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Setting up DD for clients fees

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Some of my clients still like to pay in one lump sum and others by STO. I've not pushed either way. I am now wanting to set up a DD for as many as possible.

I know about the service that Gocardless offers as have had to make payments myself and its always gone OK but what experiences have others had? And can anyone suggest others that they use?

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RLI
By lionofludesch
06th Feb 2021 16:01

I only have one client taking direct debits. There's a lot of paperwork and he had to put up a bond, originally over £100k, though it's been reduced now.

I'd struggle to be convinced that the advantages of direct debit over standing orders make it all worthwhile for a small practice.

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Replying to lionofludesch:
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By Wanderer
06th Feb 2021 16:07

lionofludesch wrote:

There's a lot of paperwork and he had to put up a bond, originally over £100k, though it's been reduced now.

Believe that's for companies wanting to set up the process themselves. Services like GoCardless take away the necessity for this.
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Replying to Wanderer:
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By Youareatit
06th Feb 2021 16:44

Also usually for much higher volume of entries. Certainly costs a lot less in fees.

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Replying to lionofludesch:
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By johnt27
08th Feb 2021 10:00

This is the old school, pre GoCardless way of doing things - so almost at decade old. No one in their right mind goes down this route anymore...

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Routemaster image
By tom123
06th Feb 2021 16:08

@lion, Gocardless is precisely for this type of thing - ie not through your main bank.

HSBC (our bank) only want to deal with a customer having many many payments - and want bonds etc.

I have three customers who rent plant from me - (not our main line of trade) and GoCardless is perfect for us.

Yes, there is a percentage fee - but it is capped.

Once the agreement is up and running money just drops into the account.

Plus, customer mandate was all done online, no paper to send and return.

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Replying to tom123:
RLI
By lionofludesch
06th Feb 2021 16:18

Ach - fair enough Tom - and Wanderer.

I'm only passing on the second hand view. I don't have many fees left to collect now.

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By Mr_awol
06th Feb 2021 16:15

If you’re using standing orders already Why do you want to move to DD?

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By nrw
06th Feb 2021 17:03

GoCardless is awesome, inexpensive and very simple to get up and running.

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By darren.austin
06th Feb 2021 18:01

We use GoCardless which works very well. We use QuickBooks as our accounting package and it integrates with GoCardless. Once a client has given authority, which can be completed online via QuickBooks, invoices raised in QB can be automatically collected by GoCardless.

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Replying to darren.austin:
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By tom123
07th Feb 2021 07:50

Now that is handy!

Fortunately my hires are the same each month.

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Replying to darren.austin:
Pile of Stones
By Beach Accountancy
09th Feb 2021 17:49

Integrates with Xero too - same ability to automatically receive payments for invoices

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Jennifer Adams
By Jennifer Adams
07th Feb 2021 14:59

In reply to Mr awol... I only have a few with STO - its the rest I want to come onboard.
I was thinking that as many clients are gong to be strapped for cash this year I'd offer POA to all

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By Refs1
07th Feb 2021 20:27

We use Go Cardless for around 50 DD per month and works well, inexpensive too. Good for taking one off payments too. I have DD to set up tomorrow whole process takes less than 2 minutes from start to finish assuming client completes his email immediately. Highly recommend them !

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Stepurhan
By stepurhan
08th Feb 2021 09:15

Another vote for GoCardless here. It does make the whole process simple, for both accountant and client, for a reasonable fee.

It also integrates with a number of other programs (GoProposal and Xero for example) so it can make other tasks easier.

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blue sheep
By NH
08th Feb 2021 10:06

We use two, go cardless and FastPay, the fee structure and method is different for each, but if I had to choose between the 2 it would be go Cardless all the way, a superb service in every possible way

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By johnt27
08th Feb 2021 10:06

GoCardless is the market leader in this space - lots of integrations and simple process for implementation. Stripe have recently moved into this space and undercut GoCardless on fees but the integration with other apps is harder to manage.

There are a few other players you can find through a google search but I wouldn't bother with them.

Many practices offer DD - it's easy to manage and better than SO as you have control over payments. GC and Stripe also allow you to collect one off payments as well as recurring payments. With the move to practices using pricing apps like Practice Ignition or GoProposal they implement DD through these platforms which is probably the easiest route for many.

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@enanen
By enanen
09th Feb 2021 10:23

In any dispute the client can reclaim all fees from the bank under the indemnity and the bank will charge you back all such claims without question. Avoid DD.

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Replying to enanen:
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By johnt27
11th Feb 2021 09:30

This is exactly the same as credit cards with protection for the consumer which is only right. However, this kind of scaremongering is a nonsense. In my experience I don't think that many payers under DD are aware that you can make indemnity claim and in 15 + years in practice I've only ever seen one client abuse this system, when they were struggling for cashflow, and they were quickly dropped by us and their various other suppliers at the time. We were also eventually paid...

The indemnity claim rests with the Service User (GC in this instance), hence the historic need for large bonds, and they can and will counterclaim if a payment was taken validly. The only time therefore this is going to be an issue is in respect of disputed fees where the client relationship has broken down.

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Replying to johnt27:
@enanen
By enanen
11th Feb 2021 10:03

Not Scare Mongering. I am an accountant in the banking sector and have seen the indemnity claims being successfully made through the direct debit indemnity. Banks are not interested in any dispute, just that the indemnity is there to protect us.

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Replying to enanen:
blue sheep
By NH
11th Feb 2021 09:50

I think you have a valid point to raise here and anyone that uses DD to collect payment does need to be aware of it.
I would not however say avoid DD, just be aware of the risks.

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By North East Accountant
11th Feb 2021 09:53

Can GoCardless collect direct debits before an invoice is raised?

Say 12 monthly direct debits in advance with one invoice at year end.

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Replying to North East Accountant:
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By tom123
11th Feb 2021 10:05

If I were the recipient I would be looking for an invoice at the start of the year, with tax point dates, so that I could reclaim respective VAT - plus also avoid large PL debit balances.

Go cardless itself does not issue the invoices.

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Replying to North East Accountant:
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By johnt27
11th Feb 2021 10:56

You can collect payments however you like, but you'll need to deal with the VAT obligations and your customer if VAT registered will also expect the same.

If you use Xero you can use GC for Xero (formerly Directli) to collect payment on invoices raised in instalments.

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Replying to johnt27:
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By North East Accountant
11th Feb 2021 11:33

Let's say the invoice is raised in advance, rather than when work is completed.

How do you keep track of deferred income for preparing your own year end accounts?

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Replying to North East Accountant:
RLI
By lionofludesch
11th Feb 2021 11:42

North East Accountant wrote:

Let's say the invoice is raised in advance, rather than when work is completed.

How do you keep track of deferred income for preparing your own year end accounts?

To be fair, we're accountants.

If we can't keep a track, why should we expect others to do it ?

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Replying to lionofludesch:
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By North East Accountant
11th Feb 2021 14:18

We do and I can tell you to the penny any time day or night.

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Replying to North East Accountant:
blue sheep
By NH
11th Feb 2021 11:42

North East Accountant wrote:

Let's say the invoice is raised in advance, rather than when work is completed.

How do you keep track of deferred income for preparing your own year end accounts?


You are an accountant and you are asking that??? Easy to do on software
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Replying to North East Accountant:
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By johnt27
11th Feb 2021 12:08

There's an app for that...

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Replying to johnt27:
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By North East Accountant
11th Feb 2021 14:24

My question was less than clear, sorry.

Everyone seems to be using GoCardless for D/D collection but I was just wondering what cloud software is the front runner for keeping track of unearned deferred income, when issued invoices in advance of the work being done?

And regarding direct debits we have our own Direct Debit SUN and have originated our own direct debits... for over 20 years.

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Replying to North East Accountant:
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By johnt27
11th Feb 2021 14:38

Flowrev

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By Hut15
11th Feb 2021 10:58

We use GoCardless and are very happy with it. We use it to collect 50-100% of the client's fee in advance of the work, which means bad payers get flagged early on. We eventually sacked one client because the direct debit was repeatedly declined. No loss to us - we refunded the fee he'd already paid because we never reached the point of doing the work. We also have a few clients who are bad payers simply through being disorganised, not wilfully slow, and we use GoCardless to collect lump sum invoice payments from them.

We do still have some very good clients on lump sum payments.They are the kind of clients who tend to pay within days of the bill, usually with a follow up email thanking us for all our help. No point in paying GoCardless to collect from them.

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By johnmcfarlan
11th Feb 2021 11:09

We have used Go Cardless for at least 5 years. There has been the odd glitch (One or maybe two) but they have generally noticed and fixed before we did. I have to say as a small fish, having a guaranteed monthly income is reassuring. We offer additional services free if clients retain us by DD: Will writing and Estate planning and no additional charge for things like mortgage references etc. It encourages clients to sign up.

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By CardiffAccountant
12th Feb 2021 15:53

Not sure if I’m missing something here.

We have been using Standing Orders for quite a few years. We have about 60 or so clients paying us monthly and have never had any issues (at least not that are worth mentioning).

What advantages are there in using direct debits?

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Replying to CardiffAccountant:
By williams lester accountants
12th Feb 2021 16:42

You would need to set up a new SO every time a client fee changes, whereas DD is variable.

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Replying to williams lester accountants:
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By CardiffAccountant
12th Feb 2021 17:58

All fee changes are agreed with the client beforehand. So I simply remind them to increase the standing order.

As it happens, a client’s was increased for this February. Client emailed me to let me know that she forgot to change increase her SO. She apologised, made a manual transfer and confirmed the SO is now correct.

Still can’t see the problem.

Besides, a DD can be easily cancelled if client wishes.

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Replying to CardiffAccountant:
blue sheep
By NH
12th Feb 2021 17:03

SO is controlled by the client

DD is controlled by you

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Replying to NH:
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By CardiffAccountant
12th Feb 2021 18:01

Fully appreciate that client has the control, but a simple telephone call/email usually gets any changes sorted.

As I have already mentioned, the client can cancel a DD with ease.

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Replying to CardiffAccountant:
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By johnt27
12th Feb 2021 18:15

As they can with a SO. Difference being as soon as a DD mandate is cancelled you get a notification so can stop work, or pick up the phone, whereas it could be a month or more before you find out the SO has been stopped.

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Replying to johnt27:
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By CardiffAccountant
12th Feb 2021 18:29

Fair enough.

If I completed some work and then discovered that the client had cancelled the SO and they were not going to clear the outstanding fee, then I would not release the work.

Furthermore, I am often surprised at how many accountants seem to invoice AFTER all the the work has been completed.

For the few clients who pay with a lump sum, I have always presented the invoice at the time of presenting the accounts and advising the tax liability. No submission will take place until all fees are paid.

If they don’t pay, they can go and find another to submit their return/s

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Replying to CardiffAccountant:
blue sheep
By NH
12th Feb 2021 18:23

You obviously have a very different client base to us, if we had to wait for a SO to be setup we would never get paid

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Replying to NH:
RLI
By lionofludesch
12th Feb 2021 18:32

Just fill in the standing order form, get them to put a cross on it, send it to the bank.

Job done.

Sometimes old school works better.

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Replying to lionofludesch:
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By CardiffAccountant
12th Feb 2021 18:38

Just get the client to log onto their bank account abs set up a regular payment.

Job done.

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Replying to lionofludesch:
blue sheep
By NH
12th Feb 2021 18:51

lionofludesch wrote:

Just fill in the standing order form, get them to put a cross on it, send it to the bank.

Job done.

Sometimes old school works better.


LOL, yeah cos life is that easy!
Having dealt with thousands of clients over the years I have learned that the more we are in control of the better!
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Replying to NH:
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By CardiffAccountant
12th Feb 2021 19:06

Only very limited control.

If the client is not happy, they will simply cancel.

OK, so with a DD, you get instant notification; not convinced this is of any real benefit.

Having said all the above, I do not know how much the costs associated with DD’s are!!!

Could you give me an indication - thanks.

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Replying to CardiffAccountant:
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By johnt27
12th Feb 2021 22:02

Prices for GC can be found here https://gocardless.com/pricing/

Very reasonable but if you want cheaper Stripe also offer DD now https://stripe.com/gb/payments/bacs-debit

Stripe isn't as easily integrated with other systems but they charge what GC used to charge when they first launched 8 years ago.

Main advantage, aside from the control element, is the ease with which they can be intregrated into quoting systems so when a client agrees a proposal they will be automatically triggered to set up DD and automatically invoiced and you receive payment on the agreed schedule.

It doesn't work for all clients and still plenty of room for good old bank transfer, although if you're snazzy, you now offer openbanking payments which are more seamless for the client. I think cheques and cash have had it and some firms offer card payment.

Like the SO/DD debate I bet many firms offer some form of card payment service through an expensive terminal services set up for which costs are ridiculous when the likes of stripe, paypal, square etc have driven down fees.

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Replying to johnt27:
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By CardiffAccountant
13th Feb 2021 07:31

Thanks

OK. So the costs are not prohibitive, but I am still not convinced.

If the client wants you to work for/with them, and you provide a good service, then I think (as long as you charge fairly) then they are only too ‘happy’ to pay.

If I had a client who begrudgingly pays, then I would feel it a sleight, and I would not be pushing for their business again.

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Replying to NH:
RLI
By lionofludesch
12th Feb 2021 19:45

NH wrote:

LOL, yeah cos life is that easy!
Having dealt with thousands of clients over the years I have learned that the more we are in control of the better!

To be honest, over the years, I've sent bills and 90+% of them send me the money. If they didn't, I'd explain that next time it happened they'd be seeking a new advisor.

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Replying to NH:
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By CardiffAccountant
12th Feb 2021 18:37

Not sure why that is.

All my clients pay up front for work to be completed.

If SO is not in place by the first day of the month following the agreed fee basis, then a telephone call usually sorts it.

I guess it’s only a matter of time before I may have to ‘eat my words’. In the meantime, let’s hope I don’t have any serious issues.

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