Direct debit is an arrangement to enable the transfer of money between a customer and a business. A direct debit system is an automated way to facilitate the transactions. When a product/service supplier and a customer agree on the amount and terms, the direct debit system automatically deducts the client’s bank account with the agreed amount. The direct debit system is an efficient way to ensure the supplier gets paid the exact amount on the agreed dates. Here are some of the businesses that can greatly benefit from a direct debit system.
Gyms, Health, Fitness & Exercise Centers
Most gyms offer a monthly subscription. Gym owners are sometimes stressed out in collecting monthly payments from their members. They are always given excuses on why their members cannot pay them. Gyms rely on monthly payments by their members to pay for overhead costs and staff salaries. Without a steady cash flow coming from monthly membership fees, these gyms may struggle with their finances. Having a direct debit system for payments will increase the cash flow of the gym. The gym owner will no longer be bothered by running after members that do not pay their gym membership on time.
Private Schools and Childcare Facilities
School owners know that running an educational institution needs a lot of investment. You have to ensure that your students are getting the best education that they could get and that your teachers are also doing everything they can to teach their students properly. One of the significant problems that school owners are facing is the late payments of tuition fees.
When a lot of parents are late in paying their monthly tuition fees, the school may face a problem with their cash flow. The teachers’ salaries are paid every month so if the cash flow is unpredictable, then school owners must find other ways to pay for teachers’ salaries and monthly overhead expenditures. A direct debit system will help school owners because when monthly tuition payments are taken directly from the bank accounts of parents regularly, the school owners are now able to budget their cash flow more effectively.
If you own several properties that are for rent, you will no longer be bothered by late payments from your tenants. You can easily collect monthly rental payments through a direct debit system. Signing your tenants for a direct debit payment system allows you to relax since you know that you are going to get monthly rental payments on time. A direct debit system will also allow you to filter potential tenants. If a tenant refuses to sign up for a direct debit system for paying rent, then that tenant may have trouble with his or her finances. You would not want a tenant with money problems renting your property.
A lot of law firms take in clients on a retainer basis. This means that companies pay lawyers a monthly retainer to represent them for any legal matters that may arise. Law firms may ask their clients to pay them through a direct debit system so that they can be guaranteed that their monthly retainer payments will arrive on time.
As business owners, it will be beneficial for you to set up a direct debit system, especially if you are expecting monthly payments from your customers. It will save you time and money as well as eliminate the headache of not having predictable monthly cash flow.