Receiving payments from clients

[David Stinson]

Hi UK BF,

Me and my partner have recently set up a Ltd company.

We are using an online accounting package (just setting up preferences actually) that asks what method of receiving payment we will be using.

I've spoken to a few friends and they've said to just use bank transfer. (I.E. giving our bank details on the invoice for the client to pay direct)

My question is; is this method possible to use in the long run? If not, why not? Is this method the same as BACS payment? Do you have to pay for these kinds of transactions)
There are lots of different online payment processing providers, why would anyone go down this route if you can just use bank transfers directly?

Sorry if these are simple things that we should already know but there has been so much we've had to learn.

Thanks in advance.

David & Liz

 

[james_firmsites]

Convenience vs cost. BACS is great, but some customers will be a pain and you will want something that is faster and easier to setup. Also, BACS they have to actively go and do something vs just pop card details in.

If you deal with large invoices that are less frequent BACS or even Cheque all the way in my book.

If you deal with medium/small invoices that are often from the same customers then you might want to offer Gocardless (direct debit, flat 1%)

For day to day transactions like ecommerce, Stripe is my preferred method and despite the fees its wise to also offer paypal.

End of the day, if its a big transaction and time is not an issue then yes BACS is the way to go, but a lot of businesses need payment that is automated and chasing people to pay is a big time sink.

 

[mattk]

My question is; is this method possible to use in the long run? If not, why not?

This depending on the numbers of customers and amount of each transaction, yes it is possible.

Is this method the same as BACS payment?

No. BACS is typically used when you need to make a large number of payments, for example when running a payroll. There is also a three day process for BACS, whereas Faster Payments is instant (up to two hours).

Do you have to pay for these kinds of transactions)

No, bank transfers (using Faster Payments) are free to send and receive. You will have to pay a monthly fee on your bank account though (after the fee free period).

There are lots of different online payment processing providers, why would anyone go down this route if you can just use bank transfers directly?

If you are receiving smaller value transactions from a large number of customers, then a payment processor can offer some benefits. It is easier for your customer to pay by card than bank transfer, you get instant confirmation of the transaction and you don't have to give out your bank account detail. There are also some safeguards for both the customer and vendor. Of course, you pay a fee for all these conveniences.

 

[Gecko001]

Wrong thread. Sorry.

 

[MyAccountantOnline]

....

I've spoken to a few friends and they've said to just use bank transfer. (I.E. giving our bank details on the invoice for the client to pay direct)

My question is; is this method possible to use in the long run? ....

A lot depends on the type of business you are running.

The majority of my clients pay by standing order, but about 20% pay by bank transfer which is a one-off payment once a year. It has worked well for me for 8 years.

 

[DontAsk]

I've spoken to a few friends and they've said to just use bank transfer. (I.E. giving our bank details on the invoice for the client to pay direct)

My question is; is this method possible to use in the long run?

It really depends on the type of business and customer. If you want to setup an online shop then bank transfers is not the ideal method.

I would always include at least one payment method that allows easy on line payments by debit or credit card.

 

[David Stinson]

Thanks to you all for your replies. Just to give you a bit more info, we have a recruitment business. Specifically Marketing recruitment. We won't have a large number of transactions each year (40 max) but they will be for larger amount. Most likely they will all come from Ltd companies or corporations.
Thanks again
David