How Sage and GoCardless Simplify Payments for SMBs

Millions of small and medium-sized businesses worldwide rely on Sage’s accounting, payroll and HR software to streamline operations and reduce administrative burdens.

Its recent report, ‘Enabling Europe to Thrive in a Digital Economy’, reveals that Sage enables average annual operational cost reductions of €23,500 per SMB, alongside significant efficiency gains.

Here, we speak to Chip Mahan, Global Head of Fintech, Payments and Banking at Sage - who details how Sage, in partnership with GoCardless, is reducing admin in payments through automations and open banking innovations.

How are Sage and GoCardless reducing payments admin?

A key area where we're reducing admin is payments—a common source of significant costs and inefficiency for SMBs. Business owners, finance leaders, and accounts receivable teams often face the daily challenge of chasing late payments and reconciling accounts.

Through our strategic partnership with GoCardless, we're helping customers eliminate this administrative burden. By integrating open banking data and automated Direct Debit technology, we're saving them substantial time on payment admin and supporting them in building better businesses.

Businesses with recurring revenue models often use Direct Debit for payments, as it automates collections in line with their invoicing cycle and is more cost-effective and reliable than card payments. Historically, accessing this system was challenging for smaller businesses.

However, integrating Direct Debit into the Sage platform allows customers to digitise authorisations and collections with just a few clicks, and add a Direct Debit option to their invoices. This provides access to a payment method that is less expensive than cards and enjoys high reliability and consumer trust.

With this integration, payments are automatically collected on invoice due dates and reconciled upon receipt, enhancing cash flow reliability and potentially saving customers significant time on payment admin, depending on their business size.

This efficiency frees up resources for growth and eliminates the need to chase late payments, preserving customer relationships.

How is Sage working with GoCardless to automate reconciliations with open banking data?

We've also incorporated open banking data into our bank feeds feature in Europe and the UK, enabling customers to connect their bank accounts to their Sage Accounting package and instantly import transaction data.

This automation removes the need for manual data entry. Our source, GoCardless Bank Account Data, connects to over 2,500 banks, ensuring extensive coverage and accurate data.

Automatically importing this data into Sage simplifies and streamlines the reconciliation process, making it more efficient and user-friendly.

Feedback indicates that using open banking data has saved customers considerable time by eliminating manual data entry, leading to improved customer satisfaction and Net Promoter Scores.

What has been the impact of increased payments efficiency? 

At Sage, we prioritise innovation and have transitioned to a cloud-based subscription model in recent years. Efficient and reliable payments are crucial when billing over a hundred thousand customers monthly or quarterly.

At this scale, failed payments and inefficient processes could necessitate a large accounts receivable team.

Therefore, we use GoCardless for our own customer billing, processing the majority of payments each month with a failure rate of less than 1%. Thanks to automatic retries, most failed payments are successfully recovered.

If a payment fails again, we can send failure reason codes to our billing platform and Sage data lake to initiate tailored outreach to those customers. These payment and process efficiencies enable us to scale, grow, and offer new products without increasing finance team headcount.

Sage's implementation of payment automation and open banking data has allowed customers to escape the escalating admin associated with manual or card-based payment collections, while also streamlining account reconciliations.

By simplifying payment processes, we've freed up valuable time for our customers, enabling them to focus on growth and strategic priorities. 

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