The Benefits of Direct Debit Integration

If your company is one of the many Australian wholesale businesses that supply goods to other businesses, you probably offer credit to your clients. Although it’s risky to issue trade credit, customers will likely take their business elsewhere if you don’t offer this option.

Pencil is an Australian company that offers a solution to the problems posed by offering payment terms to your customers. PencilPay software combines several modules that address various aspects of issuing trade credit, accepting payments, and collections. One of these solutions is direct debit integration.

What Is B2B Trade Credit?

Many businesses allow other businesses to make purchases without requiring immediate payment, effectively supplying unsecured financing. While you can set standard payment terms and impose interest or late fees on unpaid balances, you’re taking a risk.

Unfortunately, the majority of businesses that provide trade credit don’t have set procedures or formal policies to regulate its use and administration. Using PencilPay negates some of the risks by helping you establish clear terms and conditions for your customers in addition to facilitating direct debit payments.

What Is Direct Debit?

Direct debits are automatic digital financial transactions between a payor and payee. The payor authorizes a payee to withdraw funds from the payor’s bank accounts or credit cards. Direct debit payment amounts and dates are flexible and agreed upon between the parties. However, the payee controls the direct debit.

Payors can cancel direct debit agreements through appropriate channels, but the payee receives a notification. As a B2B company, you can immediately suspend customer accounts if they cancel their direct debit agreement.

As the payee, you can specify if your customers need to pay each invoice immediately or if they’ll pay weekly or monthly. You can also establish fixed or flexible amounts and other applicable terms.


How Does Direct Debit Integration Benefit Your Business?

Whether you are a B2B company owner or a member of the accounting staff, you will see many benefits by adding PencilPay’s direct debit software to your existing systems.

One of the most important benefits is the peace of mind you’ll get from knowing that payments are automatic, so you don’t have to wonder if customers will remember to pay their bills on time.

Easier Customer Setups

With PencilPay, you can integrate a credit application into your website. You have full control over the credit limits and trading terms you’ll offer, and you can customize the forms you’ll use with your branding.

You can make direct debit payments a mandatory condition of extending credit and collect credit card or bank information as part of a customer’s application process. Using PencilPay software, you can initiate and perform a thorough, up-to-date credit check on each applicant.

If you approve a trade credit account for new customers, Pencil integration can create accounts for them in your existing inventory and accounting software. This allows customers to place orders immediately.

Cash Flow Improvements

You depend on customers to make payments to your company when they’re due so that you have the necessary cash flow to pay your obligations.

Late or missing payments from these clients can jeopardize your ability to meet your company’s commitments.

When you facilitate direct debits, you know how much money you’ll receive and when to expect it.

More Automation

Getting paid is easier with direct debit. PencilPay saves customer payment details and can automate invoice reminders and create payment plans.

Direct debits also make reconciling payment batches easy. With PencilPay, bank reconciliations are automated.

Increased Flexibility

Because your customer signed a direct debit agreement, you don’t need them to reauthorise direct debits if you change their payment amounts or frequency.

Clients can also request payment plans or delayed payments through your direct debit system, making those things easier for everyone involved.

Customer Appreciation

Today’s customers want options. Some prefer to initiate payments themselves, but most enjoy the convenience of direct debits. Even if you don’t make direct debit mandatory, customers will appreciate having it as a payment option.

Clients who find it easy to do business with you are likely to be loyal. Knowing that you’ll initiate their payment so they don’t have to is definitely easy.


How Can Direct Debit Integration Save Time and Money?

In addition to the direct benefits of streamlining your customer onboarding and payment processing, adding direct debit integration to your systems also provides other advantages.

You’ll Pay Less in Transaction Fees

Every time you accept a manual credit or debit card payment, your processing company usually charges a per-transaction fee and a percentage of the transaction amount. Direct debits incur lower fees, so you’ll receive more of the money you’re due.

You’ll Incur Fewer Labour Costs

Manually processing customer credit applications and checks, invoices, statements, payments, and reconciliations takes a lot of time. When you use PencilPay, the software can complete these tasks for you. You may not need as many employees or employee hours, so direct debit integration can reduce your payroll.

You’ll Save Time

Reducing the time your employees spend doing these tasks means they can use their time in other ways. All businesses can benefit from more productivity, especially very small businesses with few employees.


How Does PencilPay Work?

Our system is easy to use and integrate with your existing systems. When a customer completes a credit application using PencilPay’s form, our software:

  • Checks their credit information, including outstanding balances from other suppliers
  • Allows you to customize terms for each client
  • Feeds your new customer’s credit information, payment details, and other pertinent information into your inventory, accounting, and CRM systems
  • Automatically charges customers for invoices or statements using direct debit, according to specified payment terms
  • Reconciles payments with invoices and bank statements automatically

We will provide support, training, and assistance getting your platform configured and integrated into your systems and website. We can also help onboard your existing clients.


Would You Like To Try PencilPay?

If you’re looking for a reliable, trustworthy provider of direct debit software, contact us with questions or book a demo with PencilPay.

We offer a 30-day free trial so you can discover the benefits of direct debit for your company. Join the thousands of other highly satisfied PencilPay clients today.