Well Mondo Duplantis just broke the World Record at the 3rd attempt, so all is not lost if things don’t work out first time!
Direct Debit is a very reliable and predictable method of collecting payments but, as with all payments, they are not guaranteed to go through. In the Direct Debit scheme these unpaid items are notified to the collecting organisation (Service User) through a report. This is called the Automated Return of Unpaid Direct Debits – ARUDD. If the Direct Debit Instruction has been cancelled or the account closed, then there is nothing that we can do as the collecting organisation. If the collection has failed for other reasons however, we can.
Why Direct Debits get returned unpaid
A Direct Debit may be returned unpaid for several reasons, including:
- Insufficient funds in the payer’s account
- Incorrect collection details
- Incorrect account details
- Bank restrictions (e.g., account not permitting Direct Debit collections)
- Payer cancellation of the Direct Debit Instruction
Why is this important right now?
In the last few years, the number of unpaid items across many industries has steadily risen to the point where they are almost double where they were 6 years ago. You can check some of the data by sector at :-https://www.ons.gov.uk/economy/economicoutputandproductivity/output/datasets/monthlydirectdebitfailurerateandaveragetransactionamount
Representing an Unpaid Direct Debit – Check the reason code:
If a Direct Debit is returned unpaid, organisations are allowed to represent (i.e., attempt to collect) the same payment again, provided the reason for the return makes representation appropriate. Typically, we would only recommend representing the Direct Debit if the reason code provided for failure in the ARUDD report is “0 – Refer to Payer”. Whilst other return codes might allow you to try again – such as “8 – Amount not yet due” these are less common. It’s worth understanding what caused the issue. For more information see our previous article: – https://movimo.co.uk/resources/re-presenting-unpaid-direct-debits/
In our view, the payer intended to pay by Direct Debit – hence why they agreed to the Direct Debit Instruction (DDI). If they didn’t want to pay by Direct Debit, they would have cancelled their DDI or made you aware directly. These failures are often just a timing issue and Payers, once alerted, often make funds available to their account. Anecdotal evidence suggests that more than 50% of represented Direct Debits attempted are successfully collected so it is worth considering.