A smooth and efficient Direct Debit System will convey lots of benefits. As a ‘pull’ payment method it puts the collecting organisation in control. The organisation decides how much is collected, from whom and on what date. When working effectively, a successful Direct Debit system can stabilise cashflow, reduce admin and contribute to a positive company image among customers. The following top Direct Debit tips will help you get the best from your processes.
1. Get Accredited Training
Collecting the organisations income is a big responsibility so ensuring new staff members receive training is essential. Given that the Direct Debit Rules are updated regularly it is important to keep that training up to date. As a result, it is recommended that all staff receive refresher training every 3 to 4 years. In addition, if your organisation is looking to introduce new processes such as AUDDIS (Automated Direct Debit Instruction Service) or Paperless Direct Debit then ensuring you know the rules and best practices specific to these systems is key.
In all these instances training should help staff understand the ‘how’ and the ‘why’ of the Direct Scheme. It will best prepare them for ‘what if’ scenarios. You can read more about the training options on our Training Page.
2. Work with the latest Direct Debit Scheme Rules
The Direct Debit Rules are updated every December. The current version is Version 5.6 which was published in December 2022. These ‘Rules’ are available to download from the secure area of the Bacs website and it’s worth checking you are complying with them. To highlight what has changed there is a handy ‘overview of changes’ table at the beginning.
3. Keep staff contact details up to date
When staff who are contacts for the bank or Bacs leave an organisation, its important to ensure that new Primary Contacts are nominated. If an issue arises where you need to withdraw a Bacs file or make changes, you will need a nominated contact to liaise with the bank / Bacs to approve this. If nominated contacts are not available it can take weeks to nominate replacements. Finding out at the point when an issue has been identified that your contacts are not up to date can be frustrating and a real challenge.
4. Update and test your Business Continuity Plan (BCP)
In order to ensure your organisation can continue to collect its income as planned, it’s important to build contingency into your Direct Debit system. Typical ‘what if’ scenarios to consider include: ‘What if’ a smartcard expires or is lost? ‘What if’ access to software is lost? Mitigations can be undertaken – and often inexpensively – e.g. linking to a bureau for contingency or increasing the number of smartcard holders. As well as having a BCP in place of course its important that staff know where it is and what actions to undertaken in an emergency situation. Its also important to that the mitigations are regularly tested and updated!
5. Collect and Apply Bacs reports
Unlike with some other payment methods such as Standing Orders, cheques and cash, you receive regular updates from Bacs regarding issues with your Direct Debits. This is through the Bacs reports made available to you via the Payment Services website or through your software or Bureau. Some of these Reports update you on changes to the Direct Debit Instruction. Other reports provide information about Direct Debit Collections. Three key Bacs reports are described below:
ADDACS Report – Advice of Direct Debit Amendment and Cancellation
The ADDACS reports contain information on which Direct Debits have been amended or cancelled. Keeping up to date with this means that you will have a better idea of what collections will be successful. It also means that you can quickly liaise with the payer if you think they may have cancelled in error.
AUDDIS Report – Advice of Returned Direct Debit Instructions
The AUDDIS report contains details of rejected and/or returned Direct Debit Instructions (DDIs). Knowing that DDIs have not been successfully set up means that you have a chance to action the reason for failure before you attempt to take a collection from the account.
ARUDD Report – Advice of Unpaid Direct Debit Report
The ARUDD report contains information on Direct Debit collections that were attempted but which were unsuccessful / not collected. It will tell you the reason why the collection failed and what you should do next.
Actioning the information in these reports will help ensure that you keep your system up-to-date and operating efficiently. It will reduce errors and associated admin so the advice should be actioned as soon as received.
6. Sign up for Bacs newsletters
Staying up-to-date with the latest Bacs news will keep you one step ahead – for example when new bank holidays are announced that could affect when you need to submit collection files. You can sign up to these via the Bacs website.
Contact us for help
Understanding the requirements around Direct Debit references is incredibly important. It will help you avoid errors and failed collections. This blog contains a brief overview of common issues but if you would like more details or have questions, please contact us and we will be happy to help.