- ADDACS, AUDDIS, Bacs, DD hints and tips, direct debit solutions, Indemnity Claims, Scheme Rules
- ADDACS, AUDDIS, AUDDIS Training, Bacs, Bureau Service, Direct Debit
- 03, AUG 2018
The Direct Debit Top 10 Most Frequently Asked Questions:
As one of a small number of Bacs Accredited Direct Debit training companies, and as a specialised Direct Debit Consultancy and Bureau service provider, we are regularly approached by organisations of all shapes and sizes to assist with their Direct Debit and/or Credit solutions. Over the last 10 years we have helped numerous businesses implement the most effective Bacs systems for their needs. During this time there have been a number of questions and issues that come up time and time again. With our experience and knowledge of the Bacs scheme we have put together a list of the most frequently asked questions and the answers you need to know.
New to Direct Debits and/or Credits?
We often assist organisations with setting up Direct Debit and/or Credit systems from the very start. This includes helping with Service User Number (SUN) applications, system implementation, deciding on the best processing option, etc. The setup process brings up a lot of questions, as for most people it will be the first and only time that they do it. Some of the commonly asked questions during setup are:
- What Service User Name should I choose? Can I change it?
Your Service User Name should be a name that your customers/members will recognise on their bank statements. Generally, it would include the whole or part of the name of your organisation. It cannot be longer than 18 characters and can be changed via application to the bank.
- Can we take a Direct Debit Instruction (DDI) via email?
No, not by just taking their bank details in an email. You could potentially accept a scanned signed paper Direct Debit Instruction. Paperless signups are usually accepted via the telephone or through online web signup but these use a script/web-pages approved by your sponsoring bank. Depending on your industry and audience, online web signups can be highly effective as these can be completed from anywhere at any time without any immediate active input needed from the organisation. Please ask us if you have questions about whether this could work for you.
- How long should I keep a paper Direct Debit Instruction for?
A paper Direct Debit Instruction can be retained as proof that authority has been duly given by the payer for the organisation to collect the Direct Debit. For this reason, an organisation might decide to keep the DDI for at least as long as the contract exists – whether this is one year or twenty years! Unlike other payment forms, however, the Direct Debit is covered by the Direct Debit Guarantee. This means that a payer could decide to claim back their money at any time and the DDI could, therefore, be required as proof in a counterclaim – at any time! Organisations may, therefore, decide to keep the DDI for longer still.
Okay we are setup and ready to go but we have a few queries:
Once the systems and processes are in place customers/members need to be implemented into the scheme. The first step is getting the signups completed; how this is done would have been decided in the setup process. Once signups are through you can start the collection process. A few questions that come up at this stage of the process are:
- Do we need to notify the payer before each collection?
If the value collected is recurring then only the initial notice needs to be provided. This can comprise a schedule or the notice can state ‘we will take x amount on the x (date) of each x (month, week, etc.) until further notice’. If the amount changes then notice must be given
- Can I issue a refund if I have collected a DD in error?
Thanks to the Direct Debit guarantee there is no need to issue a refund in any situation. Rather than issuing a refund the individual or organisation that you have collected the funds from can submit an indemnity claim to their bank. Their bank will issue an immediate refund and then claim the funds back from your organisation. This ensures no double refunds are processed and that there is an official audit trail held with the bank. If your customer is unwilling to raise an indemnity you can do this on their behalf by contacting their bank for them. Contact us if you have further questions about this. We do have a related blog on collecting direct debits early and the do’s and don’ts in that situation.
- Can we take Direct Debits from outside the UK?
Bacs is UK only so the organisation/Individual would need a UK account. If they do have a UK bank account then they can have money collected by Direct Debit – even if they are based overseas. If they don’t have a UK bank account, they could take part in the European scheme known as SEPA. There are some local schemes in countries such as Australia and South Africa but these run under their local rules.
We’ve been collecting for a while now and are having some problems with failed collections and reports we don’t fully understand. Please help!
Once your collections are up and running you will start receiving reports back from Bacs. These tell you what has happened with each transaction. If you’re submitting correctly then any issues you experience will be customer related ie. Change of bank details, cancelled DDI, etc. and these reports are quite simple to understand and counteract. But not all reports and reason codes are as simple, and we’re often contacted by organisations to help them understand what is going wrong, and how to fix it.
- A Direct Debit collection failed but the customer has said I should try to take the DD again – can I?
There are a number of reasons why collections fail. The ARUDD report uses reason codes to help you identify why a payment has failed. Understanding these reports enables you to take appropriate action. If a customer would like you to try and collect again/represent the collection then you need to understand the reason that it failed. Once you have understood the reason for the failure you can represent the collection with permission of the payer. Clear Direct Debit is an established, BACS accredited training provider and direct debit bureau. We can help you ensure your staff are up to date with all aspects of the direct debit scheme, including how to understand and use the direct debit reports, through our training provision.
- A client has cancelled their DDI but now wants to reinstate it. Can I do this? How?
The scheme does allow the reinstatement of a Direct Debit. The rule is that it must, however, have the ‘payers’ consent to do so and can only be used in the case of the cancellation of the Direct Debit being prompted by the ‘payer’. Reinstatement is not permitted where the DDI has been cancelled by the paying bank.
- What do I do if I receive an ADDACS report with a change of bank details? Do I need to contact the customer?
The Direct Debit scheme provides important advice for Services Users on Amendments and Cancellations to direct debits. The advice is titled an ADDACS report (Automated Direct Debit Amendments & Cancellation Service). The ADDACS, (along with the AUDDIS and ARUDD) must be actioned within 3 days of being made available to the Service User. The new details should be provided in the report in which case you can update your system from there. Updating the details will ensure that you do not receive future ADDACS reports for that customer. However, if you receive an ADDACS report with reason code three and no new details provided you will need to contact the customer for their updated details.
- Why do I get an unpaid report with ‘No Instruction’ when I am sending AUDDIS transactions?
Whatever the situation is, the code “No Instruction” shouldn’t really be coming back to you if you are using AUDDIS. The error is likely to be entirely controllable in your own environment. There are two possible answers. Either you are not using the AUDDIS system to set up your Direct Debits, or you are using AUDDIS but it appears not to be working for you correctly. If the reason is simply that you are not using the AUDDIS system then one resolution is to implement AUDDIS. But if you are using AUDDIS but it isn’t working correctly for you, here are some things that could be going on:
– Do you have a process ensuring you receive all your reports from Bacs? If you’re not getting all your AUDDIS reports then you won’t always know when instructions haven’t been accepted by the bank.
– Do you always action your AUDDIS reports promptly? Leaving time between receiving your AUDDIS reports and updating your system’s details could be causing the problem.
– Do you always action your ADDACS reports and are you sending the correct codes back to Bacs where necessary? A common mistake is not updating your own system with new bank details or failing to send the correct AUDDIS codes to the new bank when someone transfers their account. (You need to send a 0N code for it to be set up correctly) Try the suggestions above or alternatively we can help with our Training, Consultancy and Audit services and help to eliminate unnecessary errors for you.
– Did you leave enough time for the instruction to lodge before trying to collect? Don’t forget the three-day processing rule. Day one is when you submit the instruction, day two is when its processed and day three is when it reaches completion. You need to wait for the AUDDIS instruction to be processed before you can try and collect. If you don’t Bacs won’t recognise that you have permission to use the details that you are trying to submit.
Getting started with Direct Debits and/or Credits can be very confusing and slightly daunting. No matter how long an organisation has been dealing with Direct Debits and/or Credits there are always questions. We have been asked many more throughout the years, and many we have answered on our website. Should you have more questions for us then the following links will be helpful to you:
Have an interest in Direct Debits and Credits?
We’d be more than happy to help. We’re a multi-faceted company that supplies Direct Debit and Direct Credit training, consultancy and Bureau services. So whether you need that extra help to process your transactions perfectly yourself, or you’re looking for someone else to do the job for you, we would love to hear from you. Give us a call on 0845 658 6488 or email us at firstname.lastname@example.org