Direct Debits

In some geographies and for some use cases, Direct Debit is the preferred repayment method. For this solution YouLend are responsible for setting up and maintaining the repayments via the appropriate regional Direct Debit system (BACS Direct Debit in the UK, SEPA direct debit in Europe, ACH Direct Debit in the US).

Benefits of Direct Debit:

• No partner involvement in the flow of funds – The repayment process is independent of the partner’s payment infrastructure.
• Enables fixed repayment schedules – Ideal for predictable cash flow management.
• Covers all revenue sources – Repayments can reflect total business income, not just specific channels.

Drawbacks of Direct Debit:

• Less seamless onboarding – Merchants must sign an additional contract.
• Increased credit risk for YouLend – Since YouLend is not in the senior flow of funds, the risk of non-repayment is higher.

Types of Direct Debit
Direct Debits are available in two forms:

Variable Direct Debit

How it works: On a scheduled basis, YouLend collects a variable amount from the merchant, based on sales during that period.

Benefit: Aligns repayments with the merchant’s cash flow, similar to sales-based or re-routing methods.

How it’s calculated: YouLend maintains an open banking connection with the merchant’s business bank account to monitor sales and calculate the appropriate repayment amount.

Fixed Direct Debit

How it works: On a scheduled basis, YouLend collects a fixed repayment amount.

Benefit: Provides merchants with predictability over cash flow and repayment duration, which some prefer for financial planning.

How it’s calculated: The payment frequency and amount is agreed with the merchant up front.