Step 4. Negotiate & set up with bank

Some practices have sometimes found this to be the most challenging stage when introducing professional fee based payment schemes, especially when trying to become a Direct Debit originator. Before approaching the bank with your requirements it is worth considering the options for collecting regular payments from patients.

Direct Debits

This is the ideal way in many cases to collect regular payments from your patients. They provide the greatest control and flexibility of all the payment collection methods. Patients sign a Direct Debit mandate form authorising the practice’s bank to collect an agreed amount on a set day each month. Should the amount need to be changed; either up or down, the practice has greater control than other payment methods. Once the practice has written to the patient informing them of the intended change and when it is due to commence, your bank can be instructed to change the charged amount.

Due to the potential of this facility to collect any amount of funds from patients’ bank accounts, some banks are not so keen to allow small and medium-sized businesses to use direct debit, so if you want to use direct debit be prepared to present the business case for it to your bank. Banks provide regular reports to enable the practice to reconcile payments collected.

Charges for collecting Direct Debits vary greatly from bank to bank, although they are usually negotiable. Some practices have reported banks asking for a bond of £50,000+ before being allowed to collect DDs. This should not be necessary. Other practices have had to change bank before being allowed the facility. The smaller Scottish and Irish banks seem to have a more reasonable and flexible approach. Do be prepared to shop around.

Obtaining specific information on direct debits can be challenging and will vary between banks and even between branches so the following examples should be used as a guide only. You will need to speak with your local business banking manager to discuss your requirements but don’t be afraid to try regional offices.

The following are examples of information provided by some of the large banks. This information was correct at the time of collecting it but may have changed since.

Standing Orders

These are an easy, cost-effective means of collecting regular payments. Most banks allow this facility with a minimum of difficulty. Patients sign a simple form approved by the bank to arrange for a set amount to be collected on a specific date.

The main disadvantage of Standing Orders is when payment amounts have to be changed, for example, when the lens type or pricing alters, or if the practice wishes to increase the aftercare fee. When this occurs, the patient will have to complete and sign a new Standing Order mandate. Banks typically charge 20 – 30 pence per transaction for this service. It should be noted that some banks ask practices to start with Standing Orders until a certain number has been reached, they will then allow them to be switched to Direct Debits, which could prove to be an administrative nightmare!

Debit / Credit Card Mandate

This is an option not always considered but may suit many practices. These operate very much like a Direct Debit, but instead of being charged to a bank account, they are charged to a nominated credit or debit card. They provide a similar amount of control over payments as Direct Debits as it allows you to vary the charge as needed. Typically, there is not any initial set up fee for this service, just a charge for each payment collected, typically 25-35 pence. If the patient changes their credit card you may need to set it up again, so making this charge against a Debit card may be preferable. It is worth asking your business banker more about what’s involved in setting up this service as the approach to this also varies between banks. Those less keen to help with direct debit may be more helpful with a card mandate option.

Third party broker?

Some practices choose to use a third party broker to manage payment collection on their behalf. These brokers vary, not just in how much they charge, but also in the level of support and services they provide; before, during and after initial set up. Some simply collect Direct Debits on behalf of the practice for a nominal fee, typically from 30 – 70 pence per payment. Others provide a varying amount of support, which may include: staff training, administrative support and customised marketing materials, as part of the overall package. In this case after an initial fee of up to £1,450, towards initial staff training, marketing and administrative materials, each payment may cost between £1.25 and £1.50 per patient per month.

Practices using the services of one of the ‘full service’ brokers may find the training and marketing support helps them to implement their schemes much quicker, allowing them to learn from the experiences of other practices and build from the encouragement of the organisation. Conversely once you have lots of patients on the scheme the administrative costs may be high so you need to consider what the best option is for your practice.

Summary

Discuss your requirements with your existing bank, but do not commit to them until you are happy they will help you set up a Direct Debit facility with competitively priced fees. Do be prepared to shop around, as another bank may often offer you more than your existing one!

If you do not feel you have the resources to set up, deliver and administer this type of scheme effectively, it may be worth considering using one of the specialist payment plan providers. Do find out which one will provide your practice with the level of support you require to ensure success, as some only take payments on your behalf, whilst others provide greater levels of training and marketing.

The ideal solution to collecting monthly payments will vary from practice to practice. The important thing to consider is something that will work for you in the long term as the number of patients on your care scheme grows. If in doubt please seek professional practice management advice.