Blog

If you want to pay a company or an organisation using Direct Debit Collection need to set up your Debit with them directly, and the process is simple. Whether you set your Debit up in writing, in person or over the phone, you’ll need to have a clear record of an agreed date for the Direct Debit payment to be made, as well as a frequency.

The good news is you’ll usually have the freedom to choose the dates your Debits leave your account to suit your lifestyle and finances. For example, many people choose to have their bill payments leave their accounts just after their paydays, so there’s less room for any problem covering the payment.

The easiest way to set up a new Debit is to fill in a Direct Debit Instruction, which you’ll need to get from the business you’ll be paying. Many companies will be able to let you complete this using an online direct debit collection on the company’s website to make things easier, or you can even do this step over the phone. Once the Instruction is completed, the company will forward it on to your bank or building society, and they’ll be authorised to collect the payments straight from your account.

Going forward, if you ever have a problem or think you may fail to cover a payment, it’s best to inform your bank in advance and see what they can do to help. If they wish to make any changes to the way your payments work they’ll need to give you formal notification up to ten working days in advance.

As soon as you enter into a Direct Debt, you’ll be covered by the Direct Debit Guarantee, and any payments taken in error will be refunded immediately by your bank or building society.

Because it’s important to understand the Direct Debit process, we’ve compiled some more commonly used terms and clear explanations of what they mean.

“Paperless Direct Debit”

A term you’ll see and hear more and more frequently is ‘paperless Direct Debit’, and this simply means a Direct Debit Instruction that’s arranged via a phone call of online, so there’s no paperwork or form filling involved.

“Due Date”

Next it’s ‘due date’. This term is used to refer to the date a collection is due to be made, so it means the date your funds will leave your account according to your Debit agreement. The next term is ‘counter-claim’, and this is a claim created by a service user in response to a customer’s indemnity claim.

“Direct Debit Indemnity Claim Advice” (DDICA)

Customers have the right to place an indemnity claim for a refund under the Direct Debit Guarantee, and if the service user disputes their claim then they’ll put in a counter claim. A counter claim must be placed within 14 days of the indemnity claim going through.

When an indemnity claim is raised by an individual, the service user will receive what’s known as a DDICA, or a ‘Direct Debit Indemnity Claim Advice’. This is a notification that one of their customers has put in a claim.

“Direct Debit Guarantee”

Finally, there’s the ‘Direct Debit Guarantee’. This guarantee applies to any Direct Debit collection, and it protects customers who make their payments via the scheme. One of the main ways in which the guarantee is beneficial is that in the event that a payment is ever taken in error, the customer has the right to expect the funds returned immediately by their bank or building society, and it’s their responsibility to pursue reimbursement. The Direct Debit Guarantee offers peace of mind to anyone who relies on the Debit scheme.

It’s easy to cancel a Direct Debit when you no longer need one, and the procedure is a simple one. You’ll need to get in touch with your bank or building society at least one day before the Direct Debit collection is due to be made (if in doubt, check how much notice your bank needs first to reduce the risk of the payment leaving your account).

If you cancel the Direct Debit over the phone, you may be asked to send an instruction via post to confirm you want to cancel. It’s also a good idea to confirm the cancellation of your Debit agreement with the relevant company, perhaps by sending them a copy of any written instruction you send to the bank to get the collection cancelled.

What information do you need to cancel your Direct Debit?

You’ll need to ensure that you offer the following details when you instruct your bank to cancel your Direct Debit:

• The company name
• Your bank account number and your sort code
• All names on the bank account
• Any customer reference number from the company you were paying

Make sure you include as much information in your cancellation instruction as possible to make the process easier and simpler. If you have the regular Direct Debit collection date, include it with the above. There should be no debit collections from your account once you’ve cancelled, and if the company wishes to put another Direct Debit in place from your account they’ll need your permission before they proceed.

It’s always a good idea to keep an eye on your bank statements for a period after cancelling, just to ensure that you spot any debits leaving if your instruction isn’t actioned. The sooner you realise and let the bank know, the sooner they can ensure you’re issued a full refund.

Have a look at our infographic with the 4 easy steps of correctly canceling your direct debits:

Now we’ve all done it, taken our eye from our bank balance for what felt like a few busy days and then realised everything seems to have come out at once and we’re in a bit of a pickle. Thankfully, the Direct Debit Control Centre app means such awkward situations can be a thing of the past, no matter how busy things get.

The app’s free to download to your iPhone or iPad, and it means you can see all of your Direct Debits in one place, it’ll send you reminders before a Debit collection is made, and it’s easy to register new Debit agreements so that you’re never n danger of getting distracted and forgetting about what’s leaving your account. That means no more bank charges or awkward conversations with the bank, and best of all – peace of mind that you know exactly how much you have available and for how long.

All you have to do is download the app and spend a few minutes registering the Direct Debits you have connected to your bank account, and then you’re ready to enjoy up to date information on your finances at your fingertips. That means you’re free to check how things are looking when you’re on the train to work, when you’re getting ready for that big night out with your friends, or even when you’re out shopping. No matter where you are or what you’re up to, you can double check how your budget’s looking within moments.

If you’ve got teenagers who are just getting the hang of managing their own money, why not download the app onto the next phone you treat them to so they get into the habit of staying on top of their money?

We all know how Direct Debits benefit us as consumers, but they can offer all kinds of advantages to business owners too. From the little things like saving you a few minutes here and there to bigger things like improving your company’s cash flow, the perks of using Direct Debit collection wherever possible make it well worth considering as part of your strategy.

So let’s start with cash flow.

Using Direct Debits means you’ll always know in advance exactly when funds will be cleared and in your bank account, and that greatly reduces the room for oversights and cash flow issues within the business. It’s also good news for the members of your company Accounts team, as once your customers have set up their Debits to ensure regular and timely payments they’ll have far less need to chase late payments and send out reminders when they’re outstanding.

Customer loyalty and retention

If you’re focusing on ways to see an increase in customer loyalty and retention, then Direct Debit collection can help. Once a Debit is set up and things are plain sailing on the payment front, many customers are happy to stick with one supplier and will be less inclined to move to a competitor. In short, it’s easier for them to continue paying the company they’re familiar with and that they have the Debit set up with. Don’t forget, the Direct Debit Guarantee provides protection for both you and your customers, so in the rare event that there’s a problem, you’re both covered.

Thinking about the environment?

If your company ethos includes consideration for the environment then there’s another advantage to using Direct Debits, they make it far easier to limit the amount of paper you use and store throughout the company. The more you rely on the Direct Debit scheme the easier it is to go paperless, and that can only be a good thing.

If you’re on the brink of moving house then you’ll be finding out just how much there is to think about. Far from a question of simply boxing everything up and then plonking it down in your dream home, moving is also about remembering those little details that are hugely important – like switching your bills.

That said, a move can also mean a fresh start, and if you’ve been paying your household bills via phone or another method each month, why not use your new start as an opportunity to make a change that’ll save you time and money? Why not set up Direct Debits?

Paying via Direct Debit collection means you never have to worry about paying late when time runs away from you, as the funds will leave your bank account on a date you agree in advance, so all you need to worry about is getting used to your new home. Better still, you could save money over the course of the year, as many businesses offer a discount to customers who pay via Direct Debits. Check the back of your bill to see if you could be making savings, or ask when you speak to your provider just to check.

Now if you’re wondering how much time and energy setting up your Debits is going to take then don’t panic, you’ll often find a Direct Debit form attached to your bill that you can simply fill out and send back to the company, but if you can’t see one then give the provider a call and request that they send you one. It’ll only take moments to fill in and you’ll be able to stay in charge of your money going forward, now that’s got to be worth a few minutes…

As most of us have been using bank accounts and Direct Debit collection for years, it’s easy to take their advantages for granted, but if your children are on the brink of opening bank accounts to start paying their own ways (or more likely, saving for those trainers they just can’t do without) it’s a good time to introduce them to the advantages of paying via Direct Debits. After all, it’s never too early to learn to control your finances.

If your almost-adult is thinking about earning their own money and saving it somewhere, then that’s a great start, and if they’re going to take responsibility for paying bills such as their mobile phone bills, or paying for their own items once they have a little money coming in, then understanding about how Direct Debits work and how they can make things easier will place them one step ahead… just think how savvy they’ll need to be at uni in a few years.

Talk them through how to set up a Debit using internet banking, as no doubt seeing just how easy the procedure is will make them more likely to make use of the scheme when they start to take more responsibility for their own outgoings. It’s a good idea to point out that they have an alternative to paying out for items in one lump sum, as Direct Debits enable them to make smaller, regular payments on a chosen date that suits them.

Even if they’re not earning a large amount at the moment, learning the skill of managing money is one of the most valuable ones older children can grasp as they step into the world of managing their own finances, and introducing Direct Debit as an option can help to make the prospect far less daunting.

In times of financial strain, it’s more important than ever to keep a close eye on your outgoings, and Direct Debits can help you to take back control of your money. If money’s tight, choosing to make regular payments such as for household bills by a Debit scheme means you’ll know exactly how much money will be leaving your bank account and when, and that means there’s far less scope for nasty surprises when it comes to checking your balance.

The last thing you need when you’re stretched is an unplanned overdraft fee, and Direct Debit collection makes it easy to avoid straying into your overdraft without warning as you’ll be able to plan around your payments.

Better yet, most companies are happy to let you pick the date for your Debt to leave your bank account, so you can choose a date which is easier for you such as payday. Once you know when your larger payments will be leaving your account each month, it’s easier to work out how much you have left to meet your other financial demands.

If you set up a Direct Debit to make regular payments to a company, ask whether you’re entitled to a discount. Many businesses reward customers who pay via a Debit arrangement with a reduction on the price, and that can only be a good thing. It often tells you on your bills if you’re going to be eligible for a discount, but it’s always worth double checking – especially when times are hard.

If nothing else, paying for items by Direct Debit can help to relieve the pressure, especially for essential items that you just can’t do without. After all, it’s easier to make a small payment on a regular basis than one lump sum when you don’t have the money spare.

One of the best things about using Direct Debit collection to make regular payments is that it makes it far easier to stay on top of your outgoings, and there are some handy tools available to make it easier than ever to stay on top of your finances… even if you sometimes lose track.

The Direct Debit Control Centre App is a simple app that means you can keep control of your money when you’re on the go, and in these busy times when we barely have a moment to log into our online bank accounts and start checking what’s going where, it’s a great help.

All you need to do to get started is download the app and register every Direct debit you currently have, and that’s the only setup you’ll need to do. The app will then be able to send you handy reminders just before your debits leave your accounts, so even if you tend to get your dates mixed up or lose track of time you’ll have a heads up before the money leaves your account so you can ensure everything’s ready to go.

That’s not the only godsend of an app for those of you who rely on Direct Debit though, there’s also the Budget Calculator. Again, this tool’s simple to use but so handy you’ll wonder how you went so long without it, and it calculates how much of your money you have left to yourself once your Debits leave your account.

Just Google Direct Debit Budget Calculator to get started. All you need to do is enter your outgoings into the easy online form, and then press ‘calculate disposable income’ to see how much you’ve got left to put aside for a rainy day (or treat yourself for that matter!).

We all know that the advantages of paying via Direct Debit Collections are numerous, (they save us time, they make it easier to make our regular payments, and they’re reliable for starters) but there’s one particular advantage to the process that doesn’t get as much press as the others…it’s actually far more environmentally friendly than alternative methods.

In a world where we consider the environment in pretty much every aspect of our daily life, it’s time we noticed the impact of our payment methods on the environment and embraced those processes that help us do our bit just a little more…like the good old Direct Debit.

Just take a moment to consider how much paper you’d use with every payment if it wasn’t for your Debits…there’s the postage if you sent cheques, there’s receipts if you went directly to the bank, and that’s not the half of it. Streamlining your payments into easy Direct Debits means there’s no paper, no printing and nothing for you to do but set them up and then let them happen.

It’s just as easy to keep a track of your outgoings with Direct Debits too, as thanks to online banking all you need to do is get into the habit of scanning your Debits screen regularly to check that everything’s as it should be…and that means no more filing of endless receipts and payment records that don’t mean quite so much once they’re part of a pile on the end of your desk.

So, if you’ve been thinking about switching the way you make your payments for a while and haven’t quite gotten around to setting Debits up yet, just think that as well as making things easy for yourself you’ll be doing your bit for the planet too.