US-based SaaS business Autotask sells subscriptions in more than 50 countries, including the UK, the Netherlands, Germany and China, as well as the US.
Before discovering GoCardless, half of its customers paid monthly fees through bank transfer or check and half paid by credit card.
But with 50% of its business outside the US, finding the right payments mix for international markets was paramount, says Patrick Hughes, Former Assistant Corporate Controller for Autotask.
“We knew that bank debit was a very popular way to pay in the UK and Europe – our customers there were asking for it."
In 2017, the business started collecting bank debit payments with GoCardless in the UK and Europe through its billing platform Zuora.
“We use Zuora to manage our subscription billing - so having GoCardless integrated there makes life much easier,” Patrick explains. “I don’t have an engineering background and I managed to set up GoCardless in a matter of hours through Zuora.”
Uptake of the new payment method, from both existing and new customers, has been good, reports Patrick, with the biggest uptake in the UK and “decent uptake” in both France and Germany.
The business now takes a few hundred thousand dollars of bank debit transactions each month. “We’ve got to that level in just eight months,” says Patrick, “and without any significant effort to try and switch over customers”.
Cutting transaction costs
Autotask made the decision to offer bank debit to customers because of the opportunity to make significant cost savings. “Moving to Autotask, I saw how high our credit card fee rates were - in the US, but especially internationally,” Patrick explains.
"I had experience of using Direct Debit (bank debit) with GoCardless at TripAdvisor, so I didn’t think twice. I knew it would bring significant savings - and it has.”
After an initial ramp-up period, Autotask estimates annualised savings of $85,000 -100,000.
“I anticipate this number will continue grow, as more customers move onto Direct Debit,” adds Patrick. “The team are considering incentivization plans, such as offering one-time credit to those who switch – a cost we would soon make back. There’s still a lot of opportunity for our customers to adopt Direct Debit.”
From push to pull: reducing payment times
Before using GoCardless, more than half of Autotask’s customers were paying their monthly fees through bank transfer and check, meaning the business was reliant on the customer remembering to pay.
That in turn led to a high ‘Days Sales Outstanding’ number - the number of days the business took to collect payments.
Direct Debit has had a positive impact here: “With Direct Debit, we don’t have to rely on customers to make a ‘push’ payment - which has helped us to reduce DSOs,” says Patrick.
With GoCardless, Autotask’s DSO is around 3.5 to 6 times lower than it is for wire transfer and checks, and lower also than it is for PayPal and credit cards.
The business has saved so much time with GoCardless that Patrick was also able to avoid additional hiring into the finance team.
“If we haven’t added Direct Debit into the payment mix, we may have had to hire another collection specialist."
Preventing involuntary churn
Moving customers onto bank debit with GoCardless has brought another benefit to Autotask: reducing the number of involuntary payment failures, which at best create unnecessary administration for both the customer and the business and at worst cause needless customer churn.
“We typically see 100 payment failures a month from credit cards; with bank debit we only see one or two,” says Patrick. “We’ve had less than a dozen payment failures since we started using GoCardless eight months ago, which is really impressive.”
Partners in payments
Working with the GoCardless team has been a good experience, reports Patrick.
“The team is very approachable and responsive. You don’t always get that with merchant services companies or credit card companies – it has been much easier to work with GoCardless than with others. I would certainly recommend them.”