For small business owners, one of the major challenges is managing cash flow. Cash flow issues can leave a business vulnerable, and it’s critical to have strategies in place to help avoid them. One of those strategies is automation.
Automation can help free up time and attention that’s often spent on manual tasks, like monitoring cash flow or chasing down payments. By automating these tasks, there’s less need for human intervention or manual input. That’s where direct debit services with Pay Leader come in. Direct debit is a simple, easy, and flexible way to manage payments. And it’s particularly useful for small businesses.
How does direct debit work?
When you have direct debit set up with a company, you authorize them to take payments from your account automatically when they’re due. This means you don’t have to worry about missing a payment or worrying about late fees again.
It’s a safe way of paying bills, too – all payments are monitored by the banks and building societies who operate the schemes, so your money is always protected. Your right as a consumer is also protected by the Direct Debit Guarantee, which means that your bank will re-credit any money taken in error or failure to provide a refund/rebate within 8 weeks of being notified.
Here are five ways direct debits can be a lifesaver to your small business:
- Save time and effort
Paying bills manually is time-consuming. It’s a chore that takes you away from more productive business tasks. It’s also a process that’s fraught with potential mistakes.
With direct debit, you don’t have to worry about paying your bills manually. Instead, the money is withdrawn from your account automatically at set times each month (or whenever you specify). This saves you time and frees up your staff for other tasks.
- Save money on fees
Paying bills by credit card might seem like a good idea (especially if your card offers cashback or other rewards) — but it’s not always the best option for business owners who want to avoid fees. Many credit cards charge between 1 percent and 3 percent per transaction, which adds up fast when you’re making multiple payments each month. Direct debits are usually free of such charges, so they can save you money over the long run.
- Faster payments
When it comes to paying bills, direct debit is easy and fast. Once you’ve set it up, the money will automatically come out of your account so you don’t need to remember to transfer the cash each month. It also means there won’t be any late fees or penalties because the money leaves your account on the same day every month, meaning peace of mind for both parties
- Less admin
Depending on how many clients you have, taking regular payments can feel like a full-time job. Direct debit lets you automate this part of your business, so you can spend less time chasing customers and more time doing what really matters.
- No more chasing customers for payment
With direct debit, you don’t need to send out reminders because you know the money will be in your account on the same day every month – or whenever you choose to collect. You don’t have to worry about following up with customers, as you can set up an automatic payment schedule or payment reminder system. You could get your invoices out of the way at the start of each month, knowing that payments will follow in due course.
