Last editedSep 20241 min read
An explanation of the most common forms of receiving invoice payments, along with the positives and negatives of each option.
Getting paid
Any business wants to get paid as soon as possible and while issuing invoices promptly is the first step, making paying easy for customers is also essential to good invoice management. There are a variety of popular payment methods available to business owners:
Cheques and cash
Despite increased use of digital payments, some customers still prefer paying with cheques or cash. This approach has the merit of largely avoiding transaction fees. However, payments in hard currency or by cheque involve more admin, are inflexible and can be slow and unpredictable. Late payers can also go unnoticed without automated notifications of overdue invoices. As a result, cash flow may be impacted.
Standing orders
Customers instruct their bank to pay a company a fixed sum via standing order on a set date, giving the client control to determine how much they pay and when, plus the opportunity to cancel arrangements should they so wish. It’s a cheap or free way for businesses to take payments, but lacks flexibility and can involve a lot of paperwork. It also brings an increased risk of late payments, with no notifications if invoices aren’t settled as expected.
How to collect payments with GoCardless
1.
Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).
2.
Easily set up & schedule one-off or recurring payments via payment pages on your website checkout or secure payment links.
3.
From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.
Credit and debit cards
Continuous Payment Authority (CPA) payments – those where customers give permission for companies to take funds from their credit or debit cards – are commonplace and easy to use. The customer supplies their card number online, by phone or in person, which is then linked to their bank account by card networks and settlement banks to take the money owing. It’s a useful way of making one-off transactions or subscribing for regular payments, but can be expensive for merchants as costs are high both per payment and in monthly fees. Failed payments are also reasonably common due to cards being rejected, expiring or getting lost or stolen.
Direct Debit
Companies can automate payments, taking money from customers’ bank accounts when payments are due, varying the frequency and amount as required, but without having to seek the permission of the customer each time. Direct Debit carries a low cost per payment for the merchant and failure rates are very low, less than 1% with GoCardless. It’s a very flexible way to take payments, with minimal hassle involved.
Bank transfer
Payments by Bacs allow direct transfers from the customer’s bank account to that of the business. While this method is commonly used for regular payments, it can also work for one-off transactions. Bank transfers are popular due to low transaction fees and a low failure rate. Again, they carry the risk companies will not be alerted if payments fail. They are also inflexible, only allowing customers to pay the right amount at a specified time.
Eliminate stressful & costly late payments with automated invoice collection. GoCardless is quick & easy to set up and gets your invoices paid on time, every time.
“Overdue invoices are virtually non-existent and that makes us happy!” - George Ford, Director, Veriphy
Interested in collecting payments by Direct Debit?
Find out if online Direct Debit is right for your business
