The cancelled Direct Debit instruction

Direct debit provides a convenient and straightforward way for customers to pay regularly for services they receive on an ongoing basis. However, whilst direct debit solutions are easy to manage from an organisation’s perspective, customers are able to cancel their direct debit payments through their bank. So how do you manage the cancellation of direct debit instructions?

Focus on customer service

Direct debit is a fantastic way of improving service for your customers – it takes away the worry of missed payments and allows them to manage their money better, knowing how much is going out each month. Direct debit solutions can help save people money and help them manage their finances better. However, for you as an organisation, setting up your direct debit system to run smoothly is just the start of the process. Ensuring that you manage the system correctly, keeping on top of any non-processing days and, crucially, making sure your staff receive regular and relevant direct debit training are all part of your ongoing responsibilities. If things start to go wrong – payments are taken early or too much money is taken – customer confidence in direct debit may start to waiver. You can help build trust in the direct debit system by keeping on top of all these things – and there are professional direct debit training opportunities that you can take advantage of to help.

The threat of cancellation

Another point to remember is that it’s vital not to neglect other aspects of your customer service. Many customers now see the threat of cancelling their direct debit instruction as a legitimate way of achieving action, for example if service levels drop. A quick scan through social media will reveal the posts of many disgruntled customers attempting to gain attention this way.

Cancelling a direct debit instruction

One of the benefits of direct debit for your customers is that it is simple for them to cancel the direct debit should they no longer wish to continue with your service. This is done by the customer contacting their bank or building society, and providing them with information about the direct debit they wish to cancel, including

• The name of the payee organisation (i.e. you!)
• The customer reference

The customer may choose to notify you at the same time, but otherwise, you will find out that the direct debit has been cancelled through an ADDACS report.

Bacs advise that a Service User should act within three working days of receiving the ADDACS report to action any changes or cancellations to a direct debit. If you struggle to access your reports, a direct debit bureau could help you.

The penalty for failing to action a cancellation is potentially an indemnity claim – a refund under the Direct Debit Guarantee.

Cancel the services

The other thing to remember is that if a customer cancels the direct debit but wishes to continue receiving the services you provide, they must set up an alternative payment arrangement. In many cases where the cancellation of a direct debit instruction is threatened, it may be possible to resolve the issue to everyone’s satisfaction, by addressing the customer’s concerns.

If you have any questions about issues arising from the cancellation of direct debits, get in touch – we’re a BACS accredited direct debit bureau and training provider, and we’d be happy to help!