Almost every business is aware of the terms of direct debit and standing order. Today, no business environment is complete without these payment methods that have taken the world by the storm. But, have you ever tried to find out the difference between direct debit and standing order?
Direct debit and standing order do the same job. These payment methods work as instructions that you give to your bank, allowing it to make a payment regularly. Both the payment methods authorize the account holders to set an amount of money that will be taken out of their bank accounts regularly. Businesses can use that amount for many reasons, such as paying the utility bill or paying the cost of a service or a product.
Although standing orders tend to be a simple option for those with a business bank account, several issues may not make this payment method suitable for some businesses. For example, you cannot change the payment amount without having to cancel the existing instruction and set up a new one. It means making changes to your payment amount will need huge administration work overhead, and this is something that not every business can afford doing.
Banks take up to a month to verify a paid payment. This time disturbs the administration and the cash-flow of your business.
With direct debit, things are quite different. Unlike standing order, it makes it easy for small businesses to meet their goals. Direct debit services are worth your time and effort for setting up one for you. They help you with many payment situations, such as the below:
- You need to change your payable amount quite often with an automatic customer notification system without having to sign any additional paperwork.
- You want to benefit from the flexible payment terms for your clients.
- You want to provide your customers with a guarantee to get their payment back if made incorrectly.
It takes time to consider how your business can collect payments, especially when they are recurring payments. Depending on your nature and size of your business, you can choose between a direct debit and standing order.