I use it for some customers, but not all. For ones where they keep forgetting to pay it’s handy because you don’t have to keep reminding them.
I don’t think the above example is realistic to be honest, I doubt many people have 400 x £10 customers.
Assuming the turnover is right (£4k) I’d say you’d be more likely to have 285 x £14.00 monthly customers.
In that case, the fees would be 34p per customer, so more like £97 per month (assuming you collected all of your turnover this way).
This is also tax deductible, so if you’re paying 20% tax and are self employed, the actual cost is £78 per month. (Less if you’re a higher-rate tax payer)
Pros:
+ Cashflow (no waiting for weeks to get paid)
+ Bad debts less likely (though not impossible)
+ Customer doesn’t have to do anything, which some really like
+ Generic cards ; you wont need to write out your 'windows cleaned today' cards with individual amounts one (EG please pay £14.00), you could just get generic "thank you for continuing to pay by direct debit" cards, which will save some time and admin. It might also be a way to hide your prices from employees if you don't want them to know how much you are charging.
Cons:
- Fees
- I don’t like to be dependent to an outside company to get paid. If they went bust or shut down, or decided to triple their fees, it would be a real pain to untangle from them if you collect all your income this way.
