Direct Debit in the educational sector

Did you know that every year, we pay more than 55 million in business to business direct debits? Even more reason to start using this method to ensure you are paid on time. This is important in any sector, but even more so in education. Let’s find out why!

Imagine having finally set up your tutoring business or an after-school sports club with wholly positive expectations to be able to inspire and motivate children to only find out that you start having a cashflow problem. One week it’s a forgotten wallet, then it’s ‘I’ll write you a check next time’ or ‘Oh, I thought I paid for the month’. You may even hear complaints that your services are too expensive!

It’s not uncommon for businesses to just give up and quit the economy. There must be something better.

This is where payment by direct debit comes in as the solution to all these problems. From private tuition to secondary schools and nurseries, from sports clubs to academies and boarding schools – payment by direct debit makes it easy and transparent for parents to pay and for the organisation to receive the payment as soon as possible and with no problems or extortionate fees.

 

Benefits

 

Flexible payments:

Hourly, weekly, monthly – we have it covered. This degree of flexibility, coupled with our dedicated team’s efforts makes it easy for the parents to keep track of their finances whilst staying on top of household bills.

 

Cost-effective for businesses

Cuts in administrative costs that would normally arise from cash and cheque payments, DD solutions are also cheaper per transaction than debit and credit card payments.

 

More secure

Direct Debit Guarantee for a peace of mind.

 

Fast to set up

Gone are the times when you had to sign everything on paper. Providing the opportunity for parents to sign up online would make it a breeze. From a business perspective, it makes it easy to do accounting and analysis of payments.

 

When used in promotions, it’s been proven that direct debit can nearly double the conversion rate

and it helps to retain customers loyalty, which can give you a competitive advantage over other tutoring businesses for example.

 

DFC and the educational sector

DFC offers Revenue Management Solutions for in the Education & Childcare sector. Find out more about DFC and get in touch.

Why is Direct Debit more flexible?

Direct Debit is the most flexible payment method around. A bold statement, sure. But one that we at DFC believe wholeheartedly. Here’s why:

 

More billing:

Unlike its more rigid cousin, standing order, payment amounts and frequencies can be scaled up and scaled down with Direct Debit. Whether your fitness class is taking a break for the Christmas period or you’ve used less electricity at home this month, your Direct Debit instruction can accommodate this without the kerfuffle.

 

Less paper:

Now, we will admit that Direct Debit of yore was restricted in its abilities. It was expensive to set up and was reserved primarily for larger corporations (see now how smaller businesses can benefit from DD). But in our digital, paperless age, Direct Debits are painless. Organisations can gain a SUN far more easily, and their customers can set up a Direct Debit at the drop of a hat.

 

Easier forecasting:

Direct Debit spreads costs over a set period, most commonly a year. This is music to the ears of your accounts team, who can use this information to work out exactly how much income is coming in and when. Budgets can be adjusted according to monthly cash flow and there is much more room for damage control should problems arise.

 

Time-saving:

Time is money. Any time spent focusing on payment management is time that can be spent elsewhere. Direct Debit is one of the most painless revenue resources to manage because it’s automated. No paperwork, no files, no hassle. It’s important to monitor Direct Debit finances, but beyond that, your time can be freed up to focus on other areas of the business. Hooray!

 

DFC’s mission is to make our clients business easier and help improve your relationships with your customers so that they stay longer. You can leave DFC to collect your Direct Debits, while you concentrate on running – and growing – your business. Find out more about DFC’s Revenue Management Solutions: https://www.debitfinance.co.uk/

Overseas Direct Debit – an overview of how Direct Debit operates in countries outside the UK

  • 30 Apr 2018
  • Blog
  • Comments Off on Overseas Direct Debit – an overview of how Direct Debit operates in countries outside the UK

What is SEPA Direct Debit?

Normally, Direct Debits can only be made between accounts within the same country. SEPA is the exception – it allows for Direct Debits in EUR to be made cross-border and nationally since 2009.

SEPA Direct Debit is a European initiative that allows merchants to collect Direct Debits in Euro denomination. SEPA is comprised of the 28 EU countries, together with Norway, Iceland, Switzerland, Liechtenstein, Monaco and San Marino.

Within the individual non-Eurozone countries, local payment rules apply – SEPA payments are only valid for cross-border transactions in non-Eurozone countries.

Within the Eurozone, however, all bank accounts in EUR should now have been migrated to SEPA payments. This means that SEPA rules apply to national Direct Debits also.

SEPA Direct Debits consists of two separate functionalities – Core SDD – which covers consumers. Banks that provide SEPA payments must mandatorily participate in this scheme. B2B SDD is targeting businesses and the participation of the banks is optional.

 

What are the key benefits of SEPA Direct Debits?

  • Faster retail payments;
  • Consumers’ payment protection;
  • Cost-savings for businesses and reducing the threshold for market entry;
  • IBAN and BIC standardisation;
  • Simplifying cross-border payments.

 

SEPA Direct Debits in the UK

To be able to receive SEPA Direct Debits, businesses in the UK need to take a few steps:

  • Collect IBAN and BIC information for all payments in EUR in an organised format;
  • Obtain a Creditor Identifier from your bank.
  • Consider the relevant deadlines.
  • File submissions should be done in the SEPA XML file format.

 

How do Direct Debits operate in different countries?

 

Germany

In Germany, there are two distinct types of Direct Debit systems – Einzugsermächtigung and Abbuchungsauftrag. Direct Debit is called Lastschrift or just ELV – Electronic Direct Debit.

The former type is the most common – the benefactor authorises the payee to debit their account – for a fixed period, one-off or until further notice.

A Direct Debit agreement has to be signed and transactions can be disputed and credited back for a certain period of time.

The latter type is a lot less commonly used – in this case, the payer authorizes their bank to process Direct Debit requests. The transactions are verified by the bank; therefore, it is much harder for them to be returned – it is only via the legal system. It is less convenient than the Einzugsermächtigung, so it’s mostly used for B2B transactions.

 

The Netherlands

Like Germany, a payer can authorise a company to collect Direct Debits without notifying the bank. Around 45% of all transactions are Direct Debits in the Netherlands.

Transactions can be recurring or one-off – and organisations have to sign a Direct Debit agreement called automatische incasso with the bank.

Unauthorised transactions can be disputed via the bank within certain time afterwards – usually 8 weeks. One-off transactions can be recalled within 5 days. Banks can also be instructed to put a selective block or a blanket block on Direct Debits to certain account numbers or for all Direct Debits.

 

Ireland

Direct Debits can be initiated in writing or over the phone. If there’s a dispute about transactions, protections will be put on the account to prevent debit transactions coming out.

 

Denmark

Direct Debits are widely used in Denmark for household payments – the service started in the 1970s by PBS (now Nets Holding) and is called Betalingsservice. Approximately, 95% of Danish households have at least one Direct Debit. In 2012 more than 16,500 businesses, public authorities and associations (creditors) carried out 195 billion payments using Direct Debits.

 

Sweden

Autogiro is the Direct Debit scheme for collecting payments in SEK from customers in Sweden. The scheme is managed by Bankgirot, the clearinghouse for inter-bank payment. In Sweden, the problem of Direct Debit fraud is much smaller than in the UK, since there are more strict requirements on which companies that can use Direct Debit.

 

US

In the United States, Direct Debit usually means an Automated Clearing House (ACH) transfer from a bank account to a payee, initiated by the payee.

 

South Africa

In South Africa, Direct Debits (called debit orders), are performed through the ACB (Automated. Clearing Bureau). Debit orders are often a preferred method of payment as they’re quick, safe and cheaper than other methods.

There are three types of debit orders: EFT (Electronic Funds Transfer), NAEDO (Non-authenticated Early Debit Order) and AEDO (Authenticated Early Debit Order).

A new payment system in South Africa is being been devised, called AC – Authenticated Collection – it will give consumers upfront knowledge about their Direct Debits through an electronic authentication process, ensure that Direct Debit payments will be authorised legally and rule out any cash flow management strategies from abusive consumers.

 

How can DFC benefit your business through SEPA Direct Debits?

DFC offers Revenue Management Solutions for clients with a global customer base. Find out more about DFC and get in touch.