Direct debits are often avoided by small and medium-sized businesses because they think it is too expensive and / or difficult to set up. While this may be true in the past, things have changed.
Nowadays, it is quite easy to set up a direct debit payment solution regardless of the size of your business or annual income. Also, the option is safe and brings lots of benefits for your business and your customers.
So if you still want to know about direct debit, here are some benefits you will notice as soon as you switch:
1. You can let customers split large payments into installments
Large invoices can put a serious financial strain on your customers ’budgets, causing some to avoid doing business with you. On the other hand, some customers may wait to raise more money to be able to buy your product / service.
None of these situations are good for your business and both reduce sales and create dissatisfied customers. To avoid this horrible situation, you can use direct debit to allow them to pay in installments. That way, customers get what they want and your business makes money at regular intervals.
However, be sure to do a little research on direct debit providers as not all of them can support split payments. Also, your location may affect the available features. In Australia, for example, you have access to a variety of direct debit solutions so you can make your own choices.
2. More flexibility for your business
Do you want to run your business from your garage? Nowadays, there is nothing to stop you!
Also, if you want to add direct debit to your payment options, you will be able to maintain a constant flow of cash flow. This will give you peace of mind and free up your time to work on your choices instead of chasing late paying customers.
After all, when your customers pay late, it also affects your own payments, which can affect your reputation as a business. When the ball is in your court (including direct debit), things are much easier.
3. More cost-effective
The fee per payment with direct debit is less than using card payment. With the card, you pay about 3% to 5% per transaction, but most direct debit payers will be around 1%. Also, the failure rate is much lower because the transaction is not mediated by a card.
It gives you the opportunity to save fees and use the money to attract more customers by offering discounts for people who use direct debit payments. As a result, you will have better cash flow, which translates into more opportunities, happier employees (who pay on time), and a better reputation for your business.
4. Improved security
The rate of cyber attacks on e-commerce stores and businesses around the world has skyrocketed in the last few years. Attackers search for all kinds of personal information, but credit card data and bank details are some of the most valuable.
Also, a data leak or a successful phishing / ransomware attack is likely to damage your business reputation in the long run. Fortunately, you can avoid all these dramas with direct debit.
Since the customer does not have to provide details of their card for each payment, and the transfer takes place between banks (no intermediaries), the level of security is higher.
A direct debit solution is a great option for any business size because it provides peace of mind for all parties involved. As a business you have reliable cash flow and the customer does not have to worry about accidentally avoiding payments.
Also, the system is much more secure, more affordable and flexible than card payments.