Your Small Business Can Save Time and Money by Taking Payments by Direct Debit.

Welcome back to "Just One Small Thing". My aim is to share short and simple tips that you can implement straight away to start improving your small business today. Would that be useful?

This tip is simple but it takes a long while to explain it so please accept my apologies :-)

You may think that only big companies can use the Direct Debit system to take one off or regular payments from their customers and clients. If you do go to your bank and ask them to set you up the likely initial cost will be somewhere north of ￡3,000 and they'll want personal guarantees from you.

Luckily, a company called GoCardless has solved this problem and can enable your small business to very quickly set up direct debits to any UK bank account. You can even take payments from some countries beyond the UK.

Firstly, let me say that I'm not an affiliate of GoCardless. I won't earn any money for promoting them. They haven't asked me to do so and they don't even know I'm doing it. They may even have some good competitors which I don't know about.

Surely it costs loads of money? Have a look at the screen shot of the pricing page on their website below. As you can see, it costs less that credit card charges (hence the name) and less than Paypal.

What would your small business use direct debits for? The honest answer is any payment that your customer agrees to pay through direct debit. Let me give you some use cases from my own experience and those of other people I've recommended to this system.

When I get a new customer I explain that they can have 28 days credit if they pay via GoCardless. Many of them accept that and sign up. The process on their end is very quick and simple. I can send them a link in a normal email. This is also on all of my quotes. I can email them directly from GoCardless. If I had several customers I can even upload a csv file and GoCardless will do the rest.

At their end your customer only has to provide their name, email address, bank sort code and bank account number. They will then get an email saying they've authorised you to take direct debit payments from them via GoCardless and you'll also get an email advising you that you have a new customer. Then all you have to do is go to the dashboard and set up a one off payment or add them to a regular payment plan or create a new one.

My most common use is one off payments because each print job is different and they don't come up at regular times. I can also use my invoice number as a reference.

However, as you can see below I've also used the payment plan for variety of different circumstances (this is not the full list). It's really handy for debt collection. If someone is struggling to pay for whatever reason you can have a nice conversation with them and say "what could you definitely afford to pay monthly?" Once they agree to that you can very quickly set them up on a plan with a beginning and end date and start it running. Every time I've done this the customer has ended up paying in full and they're very grateful so our relationship is not broken.

I also learnt many years ago that people can afford to pay you more if you can afford to spread their payments. I had a new customer opening a hair salon and wanting the very highest quality printed collateral on premium materials with added finishes. She took one look at the cost and decided she would have to dramatically reduce the spec to fit her current bank balance. I could see she was very upset so I asked her "If I allowed you to pay for the high spec work that you really want over 6 monthly instalments, would you stick with it?" She said yes and then proceeded to write me out 6 post dated cheques to cover the cost. That was before I discovered GoCardless.

That lady is still a very happy customer 15 years later and that offer helped to build the great business relationship and loyalty we still enjoy today. How much is a loyal customer worth to you? Your competitors aren't doing this so it's a competitive edge.

That's why I still offer my customers a payment plan over 6 easy monthly instalments and I can do that very quickly and simply using GoCardless.

Can you imagine how useful this could be if you have a monthly payment subscription model type business. For example, I recommended this to an IT expert friend of mine. He's chuffed to bits with it. If his customer asks for more services he can very quickly amend their plan himself. Previously he had to beg them to get around to changing their standing order. He can also take one off payments if they buy hardware etc.

Coaches, consultants, mentors and accountants all have monthly payment subscription models and I know many of them who love GoCardless because they have control of those payments. I know window cleaners who use it so they never have to go back and collect any money. By the way, GoCardless has a mobile App so you can use it on the go. It also connects to cloud based accounting systems like Xero so it makes your book keeping easier too.

What if your customer doesn't pay you? Unlike standing orders where you won't know if one hasn't been paid unless you check your bank statements every day, GoCardless notifies you immediately and you can simply press a resubmit button to try again. Obviously, you should also talk to your customer to see what the problem is. Usually it's something very temporary. Often, it's simply because they've moved their bank account.

That brings me to another benefit. Your credit card has an expiry date but your bank account doesn't. Your customers won't need to update any details unless they change their bank account which is far less frequent than credit card expiries.

For me one of the other benefits of GoCardless it's a very light and easy way of talking about how your customer will pay you without actually asking them to pay you. Obviously, some big customers with purchase order systems will never pay you by direct debit because the person you're dealing with doesn't have access to the bank details or the authority to spend their employers money. However, most owner managed business can. If someone says "I don't want to pay you by direct debit" I just say "OK, what reliable payment method can you offer me that won't require me to chase you". Unbelievably, many people just say "I'll pay you up front" which is great. I've also been offered post dated cheques which is also great and sometimes I just have to trust them or not work with them. You should consider that some people won't give you a direct debit because they're not confident that they'll have enough money in their bank account when you need paying. So, it helps you avoid dealing with them :-)

Some people say "why should I give you my bank details?" To which I say, you're not giving me any details, you're giving them to GoCardless who don't share them with me. However, the best reason is that once you've signed up to my GoCardless Direct debit System you never have to lift a finger ever again to make payments to me. You don't need to go to your online banking or credit card. It's all done for you, quickly and simply. Many of my busy customer absolutely love that.

Lastly, as some of you know, I run a Business Networking Club here in Milton Keynes called "The Business Growth Club". All my members pay their membership via GoCardless directly to the club's bank account. It makes the whole joining process really simple. Once I receive the "New Customer" email from Gocardless they've joined and that's that. If they leave they can stop it. However, I often say "let me pause it just in case you want to re-join". We're a face to face group so when the Covid lock downs meant we had to meet on Zoom I reduced the membership fee to reflect the lower costs and I was able to do that very quickly and easily using GoCardless. When we returned I was able to put members back on their original plan.

So, what could you use a simple low cost direct debiting system for?

P.S. sorry this was so long :-)