If you’re a business looking to drive cashflow, it’s worth considering how to set up Direct Debit for your customers. There are several ways to do this – but first, you’ll need access to the Direct Debit Scheme. You can do this by speaking to your bank or via a Direct Debit provider – what you decide will depend on the size of your business and the number of transactions or payments you collect.
Setting up Direct Debit payments gives you security in your account receivables, reduces late payments and the need for chasing invoices, saving you significant time and stress, not to mention avoiding those awkward conversations about when you’ll be paid.
Take a look at our blog where we lay out the process of how to set up a Direct Debit for your business.
If you are looking to offer Direct Debit payments to your customers, you have to have access to the Direct Debit Scheme which is owned and operated by Pay.UK.
There are two ways to get set up on the Direct Debit Scheme, either doing it yourself or via a third-party Direct Debit bureau.
This is usually for larger organisations who want to manage their own Direct Debit collections themselves, i.e. direct access, also known as becoming a Direct Debit originator or direct submitter.
A Direct Debit originator is where you have been authorised to submit payments to Bacs by a bank. There’s no need for any third-party provider, you can do it all yourself.
The first step would be to obtain a Service User Number (SUN) from your bank. This involves completing a series of forms that the bank evaluates to decide if your business is eligible for the Direct Debit scheme.
It can take a few weeks for your bank to approve you. You then need specific Bacs software to make the Direct Debit payments; as well as in-house training to provide the right information to Bacs, so payments are made accurately and on time.
A Direct Debit bureau looks after the submissions of your Direct Debit payments to Bacs, either using your own SUN or using the bureau’s SUN.
This is called being an indirect submitter. Some bureaus, like Access PaySuite, enable you to collect Direct Debits using phone, paper and online – giving your customers a choice on how to pay.
Bureaus help to remove the manual process – they make the submissions to Bacs to ensure you get paid on time, you can also use their software to run reports for completed, failed and cancelled transactions.
The benefit is that all payments are collected and submitted without you needing to be involved.
There are two options for managing your Direct Debits via a bureau:
Once you have decided which is better for your business, it’s a relatively simple process to start collecting payments from your customer:
1. Obtain a Direct Debit mandate from your customer. This is called a Direct Debit instruction or DDI, and it’s essentially the approval given to you by your customer to take regular payments, but you must give notice of the collection, before it’s carried out.
Getting a DDI can be either face-to-face, paperless (online) or over the phone. Using a digital page is a quick and easy way because there’s no infrastructure needed on your side – and the customer completes the form.
2. You then need (or your bureau) needs to submit the DDI to Bacs. It can take up to 10 working days, but once it’s completed they’ll let you know.
3. Once the DDI has been approved, you’re good to go on taking payments.
4. Giving notice to customers before taking payments is a must. If you don’t, you are not compliant with Direct Debit Collection Rules and may be removed from the DD scheme.
Each customer who wishes to pay via this service has to sign a Direct Debit Instruction, so you must first decide how you will collect the information.
Using Direct Debit collections is cheap, quick, and efficient and it can help with your cashflow, account receivables and forecasting. Alongside this, Direct Debit is a trusted method of payment –9 out of 10 consumers have at least one Direct Debit payment a month.
Thanks to the regulations around Direct Debits, this payment method is very secure. The Direct Debit Guarantee protects both customers and businesses from fraudulent activity and errors in collections or payments.
If you have any remaining questions on how to set up a Direct Debit, please contact us at firstname.lastname@example.org or call us now on 01206 675847 for a free demonstration and let us show you how easy it could be.
Give your organisation the stability and freedom it needs to drive higher levels of growth by seamlessly automating your payment processes.