Research shows that 64% of small businesses struggle with overdue invoices.
Moreover, late payments cost small businesses roughly $3 trillion yearly. This may hurt your overall business’ performance on many levels, requiring you to invest more time and resources to chase your outstanding payments. Not to mention the impact of the unsatisfactory cash flow on your plans for growing your small business.
That is why many companies switch to automated direct debit payment methods.
What are they and how can they help your small business?
Let’s find out!
Helping You Get Paid on Time while Increasing User Experiences
Struggling with overdue invoices is an inevitable part of any business owners’ life. And, to get your clients to pay you, you will need to send a bunch of dunning emails. This may be embarrassing for both your organization and your customers, harming your relationship forever.
Latest direct debit systems give you the opportunity to collect your payments on time and yet, keep your customers happy.
- Switching to automated payment methods
Processing customer payments is a tedious task. Just remember that every cheque you receive from your customers needs to be cashed. What about bank transfers and credit cards? Failed payments happen for multiple reasons, such as insufficient funds in a customer’s account, incorrect account details, expired credit cards, closed accounts, or bank reversals. These are all complex problems that require additional research and chasing up your customers to finalize the transaction.
That’s where direct debit steps in, as it automates your billing and rebilling processes and collects payments directly from your customers’ accounts.
- The growing flexibility of direct debit
Direct debit services are highly flexible. Namely, you just need to create a payment plan and the direct debit company will do the rest. Their goal is to help you automatically collect cash from your customers and, as such, they provide different types of payments, from one-off to recurring payments. Greater flexibility increases user experiences and inspires them to buy from you faster.
- Managing failed payments effectively
Direct debit platforms will identify any failed payments that occur and can either retry the payment at a later date, continue billing or stop billing altogether depending on your preferences. By utilising these processes, reliable direct debit companies will help you improve your collection rates and retrieve funds from your customers faster.
In other words, direct debit streamlines the payment process and reduces the possibility of any potential oversights. This leads to more transparent and frictionless customer relationships.
Real-Time Reporting to Increase Transparency
To meet your customers’ needs and get the most out of your billing efforts, you need to monitor and test your financial health regularly. You need to understand your clients – their preferred payment methods and the most common problems they face when carrying out transactions.
Some direct debit platforms have additional features that provide a full assessment of your small business’ financial performance. Using your billing data that is securely stored in the cloud, they let you monitor your financial performance in real-time, on multiple devices. You can even merge your data into downloadable reports. These could be customer list reports, invalid customer data reports, distribution reports, outstanding failed payment reports, and so forth.
Such 360-degree analysis will provide you with full insight into your financial health, answer your most common questions and concerns, and help you make wiser decisions in the future. Most importantly, these reports let you understand your clients and their preferences, helping you adapt your billing processes to them in the future.
Increasing Customer Loyalty through Flexibility
In today’s overcrowded small business landscape, where the number of companies in your niche is constantly growing, retaining loyal customers is far more important than attracting new ones. Stats back me up on that. For example, did you know that the cost of acquiring a new customer can be 5 times higher than the cost of keeping an existing one? Building and cultivating a narrow group of loyal customers and brand ambassadors is far more beneficial for your business than casting your net wide.
And, to retain you paying customers, you first need to provide them with stellar user experiences. This is where direct debit will surely help.
- Greater security builds trust with your customers.
Over the past few years, your customers have become more aware of cyberattacks and the risks they bring. They don’t want to leave their personally identifiable information anywhere.
This is where automated billing software can help. These are cloud-based platforms that comply with PCI DSS (Payment Card Industry Data Security Standard). Knowing that their data cannot be stolen and used by hackers, users will be happier to do business with you.
- Direct debit offers multi-channel customer journeys.
Modern direct debit systems provide multi-channel user experiences, irrespective of a client’s location or their time zone. For example, you could carry out transactions using multiple currencies and various channels, such as your website, social media, and emails. Every payment form you create will have a specific URL you can share on multiple channels o.
- Direct debit adapts to a customer’s needs.
Based on your clients’ needs, you can alter the data and frequency at which the payments are collected. Also, if any payment issues occur, customers are entitled to a refund from the financial organization.
- It personalizes user experiences.
Direct debit gives you the opportunity to track your customers’ payment activities, payment status, incoming payments, etc. Most importantly, use this data to get to know your customers and send them personalized notifications and promotions.
The truth is, your customers love consistency. If they’re satisfied with your products/services and your billing methods, they will probably decide to stay loyal to your company rather than switching to your rivals.
Over to You
Today, to win the hearts of your customers, you need to tailor every aspect of your business to their needs and expectations. And, your billing strategy is no exception. When compared to some traditional methods of collecting invoices that usually result in late or failed payments, direct debit comes as a blessing from the skies.
It gives both business owners and customers the opportunity to monitor their transactions in real time and instantly notifies them about any issues they may be facing. Greater flexibility, consistent transactions, full transparency, and personalization of services will increase customer satisfaction, inspiring them to pay you faster. For your business, this means faster payment collection, stable cash flow and, about all, increased customer retention.
Any thoughts on direct debit benefits for small businesses? Let us know in the comments!