Opting for direct debit payments is common for commercial renters. It automates key transactions, making them more efficient and reliable to help businesses avoid potential penalties.
It is always worth considering different payment methods when managing a business, and this certainly applies to renting property. In this article, we look at what makes direct debit a perfect choice for commercial property tenants.
What is direct debit?
Direct Debit is the simplest and most convenient way for you to pay bills. It allows a business to take money from your account on a regular basis, with the amount varying depending on how much you owe. Once the amounts and dates of collection have been agreed, the money can be collected automatically.
In the case of commercial property, this applies to agreed rental payments. However, a manager may also choose to use direct debit for other financial responsibilities, such as insurance payments.
What are the benefits of direct debit?
More efficient administration
Once set up, Direct Debit automates the entire payment process. Payments are taken automatically when due and can be easily tracked each month. This can significantly reduce the time needed to manage payments, as there is no need for manual bank transfers.
This efficiency also extends to communication. As there will be no fears of missing payments, there will be less correspondence from property managers on behalf of your landlord.
Cost-effective
Networks will usually charge less for direct debit transactions than other payment methods. For regular payments, this can help businesses save money in the long term.
Clarity and control
Switching to Direct Debit guarantees the timing of your outgoing payments. Predictable payments not only clarify cash flow, but also enable you to better plan around key dates and allocate business resources accordingly.
Avoids penalty interest and administration fees
Changing your payment method to Direct Debit ensures you are never late with making payments, protecting you from any penalties or added costs. Once authorised, Direct Debit payments will be collected when the invoice is due – on time, every time.
Environmentally friendly
Using paperless Direct Debits requires no printing or postage. This makes it a more environmentally-friendly option when applied across a business.
Reduction in payment errors
Credit or debit card payments can fail from month to month due to card expiry or cancellation. Direct Debit payments use your bank details, which rarely expire or change, resulting in significantly fewer failures. This also prevents you from having to scramble to find alternative forms of payment.
What’s the difference between a standing order and a direct debit?
The differences between direct debit payments vs. a standing order revolve around how variable the funds in question need to be. The key difference is that:
- For direct debit, a business has permission to take money from your account. The amount can vary depending on what you owe, making it the preferred payment method for most commercial landlords
- A standing order is when you send a fixed amount to a specific account on a regular basis from your bank account
Do you have any questions about Direct Debit payments? Please contact Mileway today, or get in touch with your Mileway property or asset manager.
FAQs
Can you set up direct debits from a credit card?
Direct debits cannot be set up via credit cards. Direct debit payments can only come from bank or building society accounts.
How do I set up a direct debit?
You can set up Direct Debits instantly and for free, no matter the size of your business. It is an automatic, safe, and reliable process that helps prevent issues as well as fraud.
What are the disadvantages of direct debit?
The main ‘disadvantages’ of direct debit come from infrequent payment timings. If a company loses track of its payments or is unaware of additional charges, it could risk going overdrawn.