“I was always owed somewhere between £5 – £10,000 in invoicing which is quite a large sum of money.”
Steve Holloway, of Median Accountancy & Taxation Services had spent the last 9 years of his practice running up unpaid invoices from various clients.
Being a sole practitioner, he never had time to chase up fees; and had previously turned to a Standing Order system to alleviate the issues. However, he ran into a roadblock immediately; he still had to chase people for completed paperwork, which took just as much time as chasing them himself.
With the cost of a licence to operate a Direct Debit scheme being too high for a sole trader, Steve turned to FastPay, who are experts in third party Direct Debit collections. After speaking to their team and seeing what the introduction of a Direct Debit scheme had done for a similar sized company, Steve was more than happy to become a customer.
So why change your firm’s payment strategy to collect by Direct Debit? Let us explain.
Switching to Direct Debit Collections for Accountants
Switching to Direct Debit can be done via a bank, or via a bureau such as FastPay – who can help guide you through the initial setup process and manage your collections for you – saving you both time and resources and allowing you to get back to running your business.
As with Steve, late payments are one of the biggest hurdles for British accountancy practices to overcome. According to research from Bacs, the average late payment debt now stands at £32,185. This equates to an incredible £26.3 billion total across the 47% of SMEs that say customers and clients stray beyond agreed payment terms.
Without positive cash-flow, accountancy firms and other SME’s can struggle to operate efficiently. As a result, like Median Accountancy, many are now turning to Direct Debit to give them greater control over when they are paid.
When compared to traditional payment methods, Direct Debit also has unparalleled flexibility – with notification systems designed to inform the accountant when their clients complete payments but also when they don’t. This eases the pressures on both sides of the transaction as the client does not have to worry about the prospect of missing payments and the accountant is assured of the regularity of fees.
“Within three months I had about 90% of my clients signed up and was collecting a similar % of my fees up each month.”
Starting to Collect by Direct Debit
Of course, as any savvy business owner would do, Steve spent time researching the best method of solving his problem. He headed to AccountingWeb and posed his dilemma to the masses.
“The solution came back that I could use a third party to operate the Direct Debit on my behalf. This sounded ideal and one of the first names I came across was FastPay.”
After an initial period for the set-up process, Steve found that his clients picked up the system very quickly as it allowed them to properly structure their budgets for the future. This is of massive benefit to both Steve and his clients as both parties are clear on their cash flow and can then plan accordingly.
By contacting FastPay and allowing his clients to start using Direct Debit for outstanding and future payments, Steve saw a lot of changes within his business:
- Peace of Mind; the payments from his clients became automatic, so bills were never forgotten, lost or delayed.
- Saved Time; Steve no longer had to chase clients – which freed him up to pursue new ones, while maintaining a good relationship with his current base.
- Customer Retention rose; because Direct Debit payments ran seamlessly in the background, customers were more likely to stick with Median, as it was easier to remain with them rather than switch to another accountancy practice.
Direct Debit Collections with FastPay
“When I approached FastPay they responded quickly with quotes and as has been borne out over the years, they seemed very professional from the start.”
As a Bacs-approved bureau, FastPay operates under strict regulations which focus on confidentiality, integrity and compliance with the relevant Bacs rules. They also offer solutions that are safe and secure, as customers are protected by the Direct Debit Guarantee – a very strict set of rules that govern all payments made by Direct Debit.
As such, as a third party supplier, FastPay are subject to a careful vetting process designed to ensure there are correct procedures in place to protect customers from errors and any instances of fraud that may arise.
FastPay also offer integrations with cloud accounting software packages such as Xero and Sage. This allows the user to take advantage of the FastPay Direct Debit process and manage payments in real time within their existing cloud based systems.
Steve at Median Accountancy discovered that FastPays’ Direct Debit services were perfect for his practice’s requirements. Steve wanted to return to positive cash flow after years of unpaid fees, and our automated payments system allowed him to rest easy knowing that those payments were being managed. Not only that, Steve benefitted from our early warning system – if a client cancelled their Direct Debit Instruction or changed their bank account details, FastPays’ pro-active reporting system would immediately notify him.
Over the last six years of being a FastPay client for Direct Debit collections, Steve has also seen a huge decrease in his administration issues. Previously, to increase fees for clients every year was a huge task, but now all it requires is an email to notify them of the increase in the monthly DD and the FastPay API does the rest.
A New Advocate for Direct Debit
Throughout his time using FastPay to collect his Direct Debits, Steve has finally been able to get back to developing his business. He now has more time to focus on the growth of his practice, rather than having to chase clients about their outstanding fees. Thanks to the reliability of payments every month, Steve can now plan the Median Accountancy business strategy without having to worry about the risk of negative cash flow in the future.
“I am always bemused that many accountants still don’t operate this way… the cost really is insignificant compared to the huge benefit and we are supposed to know a bit about business!”