Late invoice payments can have a massive impact on your business, negatively affecting your company’s finances and wasting valuable time chasing unpaid invoices – but Direct Debit offers a simple solution.
This handy guide should help you to 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?
This efficient and secure method of 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 just need to issue a Direct Debit mandate or take their information over the phone via the BACS-approved paperless script, both of which are provided by London & Zurich.
As soon as the customer has signed up, London & Zurich will send them a welcome email or letter, 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.
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”
Assure your customers that they can manage their payments by requesting notification prior to money being transferred. Emphasise that Direct Debit makes it easier for them to control their finances as they can view payments online, and mention that they can cancel Direct Debits easily, with most companies allowing customers to easily change payment dates.
“I don’t have time to switch”
Make it clear to customers that switching to 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”
Highlight that Direct Debit is a trusted service used by over 60,000 businesses, while also mentioning the 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 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.
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.
If Direct Debit is essential to your company’s plans, you may need to make switching compulsory, or offer an incentive for switching, which can improve migration rates while boosting customer satisfaction.
Switching from different payment types
Offering comparisons with alternative methods of payment can help emphasise the advantages of Direct Debit.
Unlike bank transfers, Direct Debit protects customers from overdraft fees by allowing them to schedule payments. The Direct Debit Guarantee scheme should also assuage any doubts they express 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.
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.
To find out more about how to introduce London & Zurich to your customers, get in touch with us or download our full guide.
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