You’ve taken the step to use Direct Debit for your business, but now, you need to understand all of the finer points of the service, including the Scheme Rules for Businesses. This Guide will walk you through the key rules of the scheme and how they affect your business.
The Direct Debit Scheme Rules govern how businesses actively use the direct debit service, from paying salaries and settling invoices from suppliers. When making payments or collections are made via Direct Debit, you will have a relationship with your bank or building society, which ‘sponsors’ you to use these services, the rules in place will ensure that all parties and organisations involved will be fully compliant to the scheme. If you have any questions or queries regarding the rules, your sponsoring bank or building society will be able to assist, or you can contact Bacs themselves.
The rules of the Direct Debit scheme cover the entire service and process, from becoming a user to managing paper and paperless direct debits. The entire list of rules can be found here, but we will cover many of the key rules that will affect you.
When setting up a Direct Debit, a business must adhere to the following:
At the point of set up, the sponsor will provide information to the service user on how and where to access its rules. Having set up a Direct Debit, a Direct Debit Instruction will be set up.
Upon completion of the Direct Debit Instruction, the following rules apply.
In the process whereby the service user collects Direct Debits from its payers, two specific rules apply.
When an organisation is looking to join the scheme, it will need to contact its bank, who will be able to advise them of the steps involved in becoming a service user. The bank will need to consider any application to sponsor an organisation as a Direct Debit service user.
Consideration for a sponsorship will take into account contractual capacity, financial standing and the quality of its administrative control.
Many other rules exist regarding your setup as a Direct Debit User, and once you are setup, it is time to move onto the Direct Debit Instruction (DDI), which is the method by which service users obtain the payer’s authority to debit their account.
The Direct Debit Instruction MUST contain the following information:
These are only a few of the key rules that exist in the setup of Direct Debit Instructions, and all must be followed.
If you have any specific questions regarding any rules in the Direct Debit scheme, and how these might affect your business, get in touch with the London & Zurich team today. There are rules regarding Advance Notice, Completion and Lodgement of the Direct Debit Instruction, Paperless Direct Debit and a number of other relevant subjects.
Our intuitive online system makes it easy to set up any type of collection and manage a wide range of collection profiles. We have experience and expertise in a wide range of industry sectors. We work with companies of all sizes to meet the specific needs of your business, whether you’re a utilities company collecting variable amounts from your customers, or a fixed subscription service.
If a customer cancels their direct debit or a payment collection fails, we will inform you instantly, providing you with the information you need to make timely cash flow decisions. As well as benefiting from a flexible, low cost payment system, you can also rest assured that your customers are using a safe, secure payment system, which is backed by the Direct Debit Guarantee.
If you are interested in variable or fixed recurring collections, or would like to set up a direct debit for one-off payments, speak to London & Zurich today. We will talk you through your options and help you understand every aspect of this cost-effective payment option.