Direct Debit is the most popular collection method for memberships and subscriptions. If you run a gym, an energy company or a magazine subscription service, then it’s likely that Direct Debit is responsible for generating your primary revenue stream.
But like any mundane finance task, Direct Debit management isn’t as cut and dry as dipping into your customer’s pockets on a weekly or monthly basis. If you fall into any of the above categories, you will appreciate that maintenance is a continuous cycle.
What are the benefits of using Direct Debit?
Direct Debit comes with a plethora of advantages over other collection methods:
- It’s a much cheaper alternative than cash, cheque or card.
- The cost benefits open your organisation up to discounts and incentives for people who sign up on Direct Debit.
- Your organisation is responsible for all customer transactions. Payments can be adjusted in line with the peaks and troughs of business.
- The cost spreading of Direct Debit allows for much more accurate forecasting. You can pre-empt exactly how much you are likely to be bringing in in a set month.
- Even with the constant maintenance, it still requires less administration than cards or standing order because payments are automatic.
- Direct Debit mandates are paperless. You can collect as many as you want and it won’t take up any physical space.
- Finally, customers prefer it. Giving them the benefits to spread the cost automatically makes their lives easier.
If the benefits of Direct Debit are so ample on their own, why outsource?
Your admin team might be brilliant folks. But here’s the real question: are they getting you more bang for your buck?
Direct Debit is about more than money management. It is a money generator in itself, and several of the above benefits, when enhanced, can have direct implications on attrition rates and the acquisition and retention of customers.
The main catch for this is that it needs to be managed fully to reap the benefits and this is a difficult task for a busy finance/administration team. Here are just some of the reasons you should consider outsourcing your Direct Debits to a bureau:
Credit control – not only are Direct Debit bureaus highly adept and experienced in keeping check of late payments, they do the chasing for you.
Advice – as experts in the field, Direct Debit bureaus are well-placed to help you develop a membership or subscription package that entices prospective customers.
Customer service – Direct Debit queries are a time-sucker, no doubt about it. Most Direct Debit bureaus will offer a customer helpline for advice on joining, cancelling, defaulted payments and more. Your team are saved the hassle of having to take calls and learn the ropes in this respect.
Reporting – Direct Debit bureaus will usually offer reporting services which keep you in the loop on your paying customers and cashflow.
Better solutions – products such as online joining are convenient for your team and your customers. Your customers can sign up beyond the realms of a normal 9-5 without input from an employee. It’s quick and simple.
Likewise, MyPayments is DFC’s, way of managing defaulted payments without any embarrassment to the customer. An easy way for customers to sort their late payments, DFC has seen over a 50% success rate in payments on members in stage one of the default process.
DFC is a leading revenue management solutions provider, offering transparent Direct Debit solutions to a wealth of clients across the UK.
Our mission is to make our clients business easier and help improve your relationships with your customers so that they stay longer. You can leave us to collect your Direct Debits, while you concentrate on running – and growing – your business.