If you're still sending payment reminders by hand, you're spending hours a month on something a free tool can do for you.
Late payment is one of the most common and most avoidable problems in small business. The Federation of Small Businesses has consistently reported that the average UK small business is owed tens of thousands of pounds in late invoices at any given time. Most of that isn't disputed — it's just not been paid yet. The standard response is to send reminders. The better response is to stop relying on your clients to remember.
What GoCardless does
GoCardless is a Direct Debit collection service. Instead of sending an invoice and hoping your client pays it, you set up a Direct Debit mandate with them once — they authorise it, and then you collect payment automatically on whatever date you choose. Gyms, utilities and subscription businesses have used Direct Debit for decades. What GoCardless did was make it accessible to small businesses without a bank's merchant services contract.
What it costs
GoCardless's standard plan charges 1% + 20p per transaction, capped at £4. In practice: a £100 invoice costs £1.20 in fees; a £300 invoice costs £3.20; anything above roughly £380 hits the cap and costs £4 flat. A £500 invoice would be £5.20 uncapped, but you pay £4. There's no monthly fee on the standard plan. GoCardless also offers higher-tier plans with lower per-transaction rates for higher-volume businesses — check current pricing at gocardless.com before setting up, as tiers change.
What it replaces
Manual invoice reminders. Chasing overdue payments by phone or email. The awkward conversation about why someone hasn't paid. The gap between invoice sent and money in account. According to GoCardless's own published research, businesses using Direct Debit collection get paid an average of 47% faster than those relying on bank transfer. That's their figure, not independent research — treat it as directionally accurate rather than a guarantee.
How to set it up — step by step
Create a free account at gocardless.com — takes about 10 minutes, you'll need your bank details and business information. Connect it to your invoicing software: GoCardless integrates directly with Xero, QuickBooks, FreeAgent, Wave and most other accounting tools. Send your clients a mandate request — they receive an email, click to authorise, and that's it. When you raise an invoice, GoCardless collects it automatically on the due date. The mandate setup is the only moment that requires client action.
What to watch out for
Direct Debit works best for regular, predictable invoices. If your amounts vary significantly month to month, some clients may prefer to authorise each payment individually — GoCardless supports this, but it reduces some of the automation benefit. It also requires a conversation with new clients upfront. Most professional clients are comfortable with Direct Debit mandates. Some smaller or less organised clients may push back. That's useful information about who you're working with.
What can a small business learn from this?
Chasing invoices is not a necessary part of running a service business — it's a process failure. GoCardless costs £4 or less per payment on the standard plan, takes an afternoon to set up, and removes one of the most time-consuming parts of running a small business. Set it up before your next invoice goes out.
Useful next step
If you want to get your business finances properly organised, our bookkeeping guide covers everything from choosing software to understanding your numbers.
From Business Handbook
