in Business

Why a healthy cash flow is the secret to a successful agency

Business services is fast-paced, dynamic and competitive. But being busy isn’t enough. Whatever field your agency operates in, evidence of your success lies in your company’s bank balance, as much as in the volume of work you’re tackling. Having lots of projects on the go and more in the pipeline is well and good. But if you’re not getting paid on time your business isn’t truly healthy - or ready to grow and exploit new opportunities.

The nature of the work many agencies undertake can exacerbate issues with cash flow. Projects often take some time to complete and can prove elastic, with clients requesting unexpected last minute changes. Plus, larger client firms might insist on long payment terms, leaving an agency waiting for money for months after work has been delivered.

It doesn’t have to be this way. There are several paths to improving your business’s liquidity. What exactly should an ambitious agency owner be doing to ensure they have a healthy cash flow? And how can they use that strengthened position to scale their company up?

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A practical blueprint for fast payment
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in Business

How open banking can help the energy sector

Over the past few weeks, I’ve been speaking with energy supply businesses who are curious about open banking and its implications for the sector. At GoCardless, we're using open banking as a platform to improve payments for our customers. In this blog, we look at how open banking could impact energy suppliers and consumers.

What is open banking?

Open banking is a new set of software standards for banks set by the Open Banking Implementation Entity (OBIE), an entity created by the UK’s Competition & Markets Authority (CMA) in 2016. The CMA’s goal is to drive competition and innovation in UK retail banking.

The new standards require UK banks to create APIs that allow two new types of services to be run by authorised, FCA regulated third parties (like GoCardless). These third parties will fall into two categories:

  • Account Information Services Providers (AISP): AISPs will be able to access consolidated information about payment accounts held by a user. Once authorised by the customer, AISPs will be able to access information such as current balance and transaction history.

  • Payment Initiation Services Providers (PISP): PISPs will be able to access a user's online payment account (with their consent) to initiate the transfer of funds on a user's behalf in near real-time. This represents an alternative way to pay online, avoiding the need for credit card or debit cards. These services are not yet widely used in the UK, but are commonly used in Europe.

But what does this mean for the energy market?

Identifying and helping vulnerable customers

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Competitive advantage in the energy sector
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in Business

The state of late payments

The culture of late payments has become so ingrained in the UK that spending time, money and resource chasing payments has, for many, become business as usual.

Take a look at the graphic below to see, in numbers, the state of late payments in the UK, how this compares to other European countries and if with new legislation, there is any sign of things improving.

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5 practical steps for fast payment
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in Business

Open banking and the rise of bank-to-bank payments

We’re reaching a tipping point for bank-to-bank payments and PSD2 might just push us over the edge.

Direct Debit, the most common means of collecting bank-to-bank payments, was devised in the 1964 by a Unilever executive, as an automated way to collect recurring, variable payments from ice cream vendors, without having to ask permission each time.

  • In 2016, Direct Debit made up 20% of all 122 billion cashless payments taking place in the EU (source: European Central Bank, Payment Statistics for 2016).
  • Direct Debit volumes in the UK reached 4.2 billion in 2017 (more than double what they were at the turn of the millennium), representing a 3.8% growth on 2016 (source: Bacs Payment Schemes Ltd, 2017).

There are several factors that have contributed to the growth of Direct Debit in the UK and Europe:

Better access
Third-party providers like GoCardless have opened up access to Direct Debit to thousands of SMEs in the UK who could not previously meet the revenue and bond criteria set out by banks. These providers act as a merchant account for businesses, developing and managing banking relationships on their behalf.

Ease of use
More commercial providers offering Direct Debit has led to significant improvements in user experience. While the former paper-based Direct Debit system was clunky and disconnected from the rest of a business’ workflow, GoCardless now gives merchants a simple, automated way to collect payments, through an app within their billing or CRM software, through an online dashboard or by building their own integration with our REST API.

Macro-economic trends
The growth of the ‘subscription economy’ in the last decade has led businesses to seek payment solutions more suited to a recurring revenue business model. Bank-to-bank mechanisms like Direct Debit allow these businesses to collect recurring payments against a subscription plan with a single mandate, while reducing involuntary churn and transaction costs (payment failure rates and transaction costs are lower for Direct Debit than for cards).

So, why doesn’t everyone use Direct Debit?

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GoCardless' Open Banking Hub
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in People

GC women discuss supporting women in tech

The problem of gender diversity in the tech industry is not new and there are many businesses and charities doing great work to make the industry more inclusive. For example, Code First Girls' 2020 campaign has already trained 5000+ women how to code for free and the newly-launched Fintech Parity Pledge encourages those working in events to only speak at, attend, and organise events that promote diversity.

Despite the success of these campaigns, there is still a long way to go, with some organisations predicting that the gender gap will worsen if more is not done. According to Code First Girls, female programmers and software developers made up only 3.9% of tech and telco professionals in the UK in 2017, down from 10% in 2007.

To celebrate International Women’s Day, we sat down with some of the women in GoCardless’ Product Development team to hear about their experiences as women in tech (and fintech, a sector in which women represent only 29% of the workforce), and to get their thoughts on what can be done to encourage more women into the industry.

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in Business

Unpaid invoice? How to have THAT conversation with your client

Accountancy firms might spend their days advising clients on their finances, but even they are aren't immune from the problem of late payments. The average professional service firm is owed £54k in outstanding payments, according to new research by data specialists Dun & Bradstreet.

Having a challenging conversation with your client about money isn't most people's idea of fun, but most small firm leaders will need to do it at some point. With that min mind. we've compiled some tips to help you chase your client’s unpaid invoice (without chasing your client away).

Start the conversation (early)

When chasing an unpaid invoice, it’s important to remember that payment is already late. So, don’t procrastinate. By making contact with your client as soon as the invoice becomes overdue, your firm may be able to close the payment gap by presenting more flexible payment options, such as changing the payment date or offering instalment payments through Direct Debit. Whilst alternative payment routes don’t guarantee payment, they do move the dial in the right direction.

Structure the conversation (clearly)

Often, a client who is trying to delay payment will wait until payment is due before advising you that they didn’t receive your invoice.

1-3 days late

Your firm has delivered a service, your client hasn’t paid for it and all you can hear are crickets. So, it’s easy to think that non-payment is intentional, but it may not be. Genuine oversights happen all the time, so give your client the benefit of the doubt (especially first-time offenders).

Once the invoice payment deadline has passed, a junior staff member from your Accounts department should give your client a gentle nudge by sending a firm – but friendly – email with a copy of the invoice attached. The email should say that payment is overdue and your client must arrange payment as soon as possible or contact your firm if they’re in financial difficulty. More often than not, a subtle reminder is all that’s needed to spur an otherwise motionless client into action.

7 days late

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5 practical steps for fast payment
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in People

Where are we in March?

March is set to be a busy month here at GoCardless as members of the team head out to various events across the UK and beyond.

Before that though, we have the last few February events, including the Techies where we are delighted to be nominated for FinTech Innovator of the Year and Quickbooks Connect in London.

With events season really starting to kick-off, take a look below to see where you can find the GoCardless team in March.

Events

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in Announcements, Business

Protecting our customers’ data: GDPR and the GoCardless Privacy Programme

Protecting our customers’ data is a priority for GoCardless. With the General Data Protection Regulation (GDPR) coming into effect in May, we welcome the opportunity to deepen our commitment in the area of data privacy.

We are making changes to our policies, processes, products and systems to ensure that we comply with the Regulation and continue to put data protection first. We’re also committed to helping our customers meet their requirements under the Regulation.

GDPR: A new data privacy landscape

Advances in technology over the last decade have led to the proliferation of personal data. More organisations are sharing and collecting different types of personal data than ever before: from IP addresses through to health data, purchasing behaviour, viewing preferences and more.

  • From 25 May 2018, organisations who handle personal data will need to meet new legal requirements, as the General Data Protection Regulation comes into effect across the EU (replacing the 1995 EU Data Protection Directive).
  • On the same day, the UK’s Data Protection Bill will pass into law, as the Data Protection Act 2018, effectively implementing the GDPR into UK law.

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GoCardless and GDPR
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in People

Meet Jake: GoCardless' Energy Specialist

Jake is Gocardless' energy specialist

Jake joined GoCardless six months ago as an account executive in the enterprise sales team. Since then, Jake has become our energy specialist, immersing himself in the market and seeing some great results! We sat down with him to see how he is finding life at GoCardless.

Tell us a bit about yourself.

My name is Jake Grave. I have been at GoCardless as our energy specialist in Sales for 6 months, during which I have been lucky enough to work with some phenomenal companies and get them up and running on GoCardless. I’ve worked in sales and customer success in early stage SaaS companies for the past seven years, and in the summer of last year my search for a new challenge at a fast growing FinTech company brought me to GoCardless.

What does a typical week look like?

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in Business

5 common excuses for late payments (and how to respond to them)

If you’re delivering services on time to your clients, it can be frustrating to be met with excuses for late payment, which typically fall into one of four categories: systems error, supply chain, company crisis or dispute.

Here’s five of the most commonly-used excuses for not paying invoices on time, along with our tips on how to respond, so that you get the money in your bank ASAP.

Systems error

“We haven’t received your invoice”

Often, a client who is trying to delay payment will wait until payment is due before advising you that they didn’t receive your invoice.

Response: Send your client an email asking for confirmation of receipt of your invoice – for example, seven days after dispatch. Or you can ask your client to send you an email acknowledgement upon receipt of your invoice. Either way, you’ll have time to re-send your invoice, if necessary.

You can also send a reminder email to your client one week before your invoice is due for payment. This will give you an electronic paper trail, which will prove useful if you later have to take formal steps to recover payment.

If your invoices are regularly going astray, you may want to switch to Direct Debit, which prevents late payments by automating your firm’s payment process – removing the hassle of your clients having to manually pay your invoices.

“Your cheque is in the post”

Nowadays, it’s unlikely that your firm is paid by cheque, but the general principle is that “payment is on the way.”

Response: Ask your client for proof of postage or ‘remittance advice’ (a letter from their finance department proving that payment has been made).

Alternatively, you can request that your client cancels the first cheque and sends another one by first class recorded delivery.

On the other hand, why not offer your client an online, automated payment option like Direct Debit? Funds will be instantly debited from your client’s account, leaving your team to focus on your work (rather than invoice-chasing).

Supply chain

“We haven’t been paid by our clients yet”

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5 practical steps for fast payment
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