What can Direct Debits do for my business?

Direct Debit has become the standard method of sending and receiving regular payments, while allowing for the payment date or the amount of money sent to be adjusted slightly – with mutual agreement and plenty of advance notice – when it is appropriate to do so.

This gives you the convenience of a regular standing order, but goes further than that, as it means if your monthly bill varies (for example, to include calls made on a landline or mobile phone contract) or if the price goes up in the future, the payment can be adjusted without you needing to set up a new standing order.

It’s useful for businesses as it means less risk of missing a supplier invoice and potentially incurring late payment fees or even facing a spurious insolvency claim – and if you are able to use Direct Debits to collect payments, you get all of the same benefits from the supplier’s perspective, too.

Can my business accept payment by Direct Debit?

Taking payment by Direct Debit is a big responsibility. It gives you direct access to customers’ bank accounts, and the right to take as much money as you request, and control of when you take their money.

Because of this it is subject to some strict protections. You will usually have to go through a detailed authorisation process with one of the big banks, you may have to hold a certain amount of capital to prove you can cover any claims that arise from disgruntled customers and incorrect payment requests, and if you do get your sums wrong, the Direct Debit Guarantee means you have to pay the customer their money back very quickly.

All of this adds up to why Direct Debits are only commonly used by quite large businesses; however, there are also intermediary bureaux that can collect Direct Debits on your behalf, usually with an initial setup fee of up to around £500 and then a processing fee per Direct Debit of 50p-£2.

What are the alternatives to accepting Direct Debits?

There are plenty of modern methods to get paid by customers. When you open an Arro Business Account you get a sort code and account number that should allow customers to pay you as they would pay into any high street bank account.

And with an Arro Personal Account that can give them their own sort code and account number, plus a MasterCard® debit card in under three minutes, customers have no excuse as to why they can’t pay you by your preferred method.

Some of the options you might want to consider include:

  • Direct funds transfer via Faster Payments
  • Regular payments via Standing Order
  • Accepting payments via debit/credit card
  • Accepting payments via a third-party e-wallet or mobile app

Not all of these will be right for everyone, but there should be enough options for you to find a method that works for your business, even if you don’t conduct enough transactions to be worth becoming an authorised Direct Debit supplier.

Can I pay by Direct Debit from an Arro Business Account?

You can use Direct Debit for B2B payments, which as mentioned, means you will benefit from making payments in full and on time, providing you have the funds in your account to do so.

Like other regular payments, you can check all of the Direct Debits you have set up in your online account dashboard; however, remember that it is normal for your supplier to set up a new Direct Debit agreement and unless you have lost communication with them, you should usually go to them first to change or cancel the arrangement.

If you don’t want to deal with them, you can cancel your Direct Debit in your account dashboard, and this will remove the supplier’s permission to access your funds.

Get a business account with Direct Debit support

Getting an Arro Business Account is fast – you just need to be based in the UK, with a company name or personal name if you are a sole trader, and over the age of 18. There’s no credit check, just an instant online ID check, so it usually takes just three minutes to get a new business account.

We are based entirely online, so within moments you can start to move money into your new account and set up outgoing payments, standing orders and Direct Debits. You also get a Business MasterCard® debit card that you can start using online immediately – all without any lengthy proof of ID and address, and without any credit check at all.