How to move customers to Direct Debit payments

In a hurry? Jump down to section "what to say when asking a customer to pay by Direct Debit" for tips and templates for your email or letter, or view how to handle objections.

When and how to ask customers to switch to Direct Debit

Trigger points

There are times in your relationship with a customer that it makes sense to ask them to switch from paying by another payment method to Direct Debit. For example:

• When you are signing up a new customer

• When a customer is late paying you and you are calling or emailing to chase for payment

• When you are changing pricing for existing customers

• The start of a new tax year

Consider the right trigger points for your business. Then make use of the relevant tips below and the talking points and email templates in this guide.

Asking existing customers to pay by Direct Debit

• Identify the worst offenders - Segment customers to identify which companies send you the most bank transfers, credit card payments, or cheques, or have the most late payments. Focus your time on the biggest pain point for your business, so you will see impactful results.

• Be proactive and phone up - Get an administrative employee or intern to spend one or two full days to call these customers, explain the benefits of Direct Debit, and ask them to switch.

• Be opportunistic - Make the most of the times when you’re naturally talking to customers already. An easy way to chase your customers about a late payment is with an Instant Bank Pay link. At the same time, you can share how the problem can be avoided with Direct Debit, and invite them to set up a mandate at that time.

• Include a call-to-action (CTA) in your invoices - Provide clear and prominent Direct Debit sign-up instructions on your bills/invoices, and your website. If you use GoCardless through your accounting or membership software, you may be able to add a 'Pay Now' button to your invoices where customers can create a mandate, for example in Xero and Sage.

• Ask whoever owns the relationship to email or call the client - Provide them with key talking points or an example email which they can top and tail as appropriate (see below). The ask will be different depending on what payment you’re asking them to move away from.

• Set a timeline - We recommend being clear on when you need customers to sign up by (to get access to any benefit or incentive for example), or you might find the move will drag on.

Embed GoCardless into customer onboarding

When taking on new customers, here are some tips to getting them signed up to Direct Debit with GoCardless from the outset.

• Invite your customers to make the first payment instantly from their bank - When presenting payment options on your checkout, invite customers to make the first payment instantly with Instant Bank Pay and request they set up a Direct Debit mandate for future payments at the same time.

• Talk about your payment options at the start – As soon as you have a working relationship with a new customer, talk openly about pricing, invoicing, and payment – and set clear expectations that Direct Debit is your preferred payment channel.

• Include your preferred payment option in contracts and engagement letters – It’s hard to change habits; set your new customer up to pay via Direct Debit by default in your contract or service agreement so they have to “opt-out” to pay by another method.

• Make it clear how to sign up to GoCardless – Don’t leave customers in the dark: show them how easy it is to set up GoCardless.

• Email customers to explain the benefits of Direct Debit – Outline the key benefits of using Direct Debit and position GoCardless as the ideal solution (see below for content to help you with this).

• Include the call to sign up to Direct Debit on the first bill or invoice – Include clear Direct Debit payment instructions on the first bill or invoice, and your website.

• Place GoCardless at the top of the payment method selection – When offering payment methods, either put GoCardless first or as the default (or only) option.

• Invite customers not comfortable with Direct Debit to pay manually - Some customers will always want to make their payments manually. Add a link in your checkout flow inviting customers to make a one-off payment with GoCardless' Instant Bank Pay feature instead.

Why move customers to Direct Debit?

With over half of payments in Europe being paid late, and 47% in Australia, many businesses are looking to Direct Debit to help them get paid on time, every time.

In a 2020 study of SMEs taking Direct Debit payments through GoCardless merchants experienced:

• 90% reduction in time spent chasing payments

• 59% reduction in staff time spent on payment admin

• 56% reduction in transaction costs

• 47% increase in how quickly payments were received 

Iain Worthington, Finance Director, VIA – Unified communications for business

Different approaches to moving customers to Direct Debit

Incentivise the switch

Some customers might be incentivised just by the fact that Direct Debit lets them pay in instalments. For example if they usually pay annually, point out that Direct Debit allows them to spread costs throughout the year and pay on a day which suits them. GoCardless lets you collect payments on any day of the month.

If that’s not enough to get your customers to move, try financial or product incentives, such as:

• Offering a one-off charitable donation for every customer who switches to Direct Debit, and ask customers to vote on their preferred charity to receive it.

• Giving a free gift. UK conservation charity, The National Trust, offered a free pair of binoculars to people who pay by Direct Debit.

• Try a discount on your product or service. Some energy providers, including EDF in the UK, and Origin energy in Australia offer a percentage off your bill. While UK gallery, The Tate, offered £10 off membership fees for those who chose to pay by Direct Debit.

• Consider waiving any admin fees. Norwich Residential Management (NRM) in the UK encourage their residents to pay service charges by Direct Debit in an instalment plan, rather than by cheque or bank transfer - if they do, NRM waive the £25 payment administration fee.

• Try a limited time offer. Window cleaning firm, Premier Clean, offered customers who chose GoCardless 10% off their next clean for a limited period.

Make it compulsory

If customers won’t budge, consider making it compulsory for them to pay you by Direct Debit.

This is a good option for your business if:

• Cash flow is becoming a problem

• You are spending a large proportion of your time chasing payments

• You don’t have a finance or admin team available to chase payments

• Efficiency of payment collection is important to you

• You are looking to grow your business and need to have simple and consistent payment processes that are easy to scale

While you may have to turn down the occasional client who won’t change; you’ll free yourself up to focus on winning the right kind of business.

If you find it difficult to enforce this change on existing customers, start by including it as a condition to new customers only. Or you can invite them to make direct one-off payments from their bank account with Instant Bank Pay.

Kiril Shaginov, Co-founder at Mörk Chocolate – Speciality hot chocolate powder (wholesale & retail) and cake wholesaler

Paul Bulpitt, Co-founder at The Wow Company – Accountants and business advisers

Darren Green from Green Pro Clean talks about his experience of making it compulsory for his customers to pay by GoCardless.

What to say when asking a customer to pay by Direct Debit

The benefits of switching to Direct Debit differ depending on how a customer currently pays you. These key talking points and email templates, split by current payment method, will help you get started.

Bank transfer

If bank transfer is a customer’s preferred payment option, try using these key talking points.

Preferred payment option – Direct Debit through GoCardless is now our preferred way to take payments - it’s simple, easy to use and benefits both of us.

Set and forget – You set up payment once, and after that, it’s taken automatically on the invoice due date. No need to set diary reminders or log into your internet banking to make a payment.

Never get chased for late payment – Payments are automatic, so you won’t get chased for payments and there’s no risk of late payment fees (if your business has them).

You're still in control and protected – You’ll receive notifications of payment before funds are taken and under the Direct Debit Guarantee scheme, you’re guaranteed a refund if any payment is taken in error.

Better for budgeting – Paying through GoCardless makes your payment predictable, which can make it easier to budget for our services.

[Optional] Financial reward – Moving to Direct Debit reduces admin time for us, so we’re passing on this benefit to you through (incentive details). You’ll get access to the benefit as soon as you have signed the Direct Debit mandate.

Tell them how to sign up – After this call, you’ll receive a payment authorisation email from GoCardless which requests that you complete a Direct Debit mandate. This gives us permission to collect the agreed funds from your bank account at the agreed time.

Example email – Here’s an example message you could send to your customers, asking them to make the switch.

Cash or cheque

Cash and cheques come with a heavy admin burden for your business. If a customer is paying you in this way, try using these key talking points to get them to move to Direct Debit.

Preferred payment option – Direct Debit through GoCardless is now our preferred way to take payments - it’s simple, easy to use and benefits both of us.

Set and forget – You set up payment once, and after that, it’s taken automatically on the invoice due date. No need to set diary reminders or draw out large sums of cash.

Never get chased for payment – Payments are automatic, so you won’t get chased for payments and there’s no risk of late payment fees (if your business has them).

You're still in control and protected – You’ll receive notifications of payment before funds are taken and under your Direct Debit Guarantee scheme, you’re guaranteed a refund if any payment is taken in error.

Better for budgeting – Paying through GoCardless makes your payment predictable, which can make it easier to budget for our services.

[Optional] Financial reward – Moving to Direct Debit reduces admin time for us, so we’re passing on this benefit to you through (incentive details). You’ll get access to the benefit as soon as you have signed the Direct Debit mandate.

Tell them how to sign up – After this call, you’ll receive a payment authorisation email from GoCardless which requests that you complete a Direct Debit mandate. This gives us permission to collect the agreed funds from your bank account at the agreed time.

Example email – Here’s an example message to send to your customers

Credit or debit card

If your customer typically pays each time using a credit or debit card, try using these key talking points to persuade them to switch to Direct Debit.

Preferred payment option – Direct Debit through GoCardless is now our preferred way to take payments - it’s simple, easy to use and benefits both of us.

Set and forget – You set up payment once, and after that, it’s taken automatically on the invoice due date. No need to set diary reminders or go to our payment gateway to make a payment.

Never get chased for payment – Payments are automatic, so you won’t get chased for payments and there’s no risk of late payment fees (if your business has them).

You're still in control and protected – You’ll receive notifications of payment before funds are taken and under your Direct Debit Guarantee scheme, you’re guaranteed a refund if any payment is taken in error.

Better for budgeting – Paying through GoCardless makes your payment predictable, which can make it easier to budget for our services.

[Optional] Financial reward – Moving to Direct Debit saves us money on transaction fees and admin time in processing the payments, so we’re passing on this benefit to you through (incentive details). You’ll get access to the benefit as soon as you have signed the Direct Debit mandate.

Tell them how to sign up – After this call, you’ll receive a payment authorisation email from GoCardless which requests that you complete a Direct Debit mandate. This gives us permission to collect the agreed funds from your bank account at the agreed time.

Example email – Here’s an example message you could send to your customers, asking them to make the switch.

Standing order (Standing instruction)

If standing orders are a customer’s preferred payment option, try using these key talking points and email template. You can find a full breakdown of standing orders vs Direct Debit here, if you need more information.

Preferred payment option – Direct Debit through GoCardless is now our preferred way to take payments - it’s simple, and easy to use for both of us.

Less hassle to make changes – If a payment amount or date changes, you won’t have to set up Direct Debit again (unlike with a standing order).

More informed – You’ll receive notifications of payment before funds are taken and we will [send our invoices as normal / we will agree payment terms in advance as normal]. Under your Direct Debit Guarantee scheme, you have the right to a refund for any payment you believe was taken in error and you can cancel your Direct Debit mandate at any time through your online banking to prevent future payments.

[Optional] Financial reward – Moving to Direct Debit reduces admin time for us, so we’re passing on this benefit to you through (incentive details). You’ll get access to the benefit as soon as you have signed the Direct Debit mandate.

Tell them how to sign up – After this call, you’ll receive a payment authorisation email from GoCardless which requests that you complete a Direct Debit mandate. This gives us permission to collect the agreed funds from your bank account at the agreed time.

Example email – Here’s an example message you could send to your customers, asking them to make the switch.

How to handle objections

Below are some common objections you might come across when asking customers to pay by Direct Debit, and suggestions for how you can respond to them.

“I don’t want to change my processes”

• Outline the benefits to customer and/or incentives (see above).

• Show how easy it is to do - explain the steps.

• Ask what they don’t want to change and see if you can meet them halfway, or add additional benefits to them, e.g. let them choose their payment date or split payments over multiple instalments.

“I don’t have time”

• Show how easy it is to do - explain the steps.

• Outline how they’ll save more time this way (if they are paying by cheque/cash/bank transfer) by giving a simple comparison of how long it takes to pay by their usual method. E.g. 30 seconds spent filling in an online Direct Debit mandate form once vs. 2 minutes on a bank transfer every month.

“I want to stay in control of payments”

• Let them know that you will still send invoices or agree payment in advance as usual.

• Tell them they’re protected by the Direct Debit guarantee and are guaranteed a refund in case of any payment being taken in error.

• Tell them they are notified before a payment is taken and they can cancel their Direct Debit at any time to stop future payments.

• Let them know that they can change their payment date at any time by reaching out to you (assuming your business supports this).

“I’m worried about using GoCardless, I’ve never heard of them”

• Tell them that GoCardless is an approved Direct Debit provider, who work with over 50,000 businesses across the globe, including Sage, TripAdvisor and Les Mills.

• Let them know that GoCardless is ISO 27001 accredited (ISO 27001 is a widely recognised, internationally accepted standard for information security).

• Let them know that GoCardless is authorised by the UK Financial Conduct Authority to provide payment services as an Authorised Payment Institution across the European Union.

• If they would like more information on GoCardless security credentials, you can point them to this page.

• Explain that compared to other payment methods like cards, bank transfers and standing orders, your Direct Debit scheme offers more customer protection, including refunds of any payments taken fraudulently or in error.

“I always pay you on time, so I don’t see why I should have to change”

• Thank them for being a prompt payer, but explain the challenges you have in your business with admin overheads or other cash flow challenges.

• Explain that having customers on differing methods is more work for you, and your efficiency ultimately benefits them, so you’d appreciate it if they could sign the mandate.

• Incentivise if needed (see above).

David Lester, Founder & MD, Citrus HR – HR software and consultancy