Top Direct Debit FAQs

You might be familiar with the basics of using Direct Debit to pay your own bills, but there’s more to it when you want to arrange for your business to take payments this way.

Here are the answers to some of the most commonly asked questions about Direct Debit.

Why might I need a company to help me take Direct Debit payments?

You can take Direct Debit payments yourself if you have your own Service User Number (SUN), sponsored by your bank. However, banks are only likely to agree to this for large, well-established companies, because of the strict rules and regulations that surround the scheme. They will need various assurances that you will be able to meet the terms needed.

Instead, you can either use the SUN of a third party who will take payments on your behalf, or who will issue you with your own SUN, but own and manage it for you.

Even if you are eligible for a SUN, using a company to manage your payments can be hassle-free and cost-effective.

You can find out more about how to access a SUN to take Direct Debit payments in our article here.

How do my customers sign up?

Your customers will need to complete a ‘mandate’ with their bank giving authorisation for you to take payments. This can either be a paper form, but more commonly is completed online. Your customers can do this directly or they can supply you with the information to complete the online form if you read them a pre-defined script.

What will you need to manage Direct Debit payments for me?

We will need to do a number of financial and credit checks for your business. This includes for each director and shareholder, who will need to provide certified identification documents. We will also need you to supply a copy of a bank statement for your business account, in line with the regulations to prevent money laundering.

If your business is new, or operating in a high-risk area or we have any concerns such as credit ratings, we may ask for a security deposit or retain a proportion of the funds collected on your behalf.

What is the Direct Debit Guarantee?

The Direct Debit Guarantee gives some basic assurances to customers when paying through this method. It includes being entitled to full and immediate refunds for any payment errors made, being notified in advance of any changes in payment amounts, dates or frequency, and having the ability to cancel their Direct Debit at any given time.

You can understand the Direct Debit Guarantee more fully in our guide here.

How do I make sure I can meet the rules of the Direct Debit scheme?

One of your main responsibilities under the Guarantee will be to provide written notification to your customers before you take payments. You can do this either through a standard letter or email alongside their invoice or for recurring payments you can send one payment schedule with details of each payment to be taken.

What if there is a problem with a customer’s Direct Debit?

If a payment is made in error, under the terms of the Guarantee, your customer can contact their bank for a full and immediate refund. Their bank will then claim the money back from you via an ‘indemnity claim’. (You can find out more about indemnity claims here.)

If a customer has insufficient funds to make the payment, you will be notified within 24 hours of a failed collection, and reasons why if necessary.

How will I know if a customer has cancelled their Direct Debit?

Customers can cancel a Direct Debit any time before the payment is due. If we manage this on your behalf, we will notify you of a cancellation by email within 24 hours.

When will I receive the money from a Direct Debit payment?

The Bacs payment cycle takes three days. If we manage your payments, they will be received by us on the 3rd day after collection. We will then transfer your funds to you by direct credit to be in your account 2 days later.

Find out more about Bacs payments in our comprehensive article here.

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