Payment Processing Blog

Research by BACS (the UK Clearing House) at the end of 2010 found that half of Britain's SMEs were victims of late payment with £24 billion owed, that's an average amount of £27,000.

Coupled with that, a staggering 158 million working hours were lost to chasing overdue payments.

If your business collects regular payments from customers it could pay you to use electronic payment methods such as direct debit.

You could see a much improved cashflow as payments arrive on a set date, so you're not relying on an individual to remember to post your cheque, plus you won't have to wait a further 3-5 days for the cheque to clear before funds become available to use.

Processing electronic payments is much cheaper than cheques, so your bank charges will reflect that accordingly.

You could write to your customers and make them a special offer for signing up to direct debit, knowing you'll be on your way to more reliable payments in the future.

Ask a reputable direct debit provider to see whether direct debit payments would be suited to your business, and it could be that you'll no longer be amongst the 53% of businesses suffering late payment.

Bacs is a not-for-profit organisation and is owned by 15 of the leading banks and building societies from UK and Europe. Bacs’ objectives are to ensure that a quality service for collecting direct debits is provided and that rules and regulations are adhered to by both users, banks and bureaus. Bacs' key responsibilities are to:

• maintain the integrity of the direct debit scheme
• update the scheme rules
• act as an ombudsman/ governing body for the service

Eazy Collect Services Ltd. is a BACS Approved Bureau.

With most payment options, customers often find excuses not to pay, even happy ones!

For those customers that make regular payments to you, it has been proven that by using direct debit as a payment solution, customers rarely cancel  their direct debit if everything is ticking over nicely. And your payments come in like clockwork, much more reliable than waiting for cheques or manual BACS payments.

Customers Paying By Direct Debit Are Therefore Worth More To Your Business.

Direct Debit also gives you the flexibility to offer customers flexible payment options so they can spread their payments over an agreed period of time.

A direct debit bureau can give you advice on whether direct debit payments are suitable for your type of business.

Offering a range of payment options to your customers will help to convert more of your prospects into paying customers.

The offer can be marketed to encourage your customers to buy, by giving them the option of spreading the cost of the purchase and a choice of payment dates.  Incentives such as this can make the difference between winning and losing a customer.

And for businesses that provide an ongoing service, a direct debit is by far the most cost effective and reliable way of getting paid on time.

A full service direct debit set up only takes a few days, and you can be processing payments from your customers, usually within a week.

You can get unlimited food in a restaurant, unlimited texts on your mobile phone and unlimited warranties usually for an ongoing monthly payment or one single payment. It is undeniably a risk offering unlimited anything especially if you are a small business but this is increasingly what businesses are doing as a way to regulate cash flow and develop more of a bond with their clients.

A membership scheme would work for most businesses but especially those businesses whereby the development of regular clientele are the key to the cash flow and overall success. A good example of an industry that has not really embraced this concept in the UK is the hairdressing, grooming and beauty sector. In the USA a franchise chain called Kennedy’s All-American Barber Club seem to be blazing a trail in this respect.

In consideration, take a £10.00 haircut and somebody getting their hair cut every six weeks or about nine times a year. That particular client would therefore pay £90.00. If the monthly membership fee for the unlimited haircut scheme was £15.00 per month then the proprietor of that shop would exactly double that income and almost certainly not have to give that individual 18 haircuts!

By offering a club which allows the participant to receive unlimited haircuts, manicures, shaves or a range of services the proprietor is (hopefully) achieving a variety of things such as:

• Increasing customer loyalty
• Using a relatively innovative marketing strategy
• Improving cash flow and securing a more reliable income
• Giving customers more
• Obtaining client details so future promotional material can be sent to them
• and as highlighted above greater profitability

Using a Direct Debit Bureau these monthly payments can be set up, monitored and professionally collected with minimum set up and ongoing costs. There is no doubt that other companies in other sectors could also offer a similar service and maximise their cash flow by offering their clients unlimited access to their service, skills or product.