How Direct Debits make you Fat!

Here in Nuapay we know how Direct Debits work, and we know how Direct Debits can fundamentally improve the critical money flow within your SME.

So we talked to some of our SME customers to get their thoughts on how Direct Debits help their cashflow. This is what we found.

1. Direct Debits allow the merchant to collect the correct € value at the correct date. Also Direct Debit payees are very reluctant to allow their direct debit bounce, as it affects their credit rating (unlike a non complete Credit Transfer or non-authorised card transaction). These combined capabilities mean payment is more likely to complete. In fact many of the Nuapay SME clients report a 2 week or more improvement on payment date of their invoices.
Invoices paid 2 weeks earlier = half month of sales, in Cash, in the Bank, Now, for Free.

2. Direct Debit costs are much less than card. Nuapay is almost 1% cheaper than the typical card transaction cost. That’s a huge difference.
Lets take annual transaction values of €100k
Typical Card costs = €100k X 1.5% = €1,500
Nuapay Direct Debit Costs = €100k X 0.5% = €500
= €1000 of extra cash at end of year

3. Direct Debits allow the collection of variable amounts each month, which is great for merchants with different invoice values every month.
But many merchants collect fixed values each month and therefore allow Standing Orders. However there is a major snag with Standing Orders. You cant increase the value without the customer resigning. Imagine if  you have 200 customers, each of which has to sign a new standing order – a nightmare! With Nuapay Direct Debits increasing the value collected is 5 minutes work.

4. Direct Debits do not have an expiry – all cards expire, making the old card details invalid. For merchants with more than 500 customers it is a costly, time consuming and often an incomplete process to catch each customer’s new card details. Direct Debits do not have this problem. No expiry means no admin hours getting new details and no missed payments.
Less labour hours + less missed payments = more cash.

5. Direct Debits are a clever way to isolate your slow payers. If they refuse to sign direct debits put the remainder of your regular clients on Direct Debit. Then after some months make the business decision. Are those slow payers worth the admin time, the cashflow challenge and frankly the head-space. Many of our Nuapay customers talk about reducing their bad debt exposure by more than 50% when analysing slow payers vs good payers in this way.
Quicker Collection on slow payers and reduced bad debts exposure = more cash.

If your business is collecting payments more than 3 times per year from the same customer, Nuapay’s direct debit solutions will significantly improve your company’s cashflow (and maybe expand your waistline!!!)

Call us and lets talk about Direct Debits. Tel – +353 1 901 2398 ¦- sales@nuapay.com