Difference Between Similar Terms and Objects

Difference Between Direct Debit And Standing Order

Direct Debit vs Standing Order

If you have been doing a business which needs a proper and regular cash flow, then you must be familiar with both terms which are ‘direct debit’ and ‘standing order.’ Both of these options are made for a similar purpose, which is to allow your bank to make regular payments to your business account. In both options, you need to select the required amount which you want to pay after a regular interval. In short, these two options are the simplest billing payment solutions.

Now when you make a standing order as your method of payment, then there are two main disadvantages associated with this method. First, you cannot change your payment amount without cancellation of the older amounts. This means that every time you need to make even a small change in the payment amount, you will need to make a new account which will cost you a lot of administration fees. In this way you lose a lot of your money in administration services. Secondly, if your payment is not made to your business account due to some reason, then it can take up to one month to notify you that the payment was not made. This is also a serious problem as it can disturb the cash flow in your business.

With these two disadvantages, people still use a standing order as their payment option, and the only reason behind that is its simplicity. The procedure to do it all is very simple, and there is not a tremendous amount of paperwork which should discourage you from adopting this method.

On the other hand, a direct debit is more suitable for your business needs, and it has several advantages over the standing order. The first advantage is that you can change your pricing and payment amount at any time without any extra paperwork or administration charges. You can also offer some attractive payment terms to your clients which can make your business relations better. The biggest advantage which a direct debit offers is the customer’s security. This is a quite new service, but it is very effective. You can offer a pre-defined security option to your customer which will ensure that if any wrong payment is made through some misunderstanding, then that can be returned on the bank notice. These are the advantages which a direct debit has over the standing order. Direct debit is more in use these days, and people trust this method for their recurring payments to be made.

These are all the facts about both of these methods. Now the choice entirely depends upon your business needs. If you feel like a standing order is the best for your business, then you can choose that option. However, from the above discussion it is clearly seen that a direct debit is more favorable to your business and also your customers. This discussion is not to force you to do anything, but its core purpose is to enlighten your thoughts so that you can make the right decision for yourself. So analyze your business needs and choose the best method.
Summary:

* Both of the methods serve the same purpose in paying your recurring payments.
* A standing order is a little more faulty than a direct debit.
* More costs for administration fees with a standing order.
* People will choose a standing order due to the simplicity of the procedure.
* A direct debit gives you more flexible terms and customer security which can improve your business relations.
* Choose the best method depending upon your business needs.


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