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Accelerate Your Payment Collection Process with Direct Debit and Zoho Books

Payments | 5 mins read

If you’re a business owner, we guarantee that there has been at least one instance where you wished for a completely automated payment set-up. For starters, the payment collection process can get chaotic when your customers are running late with their payments. No matter how many times you remind them, there will always be customers who end up paying you late.

Direct debit and Zoho Books

When the customer payments finally start pouring in, you have to keep checking your payment notifications and updating the appropriate transactions.

Also, when you provide several payment options, your payment processing responsibilities will increase. If your customers pay you via cheques, you have to cash or deposit them, which can mean frequent trips to the bank. Card payments are easier and faster, but they also come with a 5% failure rate and card expiration issues. There’s a convenient alternative to conventional payment methods: direct debit.

Direct debit puts an end to late payments and allows you to automate your entire payment collection process.

What is direct debit and how is it beneficial?

Direct debit in the UK is handled by BACS (Bankers’ Automated Clearing Services). It’s a bank-to-bank transfer service that lets you pull funds directly from your customers’ accounts with their authorization.

Direct debit is more efficient than its counterparts because it puts you in charge of the payments. Why wait for your customers to initiate payments when you can take payments from their accounts instead? It is a safe payment method that increases your customer’s trust.

Also, it’s flexible enough to handle one-time and recurring payments, even with variable due dates and payment amounts.

Refunds are easy, too! In case of incorrect payments, your customers can easily cancel a payment request after which you can refund the amount to be deposited to their bank account.

Direct debit is a great payment option whether your business is in wholesale and manufacturing, SaaS, hosting, accounting, or marketing & advertising. You can learn more about how direct debit works here.

How does Zoho Books help?

Zoho Books is an MTD-compliant full-featured accounting software with which you can manage your finances, send VAT compliant invoices, record vendor bills, generate reports, and file your VAT returns.

Apart from integrations with several prominent payment gateways, Zoho Books is also integrated with GoCardless — one of the UK’s leading direct debit providers — to simplify the payment collection process for business owners.

Direct debit is a great choice if your business collects recurring payments. You can set up the collection process with a few clicks, then invoice your customers with direct debit as a payment option. Once they’ve signed the mandate, you can sit back and relax — your payment collection process is now on auto-pilot.

Setting up direct debit

Setting up direct debit for your Zoho Books organization shouldn’t take more than a few minutes. All you need to start collecting payments is a GoCardless account and an either an EUR bank account or a GBP bank account connected to your GoCardless account.

Invoicing your customers

Once you’ve set up direct debit, you can start invoicing your customers with direct debit as a payment option. Your customers can view their invoices either by clicking on the link emailed to them or through the client portal.

With a client portal enabled in Zoho Books, your customers will be able to view estimates and invoices, the status of any document, their payment history, and much more. Moreover, when your customers complete their payments, the relevant invoices will be marked as ‘paid’ automatically.

Getting authorization from your customers

If you’re going to collect recurring payments, your customers need to sign a mandate to authorize you to collect funds from their accounts. Mandates are not necessary for one-time payments.

When you invoice a customer with direct debit as a payment option, before they can proceed with the payment, they will be directed to the GoCardless page to fill in their mandate details. The mandate sync feature in GoCardless will help you fetch your customer’s mandate details from GoCardless to your Zoho Books account. Now when you look at your contacts in your Zoho Books account, you can see which customers have active mandates for direct debit.

Reconciliation just got a whole lot easier

Reconciliation helps you track the funds leaving your account and match it with the amount you’ve actually spent. On connecting your bank account to your Zoho Books account, your bank transactions will be automatically fetched to Zoho Books. You can go ahead and match your transactions right away.

To simplify the reconciliation process, each uncategorized transaction is picked up from your connected bank feed and you will be recommended an existing transaction to match it with. You can also set transaction rules to map your transactions to their appropriate accounts in Zoho Books automatically.

As for your direct debit payments, you’ll have a GoCardless clearing account within Zoho Books where you can keep track of the payments you’ve received, the corresponding processing fee for these payments, and refunds (if any). Once you map your bank account to Zoho Books, the incoming direct debit payments will be split between the transaction fee charged by GoCardless and the payment amount sent by your customers.

Here’s your takeaway!

Direct debit is a good way to ensure a steady cashflow for your business. It has a low failure rate and uses automation to reduce your manual work.

It’s beneficial for your customers as well, because they don’t have to enter their bank details multiple times or make recurring payments manually.

You can simplify the entire payment collection and recording process by introducing automation, and Zoho Books and direct debit together do just that. Now, you can save time spent on chasing customers for payments and pay complete attention to your business instead.

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