* Payment Types Explained
February 1, 2024 - Reading time: 10 minutes
Truly automatic payments are Direct Debits, but many people confuse these with Standing Orders, or even BACS transfers, which can lead to hesitation when trying to agree on what might be best for your business/club/organisation.
Here is an outline of the differences, as well as notes regarding how our software deals with each type of transaction.
Direct Debits -
THE CLIENT sets up a Direct Debit Mandate with their own bank, giving authorisation for 'you' to request an amount to be paid from their account when it is due. Worth mentioning - High customer protection as immediate refund from your bank in the event of an incorrect payment.
YOU: Firstly, as the business/club/organisation receiving the payment, you need to ensure that your bank account is equipped to accept DD payments. If it is, you can then go about setting up an account with a payment processor. (We use www.GoCardless.com and our customer biased reasons are all clearly stated in our DD Set-Up Guide, available to all users of Club Organiser.)
PROs: Once set up, it's a quick, painless way for money to be collected automatically on a regular, recurring basis, with payments being credited direct to 'your' bank account. (Whilst also appearing on the member's account statement within Club Organiser.) Any changes to membership fees etc. are taken into account at the time of request and nothing needs be done by the client, provided they have been advised in advance that the amount will change for a given reason. (perfect answer when adding on annual membership/subscription fees at the beginning of a year for example)
CONs: Many Treasurers fear that the transactional cost of using DD will be too great to make it worthwhile for a club/organisation to implement. This is our main reason for using Go Cardless - their charges are much lower than other online payment options like PayPal, and can easily be absorbed by the client or the club - the choice is yours, and is another point that is covered in our DD Set-Up Guide.
Standing Orders -
THE CLIENT: Sets up a Standing Order from their own bank account, naming 'you' as the recipient, paying 'you' a set amount on the same date every month, using a reference to identify their payment. Worth mentioning - No customer protection as once they've performed the transaction, they can't get it back unless you manually refund them.
YOU: Advise 'your' clients of the correct bank account number, sort code and account name for the money to be paid into, and agree a set date that you want that transfer to occur. (If you use Club Organiser, you can use 'your' monthly electronic bank statement to upload and automatically reconcile all the payments received into the system and they will be allocated to the appropriate member's account statement pages, visible to both 'you' and the client.)
PROs: Quick and easy for the client to set up providing you give them 'your' bank account details, and they have complete control over the ongoing arrangement. The money goes straight into 'your' account and doesn't involve any manual paying in. (Club Organiser issues members with a Unique Member Ref Number, which they need to use as a bank ref - this enables the system to recognise the payment as coming from that particular member)
CONs: In the event that their membership fees change at all, 'you' will need to contact the client and ask them to change the Standing Order arrangement with their bank direct themselves . They are also able to cancel the SO at any time, without giving you or the bank notice. If additional, ad-hoc fees are required for any reason at any time, the client will need to be asked to perform a one-off BACS transfer or pay by another method such as cash or cheque.
BACS Transfer -
THE CLIENT: Logs in to their online bank account and performs a one-off payment transfer of an agreed amount to 'your' bank account. The client needs to remember to use some sort of reference to ensure their payment is identifiable to 'you', and preferably contact you to let you know they've performed the transaction.
YOU: Receive an amount direct into 'your' account and it appears on 'your' bank statement on the day the transaction is performed, or later if the payment needs to be authorised in some cases.
PROs: Can be quick and easy for the client to perform, and the money appears in 'your' account electronically, so doesn't involve any manual paying in. (Provided the unique member ref number is used by each member, their payment will be picked up by the Club Organiser system and will show as received on their member account statement).
CONs: You will need to remind the client every time the payment is due (weekly, monthly, termly etc.) and furnish them with the account details etc. as they may not have kept or saved them previously. You will also need to agree a reference of some sort for their payment to be identifiable when it appears in 'your' account. (Any BACS payments on 'your' bank statement can be uploaded and reconciled electronically within Club Organiser, but if they don't use the correct reference, 'you' will need to manually reconcile their payment).
Lest we forget...
Original Payment Methods - Cash and Cheque
THE CLIENT(s): Hand you the cash or cheque(s).
YOU: Tell the client how much they need to pay you and when/where to give it to you. You then do whatever you need to, to track the payment(s) as received and then make a trip to the bank to pay it in.
PRO: You know you definitely have received the payment as it's in your hand!
CONs: Time consuming and the temptation to spend cash before it gets to the bank can be too much for some!
The most favourable thing about using a software system, is that, no matter what your preferred choice of receiving payments from clients/members, it is easily incorporated and kept track of. Our system allows both Club/Owner and Member/Client to view their statements and 'you' can choose whether you want to use online methods or not, when and how you like. We don't charge any extra for any of the services, so the choice is entirely yours and your Treasurer's.
Many clubs start out saying they'll go to Standing Orders, but usually end up moving across to DD eventually - purely for the convenience and time saving benefits. Payments by members for fixtures or one-off events can save 100s of man hours for big clubs with lots of competitive fixtures/galas and all systems are safe and secure.
If you've got any questions please leave a message and we'll get back to you asap.
Thanks for reading!