One of the most difficult things for new businesses is payment collection. It is a vital part of a business’s cash flow, but it is a time-consuming process that can have serious consequences if it is not done effectively. Direct debit for small business is an excellent way of ensuring regular payment collection and also saves valuable time that can be spent on focusing on the everyday running of the business. But, for those who are not familiar with the process, direct debit can seem very complicated.
Therefore, it is essential to understand it properly in order to take full advantage of it.
What is Direct Debit?
It is basically an automated payment method, which can be the most efficient way for businesses to collect payments from their customers. Direct debit allows companies to directly obtain payments from their customers’ bank accounts. It is not the same as standing order because direct debit grants control to the business whereas the former gives it to the customer. As long as the customer has completed the direct debit mandate, the business can easily get their payments on their due date.
Benefits of Direct Debit
There are some key benefits of direct debit for small business when it comes to collecting payments. Firstly, it allows businesses to control their cash flows in a better way because they can have a fixed schedule of payments planned ahead of time. Furthermore, direct debit is also helpful in reducing the amount of paperwork that needs to be done and can save a lot of costs for a business. In addition, the danger of your payments being late is reduced and you can enjoy peace of mind that your payments will arrive at a prescheduled time and date. Generally, it takes three days for the payments to clear, which is extremely convenient.