What is Direct Debit and how does it work?

Direct Debit is an automated payment method that allows you to collect payment from your customer’s bank account. 

There are two main reasons why Direct Debits are a smart way for small businesses to collect payment: 

1. Direct Debits are taken automatically from your customer’s bank account

   After your customer has authorised a Direct Debit mandate from you, you can set up future payments from their bank account. Your customer always gets notified of the amounts and payment dates but because the payments are automatic, your customer doesn’t need to remember to pay. This means you spend less time chasing up on late payments. 

2. Direct Debit payments are bank-to-bank

   There’s no card network involved in processing Direct Debit payments so the cost stays low and there’s no risk of failed payments due to expired cards.

You have access to Direct Debit on approved onboarding with GoCardless. If you have signed up for Invoice Assistant as a limited company or sole trader, then you will be eligible for the following:

• Limited companies – one free direct debit per month powered by GoCardless

• Sole traders – two free direct debits per month powered by GoCardless

With Invoice Assistant, your first two Direct Debits for that month will be free as part of the add-on. Your first and second uses of Direct Debit in a month will be deducted, but then refunded to you in your next billing cycle. Find out more about Direct Debit and how it works.

For peace of mind for your customers, all Direct Debits are covered by the Direct Debit Guarantee. Read more about this at the Bacs website.

You can collect invoice payments by Direct Debit via your Tide account. This service is provided by our partner, GoCardless. Find out more.