How To Understand and Use Bacs Reports

We look at the Bacs reports that you will need to become familiar with as a Service User – what they tell you and how to use them!

Once you have your Direct Debit – and, if appropriate, Direct Credit – systems in place, what next? There’s the addition of new customers signing up to pay by this method, known as “lodgement”; the regular submission of collections files; and management of the Bacs payment cycle. Service Users must also stay on top of the reconciliation of Direct Debit customer payment and collection information, such as missed payments, cancelled Direct Debit Instructions (DDIs), or wrongly applied debits or credits. To help Service Users keep on top of this, Bacs produces a number of reports. In this blog we look at those reports, the information they give you, and how to use them to your advantage.

Bacs reports can be downloaded from the Payment Services website, or obtained through your Bacs software. Bacs reports only highlight changes – so, for example, the AUDDIS report, which we look at first, won’t list valid DDIs which have been implemented, only those that could not be set up.

The AUDDIS report

AUDDIS is an acronym for Automated Direct Debit Instruction Service. The AUDDIS report called Advice of Bank Returned Direct Debit Instructions details those new Direct Debit Instructions that have been submitted by you for lodgement but have been rejected, either by Bacs or by the Payer’s (customer’s) bank.

There can be a number of reasons for rejection, including cancellation of the instruction or the bank account being closed. The reason will be indicated using AUDDIS “reason codes” so it is clear what action needs to be taken. For example, if the DDI has been rejected because the bank account is an invalid account type (AUDDIS reason code F), you will need to get in touch with the customer and ask for the correct information.

The ARUDD report

If a Direct Debit transaction cannot be completed, it will appear in an Automated Return of Direct Debit (ARUDD) report. As with AUDDIS reports, you will be given a reason code indicating why the payment could not be completed. Based on this, you will be able to take appropriate action. One point to note with ARUDD reports is the common “Refer to Payer” reason code. This means that the paying bank cannot specify the reason the payment could not be completed. “Refer to Payer” often means that there were insufficient funds in the relevant account, but it should not be assumed this is the case – you will need to conduct further investigations to identify the true cause.

The ADDACS report

Once a DDI has been set up, it may change. ADDACS, the Automated Direct Debit Amendment and Cancellation Service, create an ADDACS report which advises the Service User of changes that are made to existing Direct Debit Instructions. These should be acted upon within 3 days of receipt. It is in your best interests to act quickly on receipt of an ADDACS report from Bacs, otherwise, you risk making incorrect collections and facing indemnity claims, loss of revenue, and damage to your organisation’s reputation.

The DDICA report

The DDICA – Direct Debit Indemnity Claim Advice – report is the one that no Service User wants to receive. It contains details of any indemnity claims you face – for example because you collected a payment early or took the wrong amount. Unless you have experience handling these claims, we would advise you to take advice from a specialist Direct Debit company.

The Bacs reports we’ve mentioned above all refer to Direct Debits. For those also using Direct Credits, you should be aware of the following reports.

The ARUCS report

If the Direct Credit system has been unable to apply the payment concerned, funds will be returned to your bank account and you will receive an Automated Return of Unapplied Credit Service (ARUCS) report explaining that the payment has not been made and giving the reason why. This could be because the bank account could not be identified, or for some other reason. As with ADDACS reports, it is vital to action an ARUCS report within 3 working days. You should advise the intended beneficiary that the payment has failed, and if necessary obtain the correct details to ensure payment can be made.

The AWACS report

An Advice of Wrong Account for Credit Service (AWACS) report will contain information about payments that have been made even though the bank account details were inaccurate. You will receive the correct details and it is in your best interests to update your records swiftly to ensure that payments are not misdirected in future. In any event, you should action information in the AWACS report within 3 working days.

Managing your Bacs reports

Once you get into the routine of regularly checking your Bacs reports and taking the necessary corrective action, the Bacs system and payment cycle will become much clearer and more manageable.

It is a good idea to make sure all staff handling Bacs reports receive regular training from a Bacs Accredited training provider, such as Clear Direct Debit, in order to stay on top of the reports and the information they provide, and ensure you are taking the right action to correct any Direct Debit or Direct Credit anomalies. It’s essential to do this promptly – within 3 days – to remain compliant with the Bacs Scheme rules.

Alternatively, you can choose to work with an expert Direct Debit bureau which can scrutinise your reports and handle any actions arising.