How do I make and receive payments?

With modern technology playing a major role, there are now many ways of making and receiving payments. Depending on the nature of your business, you’ll probably carry out transactions in a variety of ways and you’ll want to think about security as well as costs for each of these...

 

Card payments

Making payments using a business credit or debit card is simple and efficient. This is suitable for most purchases, particularly expenses. Businesses reliant on cash sales can use the services of a card acceptance company to enable them to accept card payments as an alternative to cash and cheques.

The service usually involves the provision of an electronic terminal that automates card acceptance and authorisation.

Points to consider:

• Card payments provide the recipient with a guaranteed payment, with funds available to use within two to three days of being banked
• Credit or debit cards are more secure than cash and more reliable than cheques
• Using a card for expense payments enables a business to reconcile banking more efficiently, as a separate statement is provided for these transactions
• Accepting cards makes it easier for customers to deal with the business and, at the same time as potentially improving sales and cash flow, can save time and money with banking
• Both credit and debit cards, and card acceptance services, are subject to charges

For more information on using credit cards for your business with Barclays please visit the Company Barclaycard website.

 

Online banking

Most banks now offer online banking which enables you to make direct payments from your business account. You can pay bills and invoices from any PC or laptop with internet access to any business or individual with a UK bank account. You may also be able to set up payments to arrive on specified dates in the future. You will also be able to reconcile your online bank account payments and receipts with bookkeeping software, such as that included in the Barclays Business Manager package.

Points to consider:

If you don’t have time to visit your local bank, then online payments can be a hassle-free way to make payments and save you time – and they are often one of the cheapest means of making payments.

 

Telephone banking

Like online banking, telephone banking is a useful alternative for making payments if you don’t have time to go into your bank. It is increasingly popular with many businesses. Most banks now offer access to your bank accounts by phone, 24 hours a day, 365 days a year.

Points to consider:

Making payments by phone can simplify your banking – you don’t need to confirm the payments in writing, and you can check all your transactions against your statement when it arrives.

 

Direct Debit

Most people are familiar with Direct Debits – the vast majority of British households make at least one payment by this method. When you sign a Direct Debit, you give a mandate to the supplier to take outstanding payments directly from your account – usually on a monthly basis. Direct Debit is also a simple way for businesses to collect regular or occasional payments from their customers.

Points to consider:

• Direct Debits save time and, as they are automated, are usually one of the cheapest ways to make payments
• For larger businesses, having the ability to collect Direct Debits from customers significantly reduces the costs of collection, and puts cleared funds directly into your bank account.

 

Direct Credit and Standing Order

A Direct Credit is a simple, secure and reliable service that enables you to make one-off payments by electronic transfer directly into the bank or building society accounts of your employees, suppliers, or any other recipients. Standing Orders enable businesses to set up automated Direct Credit payments for fixed amounts – for example, a payment to a supplier of £100 can be set up to leave your business account automatically on 23rd of each month.

Points to consider:

• This gives you more control of your outgoings, because you can time your payments with complete accuracy, so you know exactly when your account will be debited
• As both Direct Credits and Standing Orders are automated, they are one of the cheapest methods of making a payment.

 

Cash

Many payments can still be accommodated using cash. This is most appropriate for smaller transactions, such as the purchase of ad-hoc equipment or for expenses. It is often more convenient to receive payment for smaller items in cash. In addition, this is essential for businesses dealing in cash sales, such as retailers.

Points to consider:

• Cash is quick, convenient and guaranteed
• Handling cash carries a risk when handling it, whether through loss, theft or fraud
• Cash is usually expensive to handle. Not only should you consider the insurance cost when handling large sums of cash, but also the charges from your business bank.

 

Cheques

Cheques are a traditional form of payment. When you open a bank account, you will usually be sent a cheque book, which you can use to pay bills or make payments between your bank accounts. A cheque is also a convenient and frequently used way of receiving payment from customers – from both trade debtors and consumers.

Points to consider:

• Cheques are convenient, safe and widely accepted
• Preparing, checking, signing and posting cheques can be time-consuming
• After issuing or receiving a cheque, there is a clearing period of several working days until the cheque is taken from the bank account of the business making the payment
• Unless the cheque is guaranteed using a card, it can ‘bounce’ (ie. not be paid) if the customer doesn’t have enough funds in their account
• There may be charges applicable to using cheques. Refer to the Terms and Conditions which apply to your bank account.