As well as paying money out to employees and to suppliers using BACS, you can also get money in by allowing your customers to pay by direct debit. In many cases this allows companies to improve their cashflow significantly, and also reduce the costs associated with receiving monies and the subsequent banking fees and payment processing overhead.
Taking direct debits is a lot easier than you would think. There are a few things to consider but overall it is a straighforward process. Here’s what you need to know;
- You will need to sort out the facility with your bank as they will need to be happy that you have the funds to fulfill the direct debit guarantee. This is usually in the form of a bond or a set amount of money left in a bank account for security.
- In the event that this proves difficult (some bank managers are not familiar with how direct debit works) then you can usually get the details of the right department from your BACS bureau (Some bureaus will help you through the process. We do).
- Once you have the bank facility setup then you will need to start collecting bank account details from your customers, using the direct debit forms, which display the direct debit guarantee on them. You will normally then collect these details in a report which is in a format the BACS bureau can accept.
- You provide the report to the BACS bureau, and this will allow the bureau to process all the transactions. The way to think about it is that you are pulling money from the customers’ accounts. They are not sending money to you.
- Over time you will need to send updates to the bureau to keep the list up to date. Normally the frequency of these updates depends on how often your direct debits are processed, but once a month is typical. There are rules on notifying customers that direct debit amounts have changed. Your bacs bureau can help with this.
And its as easy as that. Moving customers to direct debit is probably the best way to handle the payments processing in your business. You can find out more by giving us a call on 01405 765782 or contacting us using the form.