People today are increasingly time poor, both in their personal lives and at work. Half of UK adults admit to feeling busier now than they did 12 months ago and 41% say they have less free time than they did a decade ago.
The payment industry has responded, and in the age of contactless cards and instant one-click online shopping, we’re purchasing goods and services faster than ever before.
Paying regular fees and subscriptions by Direct Debit is the new norm. Latest BACS research found that the volume of Direct Debits processed grew by 5% in 2017 as large and small companies use it to respond to customer demand.
Cheques are rapidly falling out of favour, with the same research finding that their use dropped 12% in the past year. And it’s predicted that soon cash will be obsolete too, as we’ll be using our mobile phones, and even our fingerprints, for digital transactions.
Keep Up or Get Left Behind
If your start-up telecoms business isn’t offering the quickest, most convenient payment option for your customers, they will soon turn elsewhere.
Setting up a Direct Debit is not only welcomed by time-poor patrons, it’s expected. Don’t deter potential clients from switching to your telecoms services and products by not using it.
You know it’s a service you need, but where should you begin?
We’ve got you covered. Here are our answers to the most frequently asked questions on how to set up Direct Debit collections for your business.
What is Bacs?
Bacs (Bankers Automated Clearing System) is a non-profit organisation that manages automated payment methods, including billions of Direct Debit and Bacs Direct Credit transactions each year. It’s closely regulated and run by a membership-based industry.
What Is Direct Debit and How Is It Different to A Standing Order?
A Standing Order is an instruction from an individual to their bank to pay a fixed amount to a specific person or business on an ongoing basis. The individual can change the amount, frequency or collection date by arranging this with their bank.
A Direct Debit is organised by a business who is collecting money from an individual. The business gets the individual’s consent to take money from their account and relevant bank account details and then organises it with their bank.
For a business such as a telecoms provider, where client bills are likely to fluctuate from month to month, Direct Debit is the more flexible and controllable option.
First, you’re able to change the amount, frequency and collection date by informing your customers and adapting the Direct Debit.
Second, you’ll know within a day if a collection has bounced or is cancelled, so you can take swift action to resolve the issue.
With a Standing Order it could take up to a month or longer to realise that a payment hasn’t come through, depending on payment frequency.
What Is A SUN and Why Do I Need One?
A Service User Number, or SUN, is a unique identifier allocated by Bacs to each organisation that collects money via Direct Debit. All transactions are tracked against your SUN and it enables the bank to use the correct name on a bank statement.
Can I Get A Direct Debit Service from the Bank?
Most banks will only offer Direct Debit services to large well-established corporations with a high turnover and who are able to get their own SUN. The bank acts as their sponsor and indemnifies them against any potential fraud. This is a costly and time-consuming way to set up and run a Direct Debit scheme.
How Do I Know Which Service to Choose?
If you’re able to get a SUN from your bank then you can handle your own Bacs payments in-house. However, this requires you to purchase expensive Bacs software and fund ongoing support, licensing and upgrades. You also need to pay your bank’s fees as a Direct Debit submitter and have staff dedicated to managing Bacs processing.
Alternatively, you can outsource all of this to a Bureau Service such as the one offered by FastPay which is more affordable and cuts out the hassle of managing it yourself.
However, most sole traders, SMEs, charities and partnerships can’t get a SUN. If this is the case, you can use a service like FastPay’s Managed Service which provides you with a personalised SUN.
How Do I Know I Can Trust A Direct Debit Provider?
All companies operating Direct Debit services must be Bacs-approved. When deciding on the best provider look at their business history, client testimonials, professionalism of online presence and customer service, as well as industry expertise. They should be able to offer detailed advice about how to set up Direct Debit.
It’s also essential to research the company’s policy on data security to reassure yourself that your money and the personal information of your hard-won customers remains safe in a heavily-protected online environment.
How Long Does It Take to Set Up?
If you decide to progress with establishing a service directly with your bank, it could take months. Direct Debit providers offer different set-up times, however with FastPay you could be up and running in just 24 hours.
How Do I Get the Information Required from My Clients?
You need to obtain authorisation from your customers to collect payments from them using Direct Debit. They are required to complete, sign and return a Direct Debit Instruction which can be done online, by phone or on a paper mandate.
FastPay provides Bacs-approved web forms, phone scripts and paper mandates to help you gather the necessary information, including bank account details. Once you provide this data to FastPay, it will then manage the submission to Bacs.
How Much Does FastPay Cost?
Our Bureau Service has a one-time set up fee and costs from 3p per transaction, depending on volume. There is also a set-up fee for our Managed Service with transaction costs starting at 10p. There are no monthly or annual fees or hidden charges.
Am I Tied into A Contract with FastPay?
No, there is no minimum contract with FastPay.
How Long Does It Take for The Money Collected to Hit My Account?
If you use the Managed Service, money will be credited to a Client Trust Fund held in your name and transferred once it has cleared, a process that takes a couple of days.
With a Bureau Service, there’s no need to wait as money is transferred directly from your client’s account to yours.
What Happens If A Customer Doesn’t Pay?
FastPay will alert you immediately to any Direct Debits that have failed or been cancelled. It is then good practice to contact the customer to agree upon a second collection date.
This helps prevent the payment bouncing a second time as the customer is more likely to have the required funds in their account.
Embrace the Future with Direct Debit
Now you know how to set up Direct Debit customer collections, your telecoms business will be able to keep up with the rapidly evolving payment industry and offer your busy customers the most stress-free and convenient option.