Could you reduce the cost of collecting monthly payments by up to 90%? Membership and subscription-based organisations could potentially save up to 90% by switching to a single, monthly direct debit collections.
Faster Workout Gym has 200 active gym members.
They collect monthly membership fees on a daily basis, with batches of Direct Debit requests submitted each working day.
The collection date is usually based on the date the customer signed up. However, offering flexible payment dates remains key to their customer acquisition strategy.
How can they improve the process?
With the daily submission of Direct Debit collection files, not only is the finance department kept busy with daily extracting, uploading, approving and submitting of files, but the cost of sending Direct Debit requests could be higher than it needs to be. Particularly due to the fact they incur a ‘File Charge’ from their bank every time they submit.
In order to improve process efficiency and reduce the cost of their Bacs submissions, they could process all of their regular collections in one monthly file submission instead, specifying each customer’s collection date.
How do the costs compare?
The same amount of money is collected each month on the required dates. However:
- The cost of collecting the money is significantly reduced– potentially by up to 90%
- The time it takes to submit direct debit requests is also reduced to one monthly request instead of 22.
Fortnightly collections: the ideal solution?
- 20 file submissions, which is fewer than if submissions were made daily
- Save over 90% [Faster Workout Gym would save £1,200.00]
- With each submission taking around 25 minutes, there is a saving of nearly 8.5 hours per month – one working day.
Flexibility: First payment can be collected by Debit/Credit Card to allow instant membership and access to services, with future payments scheduled to be included in the first or second Direct Debit batch. The AUDDIS (0N) could be included in the first batch, with the first collection (01) to be included in the second, approximately 2 weeks later.
Did You Know?
Direct Debit scheme rules suggest best practice is to wait 5 working days before submitting a collection file for a DDI (Direct Debit Instruction) which has been lodged.
Direct Debit and Direct Credit files submitted directly to Bacstel-IP can be submitted up to 30 days in advance. Useful for regular collections and for covering staff holidays and sickness!
While Direct Debit payments are widely regarded as the most cost effective solution for membership and subscription-based organisations to collect payments, the frequency of submissions to Bacs could mean your business is paying more than it has to.
By considering the file and transaction charges levied by your bank, you could calculate the optimum submission schedule – giving you the most cost-effective and most efficient process.
Get more tips on Direct Debit collection here.