A new integration helps Xero users collect payments via direct debit
Obtaining a direct debit authority allowing payment to be collected from a customer's bank account on the due date improves your certainty of your cashflow. But participating in the system is non-trivial for smaller businesses, so a number of organisations have set themselves up as direct debit intermediaries in much the same way as Square and others allow small businesses to accept credit cards without having to set up merchant accounts.
One such operation is UK-based GoCardless
GoCardless has had a partnership with accounting provider Xero https://www.xero.com/au/ for some time in the UK, and the integration between Xero and GoCardless is now available in Australia.
Once a business has connected its Xero and GoCardless accounts, and has obtained direct debit authorities from its customers, payments are automatically collected by GoCardless and the transactions marked as paid within Xero.
GoCardless charges a 1% transaction fee, with a minimum of 35c and a maximum of $3.50. This makes it cheaper than credit card transactions, which typically cost around 2% with no ceiling.
Direct debit arrangements are generally more acceptable to consumers than they are to other businesses, and are more appropriate for ongoing arrangements such as lawnmowing or personal training rather than intermittent or one-off transactions.
"Direct debit payments in Australia have traditionally only been available for major companies who can afford the necessary complex systems and processes," said Xero Australia financial industry director Ian Boyd.
"By working with GoCardless and making more payment options available, we are helping small business to be as efficient and effective as big business.
"The aim is to spend less time chasing payments and to get paid faster. This then gives small business owners more time focusing on things that matter to them, like growing the business."