers, hassle free. Natalie Terris is our account manager, and she is helpful, friendly and knowledgable. All our queries are dealt with simply and swiftly. All the Eazipay processes we use are simple to use. We wouldn't go anywhere else- Thanks Eazipay! x

★★★★★

121 IT Services Ltd
We started working with Eazipay in September 2013 and since that time they have made both our clients and 121 IT's life so much simpler. The staff are great, friendly and very good at what they do. Would totally recommend them, thank you.

★★★★★

Mark Wyatt
Telecom Network Services
Telecom Network Services has been a customer of Eazipay for 14 years, since I started the business. The staff at Eazipay are outstanding, always efficient and process payments accurately and on time everytime! I recommend Eazipay Ltd, they are a great company to do business with.

★★★★★

Steven Bourne
We have been a client of Eazipay for over two years now and the service is excellent. There is always someone available on the end of the telephone to deal with any queries and it is a very professional set up. The way in which the system operates is very straightforward and we save hours of time and hassle compared with using the old method of standing orders. I would thoroughly recommend Eazipay to any business which wants to make collecting money easy!

★★★★★

Emma Martineau
Phones 4 Business started collecting payments by Direct Debit in 2007. We chose Eazipay and have never looked back. I daren't calculate how much time I have saved in using Eazipay and staying with them is a no brainer! Why change when I have such a good supplier? It is service that counts; Natalie Terriss and the whole team are always very friendly, efficient and reliable. I have no hesitation in recommending them.

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