Q: I’m running a small business as a partnership, and things are going fairly well, but cash-flow is a killer. Even though we supply services on a weekly or monthly basis to clients, payment is erratic and I’m looking at ways to keep it in line. Can I get my regular clients onto direct debits, or is there a lot of red tape around it? And are they likely to kick up a fuss?


A: Unfortunately, there’s quite a bit of red tape around setting up direct debits, and many banks simply won’t facilitate it unless you meet certain conditions. It’s scant consolation, but this caution is justified: they want to be sure they’re not giving a shady operator license to take a substantial sum out of anyone’s account.


You can discuss the issue with your bank, though I wouldn’t be too optimistic. What might be simpler is setting up a standing order. Obviously, this is only really applicable if a client is paying the same amount each time, but it should achieve the desired effect: your clients will have to actively refuse payment by cancelling the standing order where they could previously delay. This makes it a bigger psychological step for them to take (it’s always tempting for people to simply hold off on sending a cheque) and it also means that you can chase missed payments a bit more vigorously.


You may encounter a bit of resistance getting this set up from clients. I’d recommend being conciliatory but firm. Depending on your margins, you could offer a discount on services for signing up, much as the big telecoms players do.


At DCA, we run a credit control service, which takes a lot of the difficulty – and awkwardness out of chasing cash from customers. If you’d like to find out a bit more, please feel free to contact us and set up a meeting.