Which do you guys use the most? Called my bank today and they told me to set up a Direct Debit system will cost me £250!!! then i have to have the same amount of money in the account that is being paid in.
Ie. £1,000 coming from client, have to have £1,000 in account to cover the direct debit...!!!
Standing Orders look so much more appealing now even though they are a little more unstable than DD's... (as in can be canceled and you not know about it!)
So what do you use the most for monthly paying clients?
-- Edited by ClawzCTR on Wednesday 23rd of May 2012 01:54:05 PM
I use standing orders for all my regular clients. The biggest difference (other than price) is that a standing order is for a regular amount, a direct debit is a varialbe amount. Like you say standing orders can be cancelled, but so can DD. I normally raise an invoice for the client as normal, then check the bank to see if it's been paid, if not call the client. It's not any more work than any other payment method.
Yes, Standing orders can be as often or infrequent as you like. The system I use emails the client an invoice automatically. At the bottom of those who pay with standing orders I put "As you pay by standing order you don't need to do anything. Your bank will send us the payment automatically."
I bill client per year and treat the monthly standing order received as a payment on account then when raise the year end invoice i match the payments received against the invoice to tidy up the debtor list.
Standing orders can be set up either monthly, quarterly, six monthly or yearly (well the RBS S?O certainly can).
Contact your bank and request a standing order mandate form for sending out to clients. Will have all the details to on there ie your clients bank details, your bank details, how much the payment is to be for, when it is to start, how regular the payment is to be and when the payment should finish (or continue until further notice).
Do the banks charge for supplying a standing order mandate? They charge for anything else they can get away with.
The cases where I've had clients pay by standing order, I simply gave them the relevant details and told them to write to their bank with the necessary instructions. In some cases, they might even be able to set them up themselves using online banking: I can with HSBC on both my personal and business accounts.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Fair enough, but getting them still strikes me as pointless when setting up a standing order is so trivial - a simple letter by the payee to his or her bank, or do it online if the option is there. (In my book, the latter is the most preferable to the complete avoidance of the postal system.)
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
If I used DD from day one, I wouldn't still be here. Is it really that hard to check online banking to make sure everyone's standing order went in when it should? My clients get a choice, they pay on 1st or 15th of the month. It's just a case of running through the list of who's paid (you can use reference numbers to make it easy) and marking their invoice as paid. Any decent software will show you the invoices still out standing and you can chase them in the normal way. The only good thing about DD as far as I can see is the possibility to vary the amount, but you still need to tell the client about this before you take the money. Seems like a lot of work.
Update: I've had a search, and there are a lot of direct debit bureaus who will do everything for you for about 40-50p per transaction. Worth it to avoid the hassle and setup costs I would have thought.
Kris
-- Edited by kjmcculloch83 on Thursday 24th of May 2012 01:39:33 PM
I bill client per year and treat the monthly standing order received as a payment on account then when raise the year end invoice i match the payments received against the invoice to tidy up the debtor list.
I thought about this Mark, but I wasn't really prepared to pay the money for a credit license just for this. If I did other work which needed it I may have billed clients yearly.
I'm new to the forum but have been reading your posts for around 10 months.
I run a small accountancy practice and specialise in small owner managed limited companies, usually IT and building contractors.
I use Direct Debits, which doesn't seem like a popular choice from the other posters. The reason I chose to collect fees by direct debit was the ablilty to collect one off amounts and also to increase client fees on a recurring basis.
I worked for a accountancy firm for 5 years who used Standing Orders and watching the admin staff try to manage 500 clients via standing orders was interesting to say the least. Around a year before I left they switched to Direct Debits and the reports available and ease of collecting outstanding debts saved the business lots of hours in chasing standing orders that clients had forgotten to give to their banks.
I think for a smaller practice of up to 50 clients that Standing Orders are more than adequate, but over this my opinion is that Direct Debits are a better suited collection method.
Look forward to reading more posts and contributing in the coming days, weeks and months.
I would love to use DD's Martin but the initail cost to set them up and then to have the money in the account to cover them should they be recalled was just too much for me to do as a starting sole trader.
I googled a standing order mandate and then set about changing it... added boxes for them to fill in then my header.... job done! look very snazzy too! if anyone wants a copy then drop me a PM with your email address. :D
It cost me around £ 400 to set-up the Direct Debit online collection system and I pay 1.25% of any Direct Debits collected. I paid an extra £ 100 so that my company name appears on each clients bank statement too, which I think is a nice touch.
I know Direct Debits are more expensive then Standing Orders, but I would strongly recommend that any new bookkeeping or accounting businesses starting out should use Direct Debits from day one as the control and reporting is second to none.
It gives a great print out for any clients that have queries on what they have paid you since they have been a client and also helps with your year end accruals for your fees.
I accept that the set-up fees are quite expensive but the benefits outweigh this over time.
From the other side of the coin, i.e. as the paying customer, I like to keep control of what goes in and out of my bank account, and so in general I much prefer Standing Orders to Direct Debits. The very thing you are saying is better with Direct Debits, that you can just take whatever money out of the customer's account you like (subject to meeting the conditions of the Direct Debit Guarantee about telling the customer about changes), is exactly what I don't like about them.
So if I were to take on a service, I would go so far (and have done so) as to not going with a particular provider simply because they insist of Direct Debits as payments instead of Standing Orders.
I agree it's better with the Direct Debit Guarantee in place, but I hear of friends who have some Direct Debit set up and get surprised because an amount is taken out which they didn't expect, despite it all being correct under the Guarantee, and I just don't want *that* hassle.
So if I ever set up my own business doing bookkeeping or whatever, I'd only be offering Standing Orders.
Thanks for all the advice folks... Handed my first SO Mandate into the clients back the other day and they were totally happy with it, looks like i can do things right!! lol Only thing i had left off, which is for my benefit is the 'Ref;' box so her money coming in isn't a load of numbers, instead it'll be 'Mr Bloggs'. But thats now added! :D
