50% of accountant practices don't have clients pay with credit cards...Does this make sense

I heard the VP of Thomson Reuters give a talk in NYC at an accounting conference about it. Just curious to hear what people in the UK think.

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paying by card

jfoster | | Permalink

I have looked at doing this but the cost is too much for a small practice. I do offer payment by paypal to my clients though.

MarkAOrr's picture

Use a Direct Debit System

MarkAOrr | | Permalink

I think credit card payments are useful if you tend to have one off adhoc amounts.  However, I would expect most accountant to want their clienst to pay them monthly.  The most efficient way to do that is by direct debit.  However, don't go to your bank for it, they won't be very hlpful and they will charge a fortune.  I use London & Zurich to run run my direct debit system.  It is very efficient and inexpensive. 

jpointon's picture

Payment by credit card

jpointon | | Permalink

 We offered this facility for about 5 years during which no client availed themselves of it. Nowadays if the fee exceeds ceran levels we will accept payment by interest-free instalments by standing order. 

bookmarklee's picture

Make it easy

bookmarklee | | Permalink

Accountants should simply give clients all possible choice and options to ensure that payment comes in as quickly and effortlessly as possible. It makes no sense to insist on payment through a facility that the client doesn't like or trust.

Equally, if a client has cashflow issues then accepting payment by credit card will often allow you to get paid faster even if the client has to spread the cost by only paying the credit card balance off over a period of time.

Offering the facility to pay through paypal includes a facility to pay by credit card for those clients who do not have a paypal account.

Mark

MarkAOrr's picture

Credit card need not cost that much

MarkAOrr | | Permalink

Obviously you can use paypal and we do that.  If the number of transactions is low it is quite good but one of the problems is it is much easier for the payee to grab the money back.  Northamptonshire Chamber of Commerce is now offering card machines at only £13 per month and I think the FSB does £15.  The percentage charge for transactions is far lower than paypal so if you have a few more to put through then it could well be worth while.

I still prefer Direct Debit which is the safest form of payment for your client but easy for you to control. 

petersaxton's picture

Standing order

petersaxton | | Permalink

"I still prefer Direct Debit which is the safest form of payment for your client but easy for you to control."

Many people don't like paying by direct debit and would prefer standing order.

MarkAOrr's picture

That's because they don't realise that Direct Debit is actually

MarkAOrr | | Permalink

 The great thing about Direct Debit is that the payee can recover their money at any time for any reason.  They just ask their bank to pay it back to them and under the cast iron warrantee given by all banks they are obliged to do so.  In contrast, if you have accidentally overpaid a standing order then the only person who can give you the money back is the recipient and they are very unlikely to do so easily.

The other problem with standing orders is that they can only be set and amended by the payee.  Many people I know just put up with losing money when the VAT rate changed because they couldn't easily get those who paid them by standing order to change the amount.  If they had been on Direct Debit the recipient can change it. Obviously it is a good idea to tell them why.

I use my direct debit system for one off payments and it has substantially reduced slow payment and improved cashflow.  Once my customers are on it they love it because it is a set it and forget system.  They never have to make any effort at all to pay us.  It has been great for me.

 

petersaxton's picture

Resistance

petersaxton | | Permalink

I don't disagree with what you say but the reality is that there is a resistance to DDs.

I think this is because there is a perceived lack of control of their finances.

The Minion's picture

Just do it

The Minion | | Permalink

We have accepted payment by card, any card except American Express, for over ten years now.

Although there is a percentage hit for credit cards (covered by additional charge) the cost per switch payment is a fixed amount.

It is still substantially less than the legal fees you get sucked into sometimes. It has been a godsend and also helps with on line sales and with clents who dont want to do DD or SO but are happy to pay by card, in advance.

MarkAOrr's picture

Resistance to direct debit is great for positioning your client

MarkAOrr | | Permalink

 Do you really want to deal with someone who doesn't believe they will have the money to pay you when it falls due? One of the great and unexpected side effects of us using Direct Debit is that it gives us a very early opportunity to talk about payment without actually talking about payment.  On all of our quotes is says we collect payment by direct debit 30 days after delivery.  Therefore, when a new customer gives us an order for the first time it is so easy to say 'thanks for the order, please can we have your bank details for the direct debit'  Most people just say yes fine.  A few corporates with proper purchase order systems obviously won't do it.  Other customers who say no either get asked to pay immediately or offer an alternative method that will guarantee we get paid on time without having to remind them.  That usually means a post dated cheque.

Credit cards are good for online transactions.  However, with repeating payments you will, at some point, get the problem that the credit card will have expeired and you will then need to update the repeat payment with the new credit card expiry details and security code.  Where as Direct Debits carry on as long as the bank account does and then most banks will help their customers continue with direct debit arrangements seamlessly.

Asking for a direct debit is a great positioning statement.  If small businesses don't want to sign up the likelihood is that they will be slow payers.

Why should I pay anything?

HudsonCo | | Permalink

I adjust my standing orders once a year for any fee increases or VAT changes. No monthly admin as with DD and it is free (my favourite price).

If the work is a "one-off" or if clients don't want to pay by SO then they pay me on 7 days. Most of them prefer monthly standing orders as a means of budgetting and breathe a sigh of relief when I offer it.

Timing for either SO or cheque/BACS is 50% in advance and 50% in arrears so we share the credit risk.

MarkAOrr's picture

You pay for a better service

MarkAOrr | | Permalink

There is no monthly admin for Direct Debit, you set it and forget it.  You may have the most perfect and responsive clients in the world so standing order may work well for you.  However, other accountants I have spoken to have told me how many times they have had to write to and call their clients to ask them to adjust their standing orders.  Presumably your time spent writing to clients and calling them is not your favourite price as it isn't free.

I have always taken the view that something free is worth about as much as you have paid for it.  In the end people should use whatever works for them. 

David Winch's picture

You Have The Choice

David Winch | | Permalink

Mark Orr rises a hugely important point:- "Resistance to direct debit is great for positioning your client.  Do you really want to deal with someone who doesn't believe they will have the money to pay you when it falls due?"

Why would anyone want the aggro of dealing with customers who aren't going to pay on time?  Filtering them out before things ever get that far frees up your time to acquire more customers who will pay you on time.

David Winch

Make Sales Without Selling and Get Paid What You're Worth

carnmores's picture

talk about hubris

carnmores | | Permalink

thats errant nonsense, for various reasons people may not have the money to pay when we want it for a number of reasons

 

how about - they might not know exactly how much the bill will be for hourly charging firms ( i disagree with this style of charging anyway!)

and when will the bill be raised to client , do they know exaxctly when they need to have funds available.

i do grant you that using a DD should make it easier for clienst to pay but i just object to the overall sentiments

MarkAOrr's picture

I really cannot understand the venom in that comment

MarkAOrr | | Permalink

If an accountant has made a contract with somebody to pay so much a month then they will know exactly how much is due and when.  If they cannot afford that or don't think there will be enough in the bank then they won't make ideal customers.  Surely, we are all entitled to expect our customers to pay us on time?

In my case, most of my Direct Debits are for one off payments rather than regularly recurring.  However, the customer is told at the time of receiving the quote that we collect our money by direct debit 30 days after delivery. When they have approved their proof they are told when delivery will be.  When we send the invoice, on the day of delivery, they are told the date when the Direct Debit will be taken.  Surely, you would agree that this is all fair.

If somebody is coming to me for a loan, which is exactly what credit is, I am entitled to set my own rules and opinions as to who is credit worthy.   A business person who is reluctant to sign up to a direct debit puts me on notice that they may not be the type of people we want to work with.  It is my business so I am entitled to make my own decisions about it.  If they won't sign up I do go through a conversation with them and we usually find a way around it or they sign up.  Usually I find that it is just someone being ignorant about an unusual form of payment in my industry.  Whereas, in accountancy, it is far less unusual so you chaps won't have the same problem.

Hopefully that helps to explain the background to my previous comments.

carnmores's picture

lol well it was lucky i toned it down

carnmores | | Permalink

i do think that DDs are a good way for some firms and their clients providing continuing professional services; but i am against too much charging up front. what rankles me is the sentiment that if clients cant pay our bills immediately we dont want them - that is surely far too simplictic

MarkAOrr's picture

I think you may have speed read the comments and therefore misun

MarkAOrr | | Permalink

I very specifically don't, can't and wouldn't use Direct Debits for up front payments.  In fact, with the system we use the quickest you can get paid for a new Direct Debit mandate is 10 days.  I actually use it so that new customers that I don't even know can have 30 days credit immediately.  Therefore, if somebnody won't accept a direct debit in order to get 30 days credit I do think it is fair for em to regard it as a worrying sign of their intentions.

Getting DDs Reversed

chatman | | Permalink

"The great thing about Direct Debit is that the payee can recover their money at any time for any reason.  They just ask their bank to pay it back to them and under the cast iron warrantee given by all banks they are obliged to do so."

I tried to reverse a DD payment and the bank told me they needed to see evidence that there was a mistake. I have heard this from other people too.

The direct debit guarantee says nothing about "no questions asked" so it sounds like they like to give the impression it is easy to reverse a payment but it in fact it is not.

jpointon's picture

Getting DDs reversed

jpointon | | Permalink

 This is not as easy as it should be,

We had a dispute with a telecoms supplier (not our present one) over their billing for calls overseas which had not been made. We told our bank to withold DD whereupon supplier merely recycled it for 10 days later! 

MarkAOrr's picture

You really can recover a direct debit at any time with no reason

MarkAOrr | | Permalink

If your bank says no to refunding a Direct Debit they will be the first in the UK to do so.  The warranty is absolutely cast iron.  I have recovered Direct Debits in the past, even several months after they were paid.  This is a very safe method of payment.  In contrast, if you had made that payment by standing order, the money is gone to the recipient and they are the only person who can give it back to you.

If you no longer wish to pay a direct debit then just cancel it and the bank will no longer let it go.  You should also advise the recipient otherwise they may presume that it hasn't arrived for some other technical reason and that may be why they reinstate it.  Mind you even if they do take it again your bank is obliged to give you the money back.

Direct Debit really is the safest way to make payments.

@MarkAorr: not quite correct

chatman | | Permalink

"If your bank says no to refunding a Direct Debit they will be the first in the UK to do so."

As I mentioned in my post, above, this has happened to me and I have heard of it happening to other people.  So it is incorrect to say that a bank doing that would be the first in the UK to do so.

If, as you say, the guarantee is that they will not do that, what authority can I quote them to support my claim, and what redress do I have if they refuse to reverse it there and then without question?

agree with chatman

shenker | | Permalink

We had an issue at our previous office where the local authority for business rates once took some ten times the amount they were supposed to ( well into five figures !) . After some hassle they agreed they were wrong but we could only get a refund by cheque !! which came through reasonably quickly but of course we had to wait for it to clear. Our bank were unhelpful throughout !!!

Getting DDs reversed

gerrycreedon | | Permalink

I'm not fully convinced about the benefits of direct debits whether you are the payer or payee you give up a substantial amount of control over your account.  I've had difficulty in recovering payments taken from our account in error where the bank was unhelpful leaving us to deal with the service provider to recover the monies.   True we also have had positive experiences with the system.  Two banks with different interpretations of the DD guarantee.  And yes I still ask clients to sign one as it works successfully 99.9% of the time.

Direct Debit - From a DD Originator

markhope | | Permalink

Can I offer some concrete details on the use of direct debit and refunds in particular, my company has been a DD originator for several years (e.g. we setup DD agreements with our customers and collect payments of variable amounts ongoing).

Full DD information can be found at : www.thesmartwaytopay.co.uk

:: Direct Debit Guarantee
•The Guarantee is offered by all banks and building societies that accept instruction to pay Direct Debits
•If there are any changes to the amount, date or frequency of your Direct Debit the organisation will notify you (normally 10 working days) in advance of your account being debited or as otherwise agreed. If you request the organisation to collect a payment, confirmation of the amount and date will be given to you at the time of the request
•If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society.
◦If you receive a refund you are not entitled to, you must pay it back when the organisation asks you to
•You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written confirmation may be required. Please also notify the organisation.
 

Thats the theory, but how has it worked in practice for us ?

Surprisingly 99% of our customers were happy to move to DD when we introduced it, following a clear explanation to them on how it would work and benefits to them. Our bank were very helpful but did look at this as effectively an extension to our overdraft, due to the fact that a customer can very easily reclaim any payments made - without our permission or the bank giving authority. My understanding and the guarantee makes it clear that the customer can call their bank and ask for funds to be returned (if they have not been notified of the collection properly, with notice period and amount). Should this happen the bank will investigate to see if proper notice was given.

In our experience if we are clear with the customer exactly what amounts will be taken and when, with good notice, there are very rarely any issues - the one that usually causes a problem is the customer changing bank accounts.

Would I recommend it as a way to manage cash-flow - absolutely - but do consider the systems and procedures needed to make it efficient and importantly communicate honestly and clearly to your customers.

MarkAOrr's picture

I am also a qualified banker

MarkAOrr | | Permalink

Coinicidentally, I qualified as a chartered banker back in 1988 when the Direct Debit system was already in place. Since that time I have always successfuly recovered Direct Debit payments under any circumstances from more than one personal bank and more than one business bank.  If banks did not allow this to happen nobody would trust or use the direct debit system.  I have never been refused.  I have never been asked to talk to the originator first.  If anybody has any problem here with recovering money paid by direct debit I will happily get it back for them as long as they are happy to share the money half and half.  I will of course give my half to charity.

By the way, you don't need to go to your bank to get your own direct debit system.  I use London and Zurcih and there are others.  It has nothing whatsoever to do with my overdraft limit as I don't have one.  You pay one simple set up fee, then £2.50 once for each new customer you add and then about 1% of the transaction.  For us this is a small price to pay for a great service and improved cashflow.  There are no bank charges, we don't have to drive to the bank to pay in cheques and when it arrives the money is already cleared.  We don't waste time calling customers to ask to be paid and therefore avoid those awkward calls which very rarely ever improve customer relationships.

If I was an accountant with clients paying every month I would consider a direct debit system to be a 'no brainer'. Even though we use ours to collect differeing amounts for individual jobs it has proved to be really good for us too. If others don't trust it or don't understand it that is fine.  I started this discussion by just putting in an alternative to credit cards.  Obviously, we should all have a variety of payment methods available to us.  Good luck  

carnmores's picture

Mark you have set your self up for this

carnmores | | Permalink

bankers and no brainers go so well together dont they ;-)

Quality Impact Marketing's picture

Play nice!

Quality Impact ... | | Permalink

Come on boys, play nice or it will just end in tears! 

 

 David Ellis Managing Director

T: 01604 211221

E: david@qualityimpactmarketing.com

W: www.qualityimpactmarketing.com

@MarkAOrr

chatman | | Permalink

You seem to simply be repeating your belief about direct debits without addressing the evidence, from other posters, that contradicts it. What is the point of that?

MarkAOrr's picture

Do you expect me to change my mind just because others have misu

MarkAOrr | | Permalink

Sorry if I have repeated myself but I suspect from there answers that people are confusing Direct Debits with Standing Orders or even with BACS paymenst via their internet banking.  Direct Debits are the only Money Back guaranteed payments you can do and have been for over 20 years.  That is reality.  I have offered people help so if they genuinely have problems then I think I have been generous.

I don't understand the bankers and no brainers comment at all.  Anyway, we all have loads of work to do so shall we just get on with it? 

carnmores's picture

Mark a little light relief is not a bad thing

carnmores | | Permalink

but you have now said that i have sped read your commensts others have have misunderstood, that frankly is hubris

@MarkAOrr - Why do you assume people are confused?

chatman | | Permalink

Why do you assume people are confused?  Did you fail to read the posts properly?  Your response made no reference to your assumption; it merely repeated your earlier unsupported claims. If you think other people are too stupid to understand the concepts of SOs, DDs and BACS transfers you need to explain them, not just repeat yourself.

Having said that, I cannot really believe anyone has difficulty understanding them. They really are very simple. What did you find complicated about them?

MarkAOrr's picture

I assumed people were confused because

MarkAOrr | | Permalink

There answers clearly showed that they were.  You are right, this is very simple.  I only entered this duscussion to help people.  I don't want or need an arguement.  I don't think people are stupid.

However, I do have better things to do so please feel free to carry on amongst yourselves.

petersaxton's picture

Mark is wrong

petersaxton | | Permalink

Banks don't reverse DDs automatically when asked - I'm not confusing a DD with a SO or anything else. Mark is simply wrong.

MarkAOrr's picture

Correct, Direct Debits are not a secure method of payment. That

MarkAOrr | | Permalink

For Chatman, you have proved the point.  DD's are nnot a secure method of payment because your client can very easily get their money back from their bank who will then take it off you.  That is precisely the point I am making. However, I have been using them for two years and so far not one customer has recovered their direct debit payment.  Two customers have cancelled their mandates and in both cases it was due to moving banks.  In both cases I was paid immediately without chasing.

For Peter, if you have an example of somebody needing to recover a direct debit for any reason then give me written permission to deal with it and I will.  If you are proved correct and I can't get it back, I will pay some money to your favourite charity.  Feel free to contact me on mark@printingandmailing.co.uk.

petersaxton's picture

Not automatic

petersaxton | | Permalink

In all my experience the banks eventually cave in and refund. What I am saying is that it is not the automatic process that you make out it is.

MarkAOrr's picture

My experience as an employee and customer has been different

MarkAOrr | | Permalink

I have never had to make a bank 'cave in'.  The banks take their obligations under the warranty very seriously. Yes, you will have to answer some questions for their records but other than that they have always returned the money to me immediately.

My offer remains.  If somebody has an actual case of not recovering a Direct Debit I will do it for you.  I look forward to hearing from some one. 

@MarkAOrr: you continue to repeat your point regardless of the e

chatman | | Permalink

Mark - You say "your client can very easily get their money back from their bank who will then take it off you"  but all the evidence from previous posts is that you are incorrect. Why do you simply continue to repeat yourself, ignoring other posters' contributions and without offering any evidence or argument to support your claim? I cannot see how anyone could take such claims seriously, however many times they are repeated.

Real Problem

shenker | | Permalink

Surely it is this that by granting a DD you are giving a third party access to your bank account and that makes people uneasy.

petersaxton's picture

Can you accept it?

petersaxton | | Permalink

"My offer remains.  If somebody has an actual case of not recovering a Direct Debit I will do it for you.  I look forward to hearing from some one."

You don't seem to be listening to what people are saying. It's not that the money cannot be reclaimed. The problem is the hassle you get in trying to get the money back.

You may not have had a problem but it is clear that many people have had problems. Why can't you accept that?

MarkAOrr's picture

I am listening and so far nobody is responding

MarkAOrr | | Permalink

Peter, I am listening very carefully to the few people who say that have experienced problems.  I have even offered to solve their problems which also shows very clearly how hard I am listening.  In 31 years of experince of this from both sides of the fence I have asbolutely never ever heard of anybody at all having any trouble at all recovering a direct debit.  However, I have frequently heard of people getting upset trying to recover all sorts of other payments.

I suppose it could be possible that a very badly trained bank employee could ask the wrong questions or make it ever so slightly more difficult but that has never been my experience.  I am very sorry if you don't like hearing this.

"I am very sorry if you don't like hearing this."

chatman | | Permalink

It sounds like Mark doesn't like hearing anything.

Mark's implication that people who disagree with him are simply sticking their fingers in their ears and ignoring some reasoned argument, or one supported by evidence, is quite franky incredible.

petersaxton's picture

Mark thinks it doesn't happen

petersaxton | | Permalink

“Peter, I am listening very carefully to the few people who say that have experienced problems.  I have even offered to solve their problems which also shows very clearly how hard I am listening.”

This shows how you are not listening carefully. I don’t think anybody has said they have an ongoing problem with DDs. They are saying they have had them in the past.

“In 31 years of experince of this from both sides of the fence I have asbolutely never ever heard of anybody at all having any trouble at all recovering a direct debit.”

Exactly, but we have.

“However, I have frequently heard of people getting upset trying to recover all sorts of other payments.”

You make out we are talking about other payments. I’m not an idiot. I know what a direct debit is and I am talking about problems with DDs. You just won’t accept reality.

“I suppose it could be possible that a very badly trained bank employee could ask the wrong questions or make it ever so slightly more difficult but that has never been my experience.  I am very sorry if you don't like hearing this.”

We don’t like hearing it because you are talking nonsense. Most bank staff are badly trained. They are low paid and the minimum possible is spent on training them. Banks say lots of things are easy but it is all marketing rubbish. The reality is very different.

Quality Impact Marketing's picture

.....8 9 10 and breathe!

Quality Impact ... | | Permalink

I seriously need to work on my time management!!! Because I really don't know how you guys manage to satisfy your clients needs and sit endlessly on here arguing! My accountingWEB folder in outlook has never seen so much action! 

Peter, is that a Norweigen forest cat in your pic? Can't quite see.

 

David 

petersaxton's picture

My cat

petersaxton | | Permalink

I don't know. We rescued her mother and four other siblings when they were abandoned.

Quality Impact Marketing's picture

Peter's Cat!

Quality Impact ... | | Permalink

Well, I'm no expert, but I know a little and going by the big ruff a bushy tail she might be. A friend breeds NFC's and we have 3. They are quite distinctive. Normally much bigger than other cats (believed to be related to the Maine Coon), long haired, big ruff and long bushy tail. Very friendly temperament and not particularly afraid of water like most cats due to generations of fishing in Norwegian forests! They are also one of the few breads that can come down a tree front first, something to do with their claws. They also have a longer face/nose than most cats, which is what I can’t really make out on the photo. Anyway, cat lesson over!!      

petersaxton's picture

Different

petersaxton | | Permalink

She looks totally different to her mother and brothers. The others have short hair.

Quality Impact Marketing's picture

Maybe not then!?

Quality Impact ... | | Permalink

Oh right, perhaps not then... unless the Dad was NFC and she just ended up with the characteristics. I guess we'll never know!  

 

MarkAOrr's picture

My thanks go to the banking expert Peter

MarkAOrr | | Permalink

I love the inside knowledge Peter.  Please can you tell us all what your knowledge is based on.  For example, which banks have you worked for?  How much are bank staff paid?  How much money do banks invest in training their staff?

I look forward to being enlightened. 

@MarkAOrr - How on earth are your questions relevant to Peter's

chatman | | Permalink

This is becoming the most sureal thread I have ever seen. 

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