Last editedApr 20221 min read
Direct Debit - also known as ACH Debit or bank debit - helps wholesalers, distributors, and manufacturers safely offer payments on account and reduce late payments.
Each year more businesses in the wholesale, distribution, and manufacturing industries move to Direct Debit to improve their cash flow and reduce admin. If you deal with a large number of regular clients, it could help you too.
For wholesalers, distributors, and manufacturers in particular, Direct Debit can help in two ways:
Safely offer payments on account (goods or services on short-term credit)
Reduce late payments
Safely offer payments on account
Customers often ask to pay on account, but without a guaranteed way to collect payment, it’s not advisable to offer large amounts of credit.
If it’s not managed properly, offering credit to customers can put your company at risk and damage your cash flow.
Once you have completed a credit check on the customer, Direct Debit provides a safe way to start taking payments on account.
Reduce late payments
60% of small-to-medium businesses (SMBs) with serious cash flow issues blame late payments. Without a reliable cash flow, growing your business becomes difficult – especially if you’re in an industry with a short buying season or where you depend on a small number of ongoing relationships.
Has Bean Coffee, a premium coffee distributor in the UK, switched to Direct Debit provided by GoCardless to help them deal with invoices being paid up to four months late. Late payments made it difficult for them to buy enough coffee beans for the year.
Since using Direct Debit with GoCardless, the average payment term has dropped from 62 days to 41. Steve Leighton, the owner of Has Bean, said, “Now we have control over when we get paid, and we can keep uncomfortable conversations about money to a minimum.”
How to get started with Direct Debit
You can start taking Direct Debit via a bank, bureau, or GoCardless. GoCardless is a specialist provider of Direct Debit. With GoCardless, you can automate your payment process and manage everything online. GoCardless offers:
Quick and easy sign up - You can sign up instantly and for free.
Easy and efficient management - You can collect recurring payments automatically. GoCardless integrates with the most popular accounting packages (such as Zuora, Chargebee, and many more) to enable easy invoicing and payment reconciliation.
Simple, low pricing - See full details of our competitive pricing options here.
If you would like to find out more about accessing Direct Debit, you may find our 60 second guide to Direct Debit providers helpful.