Guides

How to Move Your Customers to Direct Debit Payments

As a business, the most efficient way to collect payments from customers is via direct debit. Not only does it give you more control over cash flow (late payments become a thing of the past), it’s also a less time consuming, and more cost-effective, way to ensure you get paid on time.

But what about your customers? At times, it may be tricky to get customers to sign up to direct debit, especially if they’re used to paying in another way. But using this payment method also comes with many benefits for them; the way you communicate these benefits will impact their decision on whether or not to take up the direct debit payment option.

This handy guide will help you sell the idea of Direct Debit payments to your customers – highlighting the benefits, addressing concerns and showing them exactly how to move to Direct Debit.

 

Why should my customers switch?

Direct Debit payment collection is proven to reduce average debtor days and increase customer satisfaction and retention, while also allowing you to plan your finances ahead of time, as you always know how much money is coming into the company.

 

What does switching to Direct Debit involve?

Switching to Direct Debit is a quick and easy process.

Once a customer has agreed to make the switch, you will need to issue a Direct Debit mandate or take their information over the phone via the BACS-approved paperless script.

As soon as the customer has signed up, a welcome email or letter is issued and three days before the first payment is due, they will receive an ‘Advanced Notice of Direct Debits’ e-mail which confirms all the payment details.

 

What are the benefits to customers?

  1. Save time and avoid hassle

Signing up to direct debit is easy: all customers need to do is to fill out a direct debit instruction form once – and that’s it. They don’t need to think about their monthly payment anymore – the money will be taken from their account on the expected date.

  1. Avoid late payments

Direct debit means peace of mind that all payments are sorted with no further action required on their behalf. You can offer your customer a payment date that suits them, for example, after their company’s payday.

  1. Have more budget control

Knowing when a payment will go out of their account helps the customer with their budgeting.

  1. Benefit from complete protection

Customers can rest assured that in the UK they are protected by the Direct Debit Guarantee. In short, they have the right to receive a full refund for any payment taken in error.

  1. Earn rewards

Depending on their bank, the customer may be eligible to receive certain rewards if they set up direct debits.


Addressing customer objections

Although Direct Debit is proven to be trustworthy and efficient, customers occasionally need convincing to switch. Guide them towards using Direct Debit by emphasising its many benefits.

  • “I like to manage my own payments”

Direct Debit makes it easier for them to control their finances as they can view payments online and they can cancel Direct Debits easily, with most companies allowing customers to easily change payment dates.

  • “I don’t have time to switch”

Direct Debit is a quick and simple process and will save them time in the long term. Direct Debit’s automated process removes the need to set up a new transfer each month, repeating automatically unless a company is instructed otherwise.

  • “I don’t trust online banking”

Direct Debit is a trusted service used by over 60,000 businesses and customer are protected by Direct Debit Guarantee which refunds payments made in error.


Asking customers to make the switch

Make the conversation about switching to Direct Debit easier by recognising the optimum moments to raise the issue.

  • New customers

New customers have no existing preferences, so use your sales pitch to guide them towards Direct Debit. Emphasise the benefits of the system and the reasons why it is preferable to bank transfers or cheques.

  • Existing customers

Although existing customers have already opted to use another method of payment, there are opportunities to raise the possibility of switching.

If a customer is late with a payment, point out that Direct Debit removes the possibility of late payments which can create financial difficulties for them down the line.

Customers are more receptive to ideas if you’re already in a dialogue with them – raise the idea of switching during related conversations such as amending the customer’s price plan.

Customers are more willing to consider changes at the start of a new tax year, providing an ideal opportunity to discuss switching.


Switching from different payment types

Offering comparisons with alternative methods of payment can help emphasise the advantages of Direct Debit.

  • Bank Transfers

Unlike bank transfers, Direct Debit protects customers from overdraft fees by allowing them to schedule payments. The Direct Debit Guarantee scheme should also reassure against any doubts about security.

  • Cash or Cheque

Direct Debit offers the security and control of cash or cheque payment and saves time on administration, leading to savings which can be passed onto the customer – a potential deal-maker when persuading customers to switch.

  • Standing Order

Unlike standing orders, customers don’t need to set up a new Direct Debit payment if the amount payable or the payment date changes. Customers also receive notifications prior to payment being taken, which can protect them from overdraft fees.

 

Get In Touch

If you are interested in collecting variable or fixed recurring payments or would like to set up a Direct Debit for one-off payments, speak to London & Zurich today. We will talk you through your options and help you understand every aspect of this cost-effective payment option.

To find out more about how to introduce Direct Debit to your customers, get in touch with us or download our full guide.

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