Apr 16, 2019
How to cut the time and cost of Direct Debit collections
Direct Debit is the preferred payment method for two-thirds of the country’s bill-paying population. Safer than cash, cheaper than cheques and giving control over when funds are collected, Direct Debit is a no-brainer for companies and consumers alike.
Since Direct Debit is already one of the most efficient ways to collect payments, you may not have considered how to make your processes even smarter. Here’s a look at how to iron out the creases to maximise the cost and efficiency of your Direct Debit collections.
Limit collection dates
Direct Debit collections can be processed daily, but this can incur unnecessary fees and so put your finances under strain. By switching to fortnightly or even monthly file submissions you can cut the cost of your file submission charges and relieve your accounts or finance teams of undue administration.
We particularly recommend monthly collections to our Facilities Managed clients who generally represent SMEs and enterprise organisations for these reasons.
Setting up Direct Debits can be time-consuming and especially if you’re using paper forms. Moving to the Automated Direct Debit Instruction Service (AUDDIS) can transform the process by moving the Direct Debit Instruction (DDI) completion online and automating the exchange of Direct Debit instruction details with your bank. This drives efficiencies, lowers costs and reduces the risk of human error.
Chasing late payments is a real time-waster. If you’re a larger organisation offering a choice of payment collection dates, this will help your payers to pick a date that suits them, increasing the likelihood that they’ll pay you on time. Smaller organisations may not have this luxury, but there are other things you can do, including giving your payers a gentle reminder before payments are due so they can ensure they have sufficient funds in their account and this is easier to do if you are only offering one payment date.
Finally, keep on top of Direct Debit amends and cancellations using the Automated Direct Debit Amendment and Cancellation Service (ADDACS) report supplied by Bacs when you submit payments for collection by Direct Debit. It’s mandatory, but by acting on the information you will increase your payment success rate.