Direct Debit is one of the most efficient ways to collect funds from your customers, with multiple benefits for both your organisation and customer alike. Yet collecting payments by Direct Debit entails an amount of administration, and you need your processes to be as efficient as possible to optimise your payment success and administrative costs. Here’s a look at one aspect of potential efficiency – how to effectively store your Direct Debit Instructions.
Before you can collect payments from your customers by Direct Debit, the customer first needs to provide and file permission to their bank or Payment Service Provider (PSP) to withdraw funds from their account to pay you. This is known as a Direct Debit Instruction (DDI), previously referred to as a Direct Debit Mandate. It’s a form that you, as the collecting organisation or service provider, ask your customers to complete.
The DDI officially authorises your customer’s PSP to pay you. This means you won’t be able to collect funds from your customer by Direct Debit until this has been completed and successfully lodged with their PSP.
There are two ways your customers can complete a DDI, in paper format or online. Paper DDIs require your customer to complete the form directly, in person. Whereas online DDIs, or Paperless Direct Debits, enable you to sign-up your customers for Direct Debit over the phone, online – such as by PC, tablet and mobile – and also face-to-face.
Using paperless DDIs requires you to use the Automated Direct Debit Instruction Service (AUDDIS). AUDDIS enables you to send new DDIs to your customer’s PSP electronically, instead of in paper format. The benefit of this is reduced paperwork, less room for human error in transposing details to another system, a quicker set-up process for your customers and for you so you can collect payment sooner, and easier storage.
There are three ways you can lodge a DDI with your customer’s PSP, depending on whether you use paper or paperless DDIs. If you use paper DDIs, it’s important to make a copy of the document, so you can store it for future reference.
There’s no official answer to this. However, it’s wise to retain your DDIs for at least as long as the contract exists between yourself and your customer, whether that’s one year or 50 years. And in fact, many companies choose to store their DDIs for longer, since your customer has the right to make a claim for a refund from you at any time.
Under the Direct Debit Guarantee, your customers can choose to claim money from you at any time, even long after your contract has ended and the Direct Debit payments have stopped. This is known as an ‘indemnity’. If you need to challenge an indemnity claim, you may need the original DDI as evidence.
If you use paper DDIs, you will likely need a large, dedicated space to store them and a robust filing system so you can quickly find the right one, when you need it. For example, you might choose to file your DDIs by date and in alphabetical order, or alphabetically by customer name or reference.
Storing paperless DDIs is much easier, as this doesn’t require any dedicated space. Instead, you will simply need to ensure you retain the electronic DDI file or an image of it, as well as a suitable back-up.
Give your organisation the stability and freedom it needs to drive higher levels of growth by seamlessly automating your payment processes.
