Collecting Payments with repeat Billing
How to collect payments if you’re building a business that relies on repeat Billing
The aim of any repeat Billing system must be to automate payment transactions as much as possible saving your accounts department a lot of time and hassle.
For this reason Billing systems often incorporate a payment gateway to facilitate payments.
Both Dynamics CRM and other accounting software can be customised to enable them to do this.
The advantage of using Dynamics CRM over accounting software for taking payments is that customer service staff can set up the original payment - if needed - and do the follow ups.
Customers who pay by regular monthly payments can be processed easily if they sign up for Direct Debit, which with the SEPA system, can now be used to collect payments all over Europe.
Other payment systems can also be considered depending on your customers e.g. PayPoint outlets allow consumers to pay at a number of retail outlets across the UK, and electronic banking now allows people to pay easily on demand.
However a process needs to be worked out for handling the (usually) small percentage of transactions that fail.
For example, if a Direct Debit transaction fails the first time it’s attempted, perhaps because incorrect details were entered by the customer, a process is required to flag it up, and either double up the payment next time once the correct details have been entered, or to take the outstanding amount by other means.
If you’re setting up payment collection as part of your billing system, these are the main options to look at:
1. Direct Debit
2. Debit and Credit Cards
Direct Debit is very familiar to customers in the UK and is used to collect variable monthly payments direct from a bank account.
It is subject to several requirements including a Direct Debit Guarantee and a legal requirement to invoice the customer a couple of weeks before taking any money from their account.
SEPA is a program that’s been implemented across most of Europe and allows collection directly from a bank account (in Euros) in a similar manner to Direct Debit.
To handle Direct Debits, you need to send a monthly transaction file to your bank for them to process the payments.
You may need to do this using special BACS software from your bank, which can be expensive.
There are however several Payment Processing Bureaux which accept transaction files and deal with the complexities of processing payments and notification of any failures. These are cheaper.
In the UK, there are several things to consider when setting up a Direct Debit system:
- Individuals can sign up for Direct Debit using a signup form on the internet. Businesses often have more than one signatory on the account and require a paper form to be sent to the Bank.
- A Direct Debit invoice in the UK must be invoiced and sent to the customer three weeks before taking the payment and is subject to the Direct Debit Guarantee.
- Direct Debit processing costs are around £10 per transaction file and then around £0.17 per transaction.
- Direct Debit can collect different amounts each month. A business needs to apply for a SUN number from their bank or share a SUN with a bureau service.
- Standing Orders can be used to collect regular payments each month from customers where the amount does not vary. These transactions are very low cost (often free) and can be easily set up using online banking, or by the customer sending a form in to their bank.
- BACS software costs from £250 to £5,000 for controlling submissions to the Bank. Alternatively you can create a file and send to the bank or use third party bureaux which can cost £250 to set up.
- If the bank will not give you a SUN number, an alternative is to use a third party, or GoCardless, who offer a complete system including the initial data capture for 1% of the transaction.
- Some care is required when creating a file for transmission to the Bank as different transaction codes are often required for new customers. The BACS system usually emails details of failed transactions within a few days.
- There are security concerns when storing bank account details which need to be addressed - for example by doubling up your security protocols, and ensuring you comply with data protection requirements.
Credit Card payment gateways have improved in the last few years and now offer “continuous authority” to process regular payments in a similar fashion to Direct Debits.
These are some of the issues to consider when taking regular payments by credit or debit card:
- These transactions have a fee of between 1.5% and 3.0%
- Credit and Debit Cards have increased risk over Direct Debits as transactions can be subject to a chargeback where a customer can request a refund up to three months later.
- There are strict PCI (Payment Card Industry) requirements for storing credit card details which are often tokenised and stored with a third party, so you only need to store a credit card token locally.
- Debit and credit card payment gateways such as Sage Pay and Stripe may handle the PCI compliance for you.
- Chargebacks can result in a transaction being cancelled several months later but new validation checks made at the point of receiving the card numbers can remove this financial risk.
If you’re considering customising Microsoft Dynamics CRM to enable payment collection, please get in touch with us at Redware.
With over 10 years experience of billing in Microsoft Dynamics CRM, we have a suite of billing solutions available and we’d be happy to advise or consult on your project.
For a broader view of the issues, read our White Paper - Billing and Microsoft CRM: A Guide to using CRM to automate monthly invoicing. Please get in touch if you’d like a copy.
You can email us at firstname.lastname@example.org or give us a call on 0845 3010 444.