Only half of all businesses offer their customers the chance to settle their invoices by Direct Debit, despite the cash flow benefits according to new research.
In a survey of more the 1400 businesses, 53.8 per cent said that they did not offer other businesses a direct debit payment option.

Organisations benefit considerably in taking payments from Direct Debit, according to ICM (Institute of Credit Management) www.icm.org.uk Chief Executive Philip King “Direct Debits are cheaper to process than cheques or other payment methods, and reduce the workload on usually already over-stretched credit teams. But the principal benefit is that it puts you in control. You control the payment dates, amounts and frequency of payments. Any changes are controlled by you so you won’t be held up waiting for your payer to contact their bank”

Other Direct Debit benefits that Philip highlights include the ability to collect variable amounts on regular or irregular dates, reduced instances of errors resulting in less rejects or refused payments, and detailed reporting that keeps businesses fully informed on the status of all payments.
But the advantages of Direct Debits are not all one sided, the payer also benefits as Philip explains: “Paying by Direct Debit allows the payer to spread the cost of their purchases by paying monthly, quarterly, half-yearly or annually. It also provides a high degree of protection for under the terms of the Direct Debit Guarantee, the payer is protected in the event of a collection error and will receive a full and immediate refund from the payer’s bank”

One of First Capital’s customer’s credit controllers stated more than 75 per cent of all their new customers use DDs “From our perspective it has enabled credit control to become more efficient and reduce costs, which ultimately benefits the customer,” he says. “It also allows more resource to be placed on higher value and higher risk accounts therefore improving cash collection and risk exposure”

“I expected more companies to be using Direct Debits to improve cash collections and streamline efficiencies,” he says. His view is supported by Philip King: “it is not as though direct debit is a modern service that is yet to be proven”, he says. “Perhaps with the future of cheques now in doubt, Direct Debits will take centre stage”

Why don’t you find out how easy it would for your business to set up its own direct debit system through First Capital Cashflow’s Direct Debit Facilities Management or Direct Debit Bureau Service.