Getting your Direct Debits Back on Track as Lockdown Lifts

Blog by Sarah Cottee, Training Manager

Positive news for Service Users as lockdown is lifting

It’s been 3 months of uncertainty and worry for a lot of Service Users during the Covid-19 lockdown. We have seen significant increases in Direct Debit cancellations; reduced income from putting Direct Debits on hold and general uncertainty about when this will all be over. There finally seems to be some light at the end of the tunnel. With restrictions easing, Service Users will now be able to get their Direct Debits back on track. As a result, many Service Users are looking at their processes and what improvements can be made to redress issues that were highlighted during the lockdown period.

Direct Debits on Hold

During lockdown, a lot of Service Users experienced an increase in Direct Debit cancellations. To prevent these cancellations some Service Users choose to freeze or put on hold their Direct Debit collections. As lockdown has eased and doors are beginning to reopen, we have been asked what Service Users should now do as they try to start up their Direct Debit collections again.

Advance Notice

Well firstly, get in touch with your payers! It’s really important that your payers know what is happening. You don’t want them to feel shocked when they notice you have started collecting their Direct Debit again and didn’t inform them. The Direct Debit Scheme Rules state that if there are any changes to the date, amount or frequency of collection then you must send payers an Advance Notice before you collect again. If you don’t provide Advance Notice you run the risk of further cancellations or even Indemnity Claims. This can happen when payers are suddenly surprised to see money debited from their account and think it has been done in error.

DormanCy

Luckily, concerns about the Direct Debit expiring have been mitigated by Bacs. Previously, if you hadn’t made a collection on a Direct Debit Instruction for a period of time (typically 13 months), then the Direct Debit authority would expire. This could occur for example if Direct Debits were collected annually and then paused because of lockdown so a collection hadn’t been made for longer than 13 months. This period of time where the Direct Debit Instruction (DDi) will remain live on a payers account if no collections have been made is called the Dormancy period and in order to help prevent Direct Debits expiring, Bacs have temporarily extended this Dormancy period. From the 29th June 2020 the minimum Dormancy period for all Service Users will be temporarily increased to 24 months. This means that if you have put your annual Direct Debits on hold, you won’t run the risk of them expiring just yet!

Cancelled Direct Debits

If your payer has cancelled their Direct Debit with their bank, you will usually be informed of this as a reason code 1 on your ARUDD report (Automated Return of Unpaid Direct Debits) or ADDACS report (Automated Direct Debit Amendment and Cancellation Service). Alternatively, the payer may have contacted you during lockdown and asked you to cancel their Direct Debit. If the payer has cancelled because they panicked when lockdown was announced, they may have had time to reconsider and now be ready to carry on with the Direct Debit. Once you have spoken with them and have agreement that they are happy to continue you can look to sign them up again or perhaps to reinstate the original Direct Debit. Since lockdown has lifted many of our customers have reported successful campaigns to do just this!

Re-instating Direct Debits

If it has been less than 2 months since the Direct Debit was cancelled, it could be reinstated. To achieve this the payer would need to contact their bank and ask the bank to reinstate the Direct Debit. If this happens you will be notified with a reason code R on your ADDACS report. If you receive a code R you can continue to collect using the details of the original instruction, however you should issue a new Advance Notice and confirm the action with the Payer.

Re-signing Customers

If it has been longer than 2 months since the Direct Debit was cancelled, then you will need to get agreement from the customer that they would like the Direct Debit to start again.

• Paperless: If you sign up payers using Paperless, (whereby the payer signs up over the phone, via your website or face to face), you would need to send out a link to your sign up screens on your website or call them and run through the sign up script over the phone. You can also use this as the perfect time to check on them. How they are getting on? Are they in a position to continue with the Direct Debit? Don’t forget there is nothing wrong with great customer service especially at a time like this.
• Paper: If you sign up new payers using a paper Direct Debit Instruction (DDI) , you will just need to send the payer a new paper DDI to sign. Don’t forget you can always send them a copy electronically – you don’t need to send this via post, so long as it is a wet signature when the payers signs the instructions (i.e. they print it out and put pen to paper!).

If you have any questions about issues arising from the cancellation of Direct Debits, please feel free to get in touch with the team.

Bacs reports

A key part of managing your Direct Debit scheme is to stay on-top of your Bacs reports. These Bacs reports – which you can access via Payment Services, through your software or via your Bureau – are time critical, and should be downloaded and actioned within 3 working days. They will tell you who has cancelled, who hasn’t paid, who has changed bank accounts and more. If reports aren’t accessed and actioned, payments to accounts or collections against them may not be successful in the future, leaving you with either issues regarding failed payments or unpaid Direct Debits, both of which could result in additional costs for your business or complaints from your customers, suppliers or employees. Available Bacs Reports will include the following and you can find more information about these and the response actions you should take on our website:

• The AUDDIS Report
• The ARUDD Report
• The ADDACS report
• The DDICA Report

The Importance of Training

Don’t forget, you can get help to get your Direct Debits back on track. If you feel your team would benefit from improving their confidence in their Direct Debit knowledge or you are looking to streamline your processes after lockdown, then now might be the perfect time to consider some Direct Debit training. Our most popular course options right now are our online options.

ONLINE BACS TRAINING

Our online, face-to-face Direct Debit Training course provides a thorough overview of the Direct Debit scheme. Bacs Training Courses are delivered via online platforms such as Zoom, using a mix of learning techniques. These include interactive breakout sessions, online whiteboards, presentation slides and discussion points. Courses are run at pre-arranged times on a day that suits you and the timings of the course can be varied according to your needs.  The course is modular, and prices start from just £150 + VAT. Whether you are working from home or from the office – if you have internet access you can easily attend a course! Current offerings include:

• Full Course: Direct Debit In-Depth
• Module: Direct Debit Basics
• Module: Paperless DD Overview
• Module: Bacs Reports

Contact Us

If you would like to know more about our training courses, please see details on our Training Pages. You can read more about moving to AUDDIS or Paperless Direct Debits on our Consultancy Pages. Alternatively, please feel free to get in touch with the team and we will be happy to help:  training@cleardirectdebit.co.uk.