Direct Debits from Customers
Discussion
Hi
Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
The swimming club my daughter is a member of takes direct debits. They use a firm called GoCardless to actually take the direct debit. So the club tell GoCardless what is owed GoCardless do the direct debit.
The charge is borne by the club but I think it’s a couple of per cent. Do know it saves the club hours of volunteer time.
The charge is borne by the club but I think it’s a couple of per cent. Do know it saves the club hours of volunteer time.
AndyC_123 said:
Hi
Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
I'm sure if you told the 25% paying by cheque that you now only accept BACS to reduce COVID risk, they would all start paying by BACS.Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
+1 for GoCardless
There are cost savings in terms of resource, particularly against cheque payments. You can bear the cost, or we found that by incentivising DD payments the uptake increased. Adding a small admin fee for cheque payments for example, or small discounts for paying by DD. As the poster above mentioned, COVID is a great reason to introduce these changes. Staff working from home does genuinely create challenges picking up post etc.
There are cost savings in terms of resource, particularly against cheque payments. You can bear the cost, or we found that by incentivising DD payments the uptake increased. Adding a small admin fee for cheque payments for example, or small discounts for paying by DD. As the poster above mentioned, COVID is a great reason to introduce these changes. Staff working from home does genuinely create challenges picking up post etc.
AndyC_123 said:
Hi
Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
Why don't they just pay by Standing Order?Have some customers asking if they can pay us via direct debit. What sort of % fee is the norm for this kind of service?
Our % profit is very low for some orders so I worry that we will actually lose money on some orders (we use them for getting the foot in the door etc). We don't have to chase money too often and have the spec resource to do this anyway. 75% of our customers pay via BACs, 25% still pay by cheque.
Cash flow isn't a huge issue for us.
Open to any thoughts.
Cheers
Thanks for the replies, will try to address them:
I will have a look at GoCardless. Don't think DD will save us a huge amount of time as we just mark off the payments as they come in (which I guess we will still have to do).
Cheques are still common in my industry (agriculture) - we would lose custom if we didn't accept. I don't find them too much of a problem as I go and pay them all in myself once or twice a week (paying in machine outside bank available 24/7, go past it on way to gym/other stuff).
Standing order - is that not for a fixed amount each month? Could we alter it each month depending on what the customer has taken?
Those that have asked for DD have requested so they don't have to spend time paying bills when they are busy & it sorts itself out
I will have a look at GoCardless. Don't think DD will save us a huge amount of time as we just mark off the payments as they come in (which I guess we will still have to do).
Cheques are still common in my industry (agriculture) - we would lose custom if we didn't accept. I don't find them too much of a problem as I go and pay them all in myself once or twice a week (paying in machine outside bank available 24/7, go past it on way to gym/other stuff).
Standing order - is that not for a fixed amount each month? Could we alter it each month depending on what the customer has taken?
Those that have asked for DD have requested so they don't have to spend time paying bills when they are busy & it sorts itself out
AndyC_123 said:
Standing order - is that not for a fixed amount each month? Could we alter it each month depending on what the customer has taken?
Yes it is (and you can't alter it, only the bank account holder can). If the amount varies each month then a DD might be more appropriate.AndyC_123 said:
I will have a look at GoCardless. Don't think DD will save us a huge amount of time as we just mark off the payments as they come in (which I guess we will still have to do).
It depends what software, if any, you use. For the swimming club pre covid the sotware created and emailed the invoices, notified GoCardless, who emailed collection notification, GoCardless collected all the money passed it back to the club less fee, and the software marked all the relevant invoices as paid. Post covid its slightly more complex as we have to keep changing the pricing, but set the price in the software then set it running.The 95% of invoices that are on direct debit probably take 95% less time to process than the 5% that arent!
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