Direct debit refers to a bank transaction in which a person authorizes the bank to deduct money directly from their account at regular intervals to settle utility bills payment or any other recurrent payment. The person whose account is being deducted by the bank becomes the payer while the organization whose account will be credited becomes the payee. This mode of payment is quite popular in the UK as it is used by 67% of the nation’s populations. This is because of the numerous benefits that its users enjoy such as convenience, saving time and efficiency.
Different businesses that receive numerous payments can benefit greatly from direct debit payments. This mode of payment can help businesses to manage the businesses cash flow as well as increase customer loyalty. It will also improve customer satisfaction through provision of better customer services. The business will also avoid wasting time writing invoices and collecting payments. It will also avoid doing double entry of data and making many trips to the bank. The business will then spend the saved time doing other productive duties. Most direct debit service providers also provide automatic representation services, clear within a few days and provide report that the client wants. A business will also have a guarantee of payment which will give its owner the peace of mind in knowing that they will receive the money owed to them at a particular time. It also offers the business flexibility of changing the payments whenever it is necessary to do so.
Businesses that can reap from applying this mode of payment include clubs that have to collect membership and subscription fees. Educational institutions and schools can also use it to collect tuition fees and subscription fees. The method can also be beneficial for real estate and property management companies that need to collect rent and insurance fees. Charitable organizations can also make use of the method when they are collecting contributions and donations.
On the other hand, customers will also benefit from using this system of direct debit payment. For example, they will enjoy flexibility and convenience of knowing that they will not skip any payments and hence they will avoid extra charges. It is also a simple, accurate and quick method of payment. This method is also quite safe since all the payments debited from the account will be accurate and if there is an issue, the money can be refunded promptly. They will also have less paperwork to deal with and fewer cheques to issue. This method will also prove to be cheaper for customers in the long run because the charges will be divided into twelve months. They will also enjoy having control over the funds in the account as they can either assent or discontinue the direct debit process. These are all the more reasons why a business should consider seeking the assistance of direct debit service providers.