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sepa direct debit

Collecting Online Payments with SEPA Direct Debit


The Stress of Chasing Client Payments

Chasing clients for payments can be very stressful. Asking clients to settle overdue invoices makes for awkward conversations and unnecessary tension, particularly if there is an established long-term working relationship. Credit control departments are often under pressure to recover overdue payments. Late payments can severely affect cash flow, causing delays to projects and affecting the growth of a business. They can also dent the credibility of a business with suppliers if low funds can’t cover all expenses. This may have a negative impact on a company’s credit score and access to credit.
However, it doesn’t have to be that way. If your business is starting working with a new client, you have the perfect opportunity to talk about your payment terms and establish some ground rules earlier on. With established clients, it might be a good idea to send regular updates and explain how payment delays affect productivity and, therefore, the ability of delivering projects for clients. As a back up plan, you can also prepare payment reminder emails in advance to ensure you are using a neutral language. There is still more than you can do to simplify this process.
The good news is, technology can now make collecting payments easier.


Collecting Online Payments

In an ideal world, you want to be in a position to know exactly when client money is coming in, so you can plan ahead, invest in the growth of the business, pay suppliers and employees on time. In the real world, companies are relying on their clients’ goodwill to pay on time. Many clients, particularly large corporates, demand a 30-day or even 60-day payment terms to settle invoices. These clients don’t necessarily need a credit facility as such, but their suppliers will pay a high price for their generosity.
Looking at existing electronic payment methods that are available to businesses, it’s clear that at present there is no perfect solution that ticks all the boxes:
  • some solutions deduct a transaction fee, making invoice reconciliation less straightforward
  • merchant services send all receivables in a bulk transaction, and businesses have to pay both card issuer fees and merchant fees. Again, this means that invoice reconciliation more labour-intensive.
Since the introduction of the PSD2 (Revised Payment Service Directive), which came into effect in 2018, the market has opened up to new payment service providers that act as third parties between customers and financial institutions. These payment providers can be more agile and adaptable to market trends, responding and adjusting to client requirements faster than traditional banks. An effective solution for collecting client payments is SEPA direct debit, which is no longer confined to utility companies.

DD Payment types


Benefits of Using SEPA Direct Debit to Collect Client Payments

The three main benefits of using SEPA direct debit when collecting payments from clients are:
  • receiving the full invoice amount without deductions at a stipulated due date agreed upfront with the client
  • streamlined invoice reconciliation
  • improved cash flow
As explained in a previous post, a direct debit is a ‘pull’ payment: after filling out a mandate, the client instructs the bank to pay a business following an agreed regular schedule. Unlike standing orders, which are client-led ‘push’ payments, direct debits send a payment reminder in advance and are easier to track if a payment fails. Also, you can have variable direct debit amounts each month, whereas with standing orders the client will need to cancel the previous standing order and create a new one if the amount is different over time.


DebaPay Cardless Solution for Recurring Payments

Any business providing ongoing services, such as maintenance contracts or retainer fees, can benefit from using direct debit to collect client payments. Direct debits simplify credit control and invoice reconciliation processes, freeing up resources to attend to more valuable tasks.
Debapay has been offering the ability to accept SEPA (Single Euro Payment Area) direct debits to businesses through a responsive web interface that is easy to set up and intuitive to use. In other words, clients won’t need to leaf through lengthy instruction manuals before being able to use this system.
Once the client sets up the direct debit mandate online through DebaPay, the business will receive payment for invoices in full without deductions: the payment request amount is the same as the payment cleared amount. This makes invoice reconciliation more streamlined, saving businesses time and money.
One of the advantages and unique features of using Debapay for businesses is the ability to offer clients the option of either paying in full or to have a payment plan. Payment in instalments can be a cost/effective solution to keep a good working relationship with clients while still looking after cash flow. All of this is done through the web interface, without the need to contact the client to agree the payment terms. The client reads the terms and can accept them with one click. This means that businesses are no longer at the mercy of late paying clients thanks to the automation of payment requests.
For example, our client EasyTrack found that using Debapay to collect payments online freed up resources from physically collecting cash payments and lodging them at the bank, to focusing more on customer service and growing the business. EasyTrack provides GPS devices, tracking equipment and a real-time monitoring service. It is a highly pressurised environment and, after simplifying the payment collection process, the company saw an increase in productivity.


Why Choose Debapay to Collect Online Payments from Clients

If chasing client payments is affecting your bottom line and the general running of your business, it’s time to simplify your payment collection process.
We offer a simple monthly subscription model to scale as your business grows, so you can choose the fee that best suits your business needs.
Feel free to contact us to discuss your requirements.
Phone: 0906400199


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