You can accept direct debits only when you receive regular payments from your customers.
There are several advantages of using direct debits for your customers as well as your business.
Why do you accept it?
Direct debits provide various advantages for both businesses and customers. 90% of UK customers pay their bills by direct debits.
Direct debits are helpful for your business because:
- It is the easiest and efficient way of collecting regular payments.
- It is the cheapest payment method.
- With easier cash flow management, you can control your payments into your account.
There is the reassurance of an iron-cast Direct Debit Money-Back Guarantee and several other securities for your clients. They can save time when it comes to making payments because the funds will be automatically deducted from their account.
How to set up direct debits?
A business needs to access the Direct Debit scheme to accept direct debits. In the UK, it is run by Bacs.
Step 1: Contact your bank
Contact your bank and tell them you want to join the Direct Debit Scheme. Your bank will verify that you meet all of the requirements, which includes your company's administrative capabilities and financial situation. You will be allowed into the Scheme if you pass the checks.
Also, ask the bank to provide information on the rules and facilities of this scheme.
Step 2: Choose a company
Figure out how to send your payment data to Bacs in the most efficient way possible. Payment can be submitted directly if you have a large number of payments to process. However, becoming an indirect submitter is the best alternative, especially for small businesses.
Choose a Bacs-approved bureau or a specialist payment service provider such as Worldpay, FastPay, AccessPay and GoCardless. To use a bureau, you need to collect a Service Use Number (SUN) from your bank.
To choose the proper payment service provider, you must examine pricing, software, simplicity of use, and customer support. You can also check for extra features like accounting software integration.
Step 3: Take direct debit mandates from your clients
Start collecting payments once you have set up your bureau or payment processing provider. You must get a Direct Debit mandate before you can take any payment from a customer via direct debit. It is also known as Direct Debit Instruction (DDI).
This is an essential component of the Direct Debit Scheme. When a customer permits to collect payments from their bank, you must give prior notice. The DDI remains valid and payments will be received until it is cancelled.
Use Bacs-approved online or paper forms to get signed DDIs from your customers.