Residents' extras by Direct Debit for care homes

Care homes pay the hairdresser, chiropodist and newsagent, then recharge each resident's family. The amounts are small and the payments trickle in by check and transfer. For 22 families, matching payments, chasing 7 late ones and banking checks takes about 3.4 hours a month, and a couple of $60£45€54A$86C$85 bills a month go unpaid.

The home invoices each resident's extras monthly in Xero, as now. GoCardless's Xero integration lets families set up a Direct Debit once, and payments for Xero invoices are then collected on the due date and reconciled automatically, according to GoCardless's site. GoCardless's Standard fee is 1% plus 20p per UK payment, capped at $5£4€5A$8C$8 excluding VAT. The payer must be the resident or someone with authority over their money, such as an attorney, so check that when you send the request. Keeping less cash for residents also reduces safeguarding risk.

A 24-bed home in Lincoln bills 22 families for extras averaging $60£45€54A$86C$85 a month. It already uses Xero for invoicing and connects GoCardless so extras are collected by Direct Debit.

About $126£95€113A$182C$179 a month: $69£52€62A$100C$98 of admin time and $60£45€54A$86C$85 of extras that would otherwise go unpaid. The time is 2.9 hours at $24£18€21A$35C$34 an hour. Extras recovered count in full because the home has already paid the hairdresser or chiropodist. The cost is 22 payments at 65p (1% of $60£45€54A$86C$85 plus 20p), about $19£14€17A$27C$26 a month, or $23£17€20A$33C$32 with VAT. Xero is already in use here, so it adds nothing.

1. 1List the extras you recharge, the usual amounts and the date you invoice each month.
2. 2Open a GoCardless account and connect it to Xero from Xero's invoice or online payments settings.
3. 3Check who pays for each resident and that they have authority to do so, then send them the Direct Debit request.
4. 4Use the resident's room number or an account reference in payment details, not health information.
5. 5Each month, check failed payments in GoCardless and contact those families yourself.

• GoCardless adds 0.3% to Direct Debits over $2,660£2,000€2,380A$3,840C$3,760 and its page doesn't say whether that applies to the whole payment or only the part above $2,660£2,000€2,380A$3,840C$3,760. Check before moving main care fees across.
• Standard doesn't include automatic retries of failed payments; that is on Advanced and Pro, at a higher fee.
• Some families pay from the resident's own account under a power of attorney. Make sure the right person signs the mandate.
• Families sometimes dispute extras they didn't know about. Send the itemized invoice before the collection date.