Most consider Direct Debit a useful approach to managing ongoing cash flow. But did you know that it is also an effective method of handling ad hoc payments?
Many companies choose this option when an instant transfer of money isn’t required – for example, businesses collecting lone invoices or charities accepting donations. In fact, making payments in this way provides the same benefits that come with using Direct Debit for regular outgoings:
Direct Debits are controlled by the merchant, as opposed to the customer. Payment does not have to take place at the point a decision has been reached. Rather, funds can be transferred at an agreed later date without the hassle of invoicing or chasing customers.
If you accept credit cards, you can expect this to cost two to three per cent per transaction as well as a flat fee of 20-30p. Direct Debit proves a much cheaper alternative than cash, cheques and cards, whilst saving time (and therefore money) on administration.
Customers are protected under the Direct Debit guarantee, making Direct Debit the UK’s safest and most trusted payment model. When a payment error is made, banks and building societies will quickly rectify this with a full and immediate refund.
The sheer simplicity of Direct Debit proves a big pulling factor for customers and businesses deciding on a payment model. If a customer already makes infrequent purchases to a merchant, the Direct Debit process is even easier. A Direct Debit Instruction from the customer informs the bank of payment, after which the service provider will give the customer confirmation of the collection day and the amount.