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The process of setting up a direct debit for small businesses is as same as you do it to ensure timely payment for your monthly bills. It is a simple process to collect payments from your customer’s bank account, though it is an admin-heavy task.
To set up a direct debit for small business, you will need to acquire a direct debit mandate from your client’s account. It is Direct Debit Instruction, which you can either make on paper, online or even over the phone. It serves as a permission slip from your customer to collect future payment.
Direct debit set up allows you to send a notice to your client before remittance is due. After you have received direct debit mandates from your customer, cave it into the banking system via Bacs. The process will take up to 10 working days, and the bank will notify you once the process is complete.
As soon as the direct debit instruction gets approval, you can start taking your monthly remittance or installments of your sold products or service. With Direct Debit, you can make automatic payments made on time. It is a must to notify your customer about the due remittance. Otherwise, you will risk the benefits you get from the Direct Debit services. As per policy rule, you should intimate your customers at least ten days before the due date of the payment. You can receive off payments without notice upon requesting your customer to pay you immediately.
The good news is that you do not necessarily have to have local customers to benefit from the direct debit scheme. It means your small business can enjoy its benefits for international clients as well. While direct debit for a small business setup may often limit your reach, some schemes, including GoCardless, can remove the limitation from your payment.