To ensure successful Direct Debit collections, businesses need to know when to send their collection files to Bacs. Some considerations……
How often to collect Direct Debits?
A key question is how often to collect Direct Debits. It is possible to collect Direct Debits on a monthly, weekly, quarterly, annually, infrequent or even ad-hoc basis. The Direct Debit authority itself is not linked to a collection on a specific date – the date can vary according to need. This means a business can consider the best collection pattern for them and as long as payers are given enough notice in advance of collection, businesses can take Direct Debit payments as often as needed.
What is the best collection date?
Most businesses collecting from consumers find that a collection date at the beginning of the month e.g. the 1st, gives the best chance of a successful collection. This reflects the fact that many individuals receive salary payments at the end of the month and are therefore most likely to have funds available on the first of the following month. In contrast, collection dates at the end of the month can sometimes result in higher rates of unpaid items due to lack of funds by this point. The 1st is therefore the most common collection date offered.
After the 1st, the 15th is often offered as a collection date, either instead of, or as well as the 1st. The 23rd or 8th are then quite common. Businesses can collect on any day however that suits their needs and some will collect everyday of the month. It is worth considering the associated administration required for multiple collection dates. There are benefits e.g. in terms of flexibility but the associated time and cost to process multiple collection dates can be higher. If rates of unpaid Direct Debits are high or are growing over time, it may be worth reviewing collection dates to see if a different date would increase the success rate.
When should collection files be sent to Bacs?
Best practice is to send files to Bacs as close as possible to the collection date so that processing follows the 3-day cycle. This enables the organisation to apply as many updates as possible to the data e.g. from ADDACS reports. In turn, this can ensure fewer unpaid items.
On occasion it may be advantageous for files to be sent in advance to Bacs. This can be useful over Christmas or other holiday periods for example, if there is a concern that staff may not be available to forward files at the usual times. It is possible to send files to Bacs up to 30 days in advance of the processing date. This does of course mean that Bacs reports cannot be applied to the dataset in the days running up to collection, meaning that there may be a greater number of unpaid items.
Remember: If files are sent in advance it is important to ensure either that the correct collection date is selected within the software at the point of submission OR that the Bacs file contains a date per transaction, so that collection does not occur early.
The 3 day cycle
All Bacs files operate according to the Bacs 3-day cycle which works as follows:
- Day 1. Input Day. The collection file is sent electronically to Bacs
- Day 2. Processing Day. Accepted data is processed by Bacs
- Day 3. Entry (Collection) Day. Funds are collected into the Service Users Account. Money is debited from payers accounts on the same day.
How often should AUDDIS files be sent to Bacs?
AUDDIS files containing Direct Debit Instructions are subject to the same process and timeline as collection files. This means that it takes 3 days for valid AUDDIS information to be applied to payers accounts. The 3-day AUDDIS cycle works as follows:
- Day 1. Input Day. The file containing AUDDIS transactions is sent electronically to Bacs
- Day 2. Processing Day. Bacs the AUDDIS file and forwarded valid DDIs to the paying banks
- Day 3. Entry Day. Valid DDIs are lodged on the payers accounts.
The frequency with which AUDDIS files are sent to Bacs varies across different businesses. Some will choose to send an AUDDIS file every day, others once a week or once a month. Submitting these on a set day or date, can help ensure staff remember to run the process. Likewise, keeping the number of AUDDIS files to a minimum can help reduce admin and the costs associated with sending files (e.g. file charges applied by the bank per file).
If there is 1 collection per month then there could only be 1 AUDDIS file sent per month. One submission, 8 working days prior to the collection date would be best practice. This would allow time to deal with any rejected items highlighted via AUDDIS reports, before generation of the collection file. If there are 3 collections per month then there could be 3 AUDDIS submissions per month and so on. Creating more files may just add cost and extra time to create and send the files.
Help to plan ahead
Bacs produce a helpful Bacs Processing Calendar. This includes details of all Bacs processing dates. Using this calendar can ensure that everyone is aware of when files need to be sent to Bacs. The business will need to plan in the bank holidays and weekends for example. You can obtain a copy of the latest version of this calendar from our website.
Questions?
If you would like more information about when to send files to Bacs, please contact us. We are happy to help!