Getting Paid by the General Public

[Crispy5449]

I'm looking into setting up a business which would involve offering a service upfront to members of the public with payment being made monthly by DD over the following year.

I am concerned that as I will be offering the service upfront I will experience a high level of defaults, and was wondering if anyone had any experience of / advice about this payment model.

Additionally, are there any regulations I need to be aware of when dealing with the public.

One option I've considered would be to look at invoice factoring or a similar service so that I don't have to concern myself with collections / defaults, although there is obviously a cost inherent in this - are there any other services that may be more applicable (I'm not sure if invoice factoring is available where the debtor is Joe Public)

Crispy

[mumper]

Hi Crispy,

Can you say what sort of business it is?

[Rob Holmes]

Hi Crispy,

Just so I understand..

You'll be offering a service free for a trial period then billing monthly after a set period?

You say Direct Debit but I should think you mean standing order or repeat billing from their credit card ?

Rob

[Crispy5449]

Just so I understand..

You'll be offering a service free for a trial period then billing monthly after a set period?

No, it is a one off service which is performed up front, prior to any payments being made.

Payments will then be made monthly for a period of 1 year.

You say Direct Debit but I should think you mean standing order or repeat billing from their credit card ?

have to admit I've not really looked into the method of payment yet and had assumed DD was the way to go - why would standing order or repeat billing be more applicable / advisable?


Can you say what sort of business it is?

Without saying too much, I would be providing advice / guidance on a particular area of personal finance.

[kyber]

If it is a one off service and people are going to pay for it over a period of a year on a monthly basis, are you not offering consumer credit? As you are offering advice on personal finance, I guess you know the complications around this better than most.

[Ian J]

I'm not sure if invoice factoring is available where the debtor is Joe Public)


Sorry to be late in on this one but the reputable factoring companies aren't interested unless the end customers are businesses.

[Rob]

Concerning the point on Direct Debits v Standing Orders. As a new business it is extremely unlikely you will be able to persuade a Bank to allow you in as a DDR user. By issuing DDRs you are essentially allowed to take any amount of money from someone's account whenever you like. For this reason you have to be highly reputable to get this facility.

A Standing Order is different in that it is your customer's Bank who sends the money to your Bank. The customer's Bank is in control of the transaction. You can draw up a simple Standing Order Mandate, your customer fills it in and hands it to their Bank for them to act upon. This is your best route.