Direct debit: What every accountant should know

This content is brought to you by Adfin.

Every accountant has felt the pain of late payments, manual chasing, and the awkward “just bumping this to the top of your inbox” emails. Direct debit is brilliant at fixing much of this – it means less chasing, more predictable payments and better cash flow.

At the same time, as with any payment method, there’s always a few things to watch out for. We’ll dig into what accountants should bear in mind when getting paid with direct debit, and how payments software like Adfin can support.

Why direct debit is great for accountants

Reliable cash flow. Once a client signs a mandate, collections run like clockwork. Invoices get scheduled for collection on the due date (wherever possible), so you know when the money will land in your bank account.

Better client experience. Clients don’t need to remember to pay every month. It’s one quick mandate, then they’re done – and they still get clear notice before each collection. Direct debit also helps your clients’ cash flow as well as your own – breaking down chunky fees like annual accounts into manageable instalments.

Flexible amounts. Once a mandate is signed, you can invoice for varying amounts. This makes direct debit great for things like software subscriptions – if the price changes, all you do is update the invoice (and no need for your client to do anything at all).

What to be aware of

Your client needs to sign a direct debit mandate. This authorises you to take payments from their account on an ongoing basis.

Collection timings are set by the scheme. Direct debit isn’t instant; clients get advance notice and funds settle a few working days after the due date.

Occasional payment failures. Insufficient funds or account issues do happen.

Reconciling bulk settlement. Keeping track of your direct debit payments can be difficult when they are settled in bulk: since direct debit payments are settled in a single payout from your provider, it can be difficult to reconcile this to invoices in your accounting software.

How your payments software can help

Embedding mandate signatures into your existing workflows. Lots of accounting firms ask clients to sign a mandate alongside the proposal when they start working together. At Adfin, we’ve built integrations with leading practice management tools like Engager and Socket, so you can send direct debits directly from those platforms.

Ensuring funds land when you expect them. If you’re not sure when to set your due date so money lands when it needs to, you can choose a target settlement date instead in Adfin, and we’ll work backwards to when to debit your client.

Having fallback options for direct debit failures. Adfin doesn’t charge for failed payments. If a payment does fail, we make sure you have a fallback – you can retry or switch automatically to an instant option (card, pay by bank, Apple Pay, Google Pay). 

Reconciling automatically in your accounting software. Adfin integrates with Xero and QuickBooks, and will automatically mark invoices as paid when we settle funds to you.

How to get started with direct debit

Direct debit takes the friction out of getting paid, but the details matter. At Adfin, we’ve built customised retries, instant fallbacks, and much more – all tied into your existing accounting tools.

Like what you’re hearing about Adfin, but already using another direct debit provider? It’s easier than you think to switch providers – we’ve built products to migrate over all your invoices and mandates smoothly. With our mandate migration offering, clients don’t even need to sign new mandates – we’ll move them from your old provider with no interruptions to collections and no paperwork. To learn more about how Adfin can support you with direct debit, visit our website or book a demo.

This content is brought to you by Adfin.

Adfin is a payment collection and finance automation platform.