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How to Set Up Direct Debit for Small Business

Rob Keating
Written by

Last editedFeb 20245 min read

If you are a small business owner, efficiency is paramount to growing your business. Adopting Direct Debit as a payment method can revolutionise your payment collection process.

So why wait?

How small businesses can use Direct Debit

GoCardless Direct Debit for small business can be used for regular and recurring payments, making it an excellent choice for many businesses. 

Businesses that need to be invoiced regularly: If you have clients who need to be billed regularly, Direct Debit saves your customer from doing any additional admin, which is always appreciated.

Businesses offering payment in instalments: If you offer goods or products that customers can purchase in instalments, it’s in your interest to ensure they don’t fall behind on their payments. As a result, the ability to collect by Direct Debit is the perfect payment option.

Subscription-based businesses: Direct Debit is a highly suitable payment method to prevent customer churn if you're providing an ongoing subscription service.

Reduce transaction fees, late and failed payments and tiresome manual admin.

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How to collect Direct Debit from customers

How to collect Direct Debits from customers may vary somewhat depending on your set-up and provider, but the scheme rules require the following four steps:

1. Acquire a Direct Debit mandate from your customer – Also known as a Direct Debit instruction or DDI, they can be made on paper, online, or over the phone (though this method eliminates any paper trail) and is your permission slip from the customer to take future payments, so long as you give notice of the collection before it being carried out.

2. Submit mandates via Bacs – Your DDI needs to be submitted to the banking system via Bacs. This can take up to 10 working days, and you will be notified of its completion.

3. Start taking Direct Debit payments – You can accept Direct Debit payments as soon as the DDI has been accepted.

4. Give notice – You must always give notice before you take Direct Debit payments. You risk being removed from the Direct Debit scheme if you do not. Notice is usually given ten working days before payment is taken, but one-off payments can be made without notice if the customer requests that the payment be fulfilled immediately.

How to set up Direct Debits for customers with GoCardless

Setting up Direct Debits for customers with GoCardless is quick and easy. Use the merchant dashboard to set up and schedule Direct Debit payments in just a few clicks. We handle the submission of all mandates on your behalf:

  • We notify customers when payment is due.

  • We help maximise payment success by ensuring compliance with the Direct Debit agreement.

  • We inform you of any failed payments, with payment collection attempts made up to three times.

  • We integrate seamlessly with over 350 software partners like Xero and Sage, so you don’t have to rearrange your workflow. 

  • We automate a job that would otherwise need to be done manually, helping you reduce costs.

  • We offer a fast Direct Debit set-up for businesses so that you can collect payments from customers quickly.

  • We offer a no-obligation 90-day free trial, so getting started today is risk-free - click here to collect payments without fees for 90 days.

Reduce transaction fees, late and failed payments and tiresome manual admin.

The benefits of GoCardless Direct Debit for your business

GoCardless makes collecting Direct Debits from customers a breeze by handling all the admin and equipping you with everything you need for payment success:

Timely Payments: By automating the payment process, Direct Debit ensures you receive your due payments promptly, eliminating the hassle of chasing late payments.

Improved Cash Flow: Regular, on-time payments lead to a steady cash flow, enabling you to plan your business finances more effectively.

Reduced Administrative Work: GoCardless Direct Debit automates the payment collection process, freeing you from the tedious task of manual payment tracking and collection.

Flexibility: Direct Debit is adaptable, catering to regular and irregular payment schedules and varying payment amounts.

Cost-Effective: Direct Debit is more economical than other payment methods, like card payments, with lower transaction fees.

Customer protections: The Direct Debit guarantee protects consumers against unauthorised withdrawals. Additionally, as a direct bank transfer, Direct Debit is less susceptible to fraud than card payments.

Merchant dashboard: The GoCardless merchant dashboard lets you set up and edit payments in just a few clicks. You can add customers and change the collections' amount, date and frequency all from inside the dashboard.

How to collect Direct Debit 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 Direct Debit 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.

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Automated authorisation: When you add customers to one of your payment plans GoCardless will automatically send the authorisation forms to your customer. 

Integrations: You can integrate GoCardless with over 350 software packages, including Xero, Sage50 and Quickbooks, saving you even more time and stress.

High success rate: GoCardless collects 97.3% of payments successfully on the first attempt. On those rare occasions when a payment does fail, usually due to insufficient funds, you can make another attempt to retry collection the following days.

Easy to get paid: Add payment pages to your website checkout or share secure payment links via email or text.

Free trial: We offer 90 days without transaction fees, so you can sign up and get started today risk-free.

Claim your 90 day free trial to automate payment collection and get paid on time, every time.

GoCardless: your trusted partner for Direct Debit collection

For small business Direct Debit set-up and collection, GoCardless is an ideal choice. As an approved Direct Debit provider, GoCardless serves over 85,000 businesses around the globe, including industry giants like DocuSign, The Guardian, and Sage, as well as tens of thousands of small businesses in the UK.

Recognised for security credentials, GoCardless is ISO 27001 accredited and authorised by the UK Financial Conduct Authority to provide payment services as an Authorised Payment Institution across the European Union.

Cost-effective pricing and transparent fees

Unlike other payment platforms, GoCardless offers pay-as-you-go pricing, meaning you only pay for the transactions you make. There are no hidden costs, contracts, or upfront commitments, making GoCardless a cost-effective choice for your business. Plus, the transaction fees for GoCardless are significantly lower than those for card payments, helping you save more.

Automated payment collection and notifications

GoCardless automates the entire payment collection process, doing all the heavy lifting for you. The platform automatically creates and sends all necessary authorisation forms and notifications on your behalf, saving you valuable time and effort.

Award-winning support

With GoCardless, you're never alone. The platform provides award-winning support, ensuring any queries or issues you encounter are promptly resolved. With GoCardless, you're always in safe hands.

Claim your 90 day free trial to automate payment collection and get paid on time, every time.

Case studies: business thriving with GoCardless

Bike Club, the world's largest kids' bike rental network, has enjoyed significant benefits using GoCardless Direct Debit for its recurring payment collection. 

Initially attracted by GoCardless' cost-effectiveness, ease of use, and seamless integration into the customer journey, Bike Club chose GoCardless over a mainstream bank's Direct Debit system. 

"GoCardless won hands down. It was cheaper, easy to use and plug in, and super easy to build into our customer journey. Through multiple funding rounds, no one questioned GoCardless as a payments provider." 

With a majority of customers opting for GoCardless, Bike Club saves on overhead costs,

We're collecting tens of thousands of payments a month and 90% of our revenue goes through GoCardless, which saves us about three FTE per year, equating to around £100,000 worth of overhead. It's been really, really valuable for our business – if we don't have GoCardless, we barely have a business.

Bike Club utilises GoCardless' Success+ feature to minimise failed payments and support customers struggling with payments, James says, 

The intelligent retries in Success+ allow people who have missed a payment to catch up naturally, while the solution’s data allows us to identify the ones who might be struggling so we can proactively help them get to the right place.

James notes that GoCardless' international payment capabilities have also been advantageous for Bike Club's expansion plans, 

We're excited that GoCardless takes international payments in multiple currencies, because as we expand abroad, that’s a whole problem dealt with already.

The partnership with GoCardless provides Bike Club with a secure and reliable payment system. 

As a business owner, GoCardless makes me feel secure. I never wake up in the middle of the night worrying about payments.

Claim your 90 day free trial to automate payment collection and get paid on time, every time.

We can help

To grow your business, efficiency is paramount. Adopting GoCardless Direct Debit for your small business can revolutionise your payment collection process. With our user-friendly merchant dashboard, transparent pricing, automated collection and notifications, and award-winning support, GoCardless is your trusted partner for setting up Direct Debit. So why wait? Get started with GoCardless today and pay no fees for 90 days.

Claim your 90 day free trial to automate payment collection and get paid on time, every time.

Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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