Understanding Direct Debit

To put it simply, direct debit payments are a way of paying for goods or services online from your current account. Money from your account is automatically deducted by the organisation you are buying from based on predetermined instructions from you. To arrange a direct debit scenario, you need to set up and sign a Direct Debit Mandate form with who you are wanting to make the payment to. The details on the form include the amount you will be paying and when it will be made. It can be set in such a way that payments are automatically deducted on a specific date each month, quarterly or yearly.

Often, a direct debit has been confused with a standing order. The primary distinction between the two is that in a Direct Debit, the organisation or individual you are remunerating can change the amount or the date the payment is made. In spite of that, they should advise you of this by giving notice.

While using Direct Debit as a method of making payments, you can be guaranteed that you are safeguarded by the following:-

• In the event of a mistake or error in payment of your Direct debit, money is immediately returned into your bank account
• You will receive a notice in advance if by any chance the payment amounts change
• You have the right to cancel at any point you wish, should it not work in your favour.

Instances in which a direct debit can be used

• It can be used in paying for recurrent bills. Direct debit ensures your critical bills will be paid on time every month.
• You can use direct debit to make payments for any membership charges or fixed subscriptions. This may include online tools or resources for your employees. Direct Debit is the most secure and simplest approach to make recurring payments for various services you might be subscribed to.
• Paying off to your other accounts.
• You can use direct debit payments for one off payments too. While Direct Debit is normally associated to regular payments, it can likewise be used for one off payments.

Benefits accrued from the use of direct debit to businesses

1. A clear knowledge of regular income and how it is being used helps in predicting its flow and how to sustain.  
2. It is environmentally friendly as everything is automated promoting a paperless environment.
3. Direct debit has been a confirmed source of improved client loyalty due to its user friendliness, security measures as well reliability. Subsequently, businesses will realise customer retention and loyalty.
4. The consent to gather predetermined sums over a fixed period of time results in a decreased need for credit control measures, thus you have greater control over the funds.
5. It is resource saving, which implies that there is more time to focus on income generating activities rather than serving teller customers.
6. It is secure as all trade is handled through very secure technology and secured by the direct debit guarantee.

Benefits accrued from the use of direct debit to clients

1. Through Direct Debit, clients are in a position to save on any charges brought about by missing on a payment as the system is automatic.
2. It is time saving as it is automated and the client does not need to be present during the transaction.
3. Clients can break down payments and are safe knowing that payments will be made automatically and in time.
4. It is a secure and credible method of making payments.

One greater solution for transforming your payment processes is using a cloud based direct debit service that is fully automated and provides better reporting. This integration would free up valuable business time as payments can be scheduled and made with little to no human intervention. Reports can be automatically downloaded that will display key analytics about payments.

Direct Debit is an extremely convenient mode of payment that is becoming increasingly popular, not to mention its efficiency for both people and organisations. The advantages of Direct Debit build-ups are shared among both your business and its clients in what is viewed as a profoundly trusted and secure strategy for making payments. It takes away the pressure that is often associated with paying bills, and having to spend time queuing in banks. It makes it less demanding to pay your bills promptly and on time, and you will know precisely how much cash is settling what every month.

For organisations paying by Direct Debit, lessened workload and reduced paperwork for those directly involved will be a key benefit