Avoiding and Resolving Failed Direct Debit Collections

How much do failed Direct Debit collections cost your business?

Article by James Alves. Account Manager.

A common scenario we see uncovered on our Direct Debit training courses is that our attendees start to realise the true cost of failed Direct Debit collections. So what happens when a Direct Debit fails? This can be broken down into various elements, such as the cost of:

– investigating a failed collection
– figuring out the best options for resolution
– representing the collection

And what price can you put on peace of mind?

Impact on you and your business

“Failed Collections take up too much of my time.”
Your time is a cost to the business and some activities will yield a better return on your productivity than others. Consider the impact on you directly as a collector of Direct Debit payments:

– What could you be doing if failed DD collections happened less frequently?
– How much time could you save if you instantly knew the best course of action?

“There’s only me. I am the team. I don’t have anyone else I can ask to help.”

There are steps that you and your organisation can take to help you with your collections process; reducing failed collections and improving your ability to deal with the failed collections that currently occur.

Knowledge is power, so training, and having an up-to-date knowledge base that helps you to know what happens if a Direct Debit fails, is one such way to improve matters. You can read more on our website about our Direct Debit training, or you can contact us for details.

“Our accounts department asks why there is a discrepancy in our collections.”
This is a common theme with membership organisations and charities where the membership team often have the responsibility and accountability for DD collections as a separate function to the accounts department.

– How do failed DDs affect the other departments, your boss and stakeholders within your business?

The impact on customers

“Customers ask us why we have collected later than usual, and they’re not happy about it.”

Under Bacs scheme rules, you are more than entitled to re-present, i.e. to attempt another collection if the initial one fails. However, we know that customers don’t like to see irregularities in their bank balance. Typically, this is due to expectations of cash flow within their accounts at different points of the month.

If a company failed to take a Direct Debit on the due date and instead took it later, customers want to know why the collection was taken at an unexpected time, and they will come to you for answers.

– What impact does a failed collection have on your customer?
– How does your ability to resolve and explain what’s happened to affect their perception of you and your business?
– How will it impact on their future custom with your business?

What can you do?

“Prevention is better than cure.”
Fortunately, you can reduce failed collections with some foresight, and familiarity with the possible scenarios that cause issues. You can empower yourself by speaking to experts such as us at Clear Direct Debit. We provide training to help you master multiple aspects of your collections, increasing collections and reducing headaches.

“Clear Direct Debit has helped me to massively improve the DD collection rate that our charity relies on. My day to day job is easier because I have the answers I need and I spend less time confused about what’s happened. I know how to fix errors that come my way. The training was well worth my time”

– What is the cost of failed DD collections to you and your business?
– What could a single day of learning do for you?

We have regional courses up and down the country, suitable if you have just one or two people that need assistance. For larger numbers, we offer private onsite courses just for your business at your own offices. You can read more on our website about these options.

Every year, the Bacs rules undergo changes which will impact how you collect and resolve unpaid collections. You can read more about the January 2020 changes on our Direct Debit Scheme Rules Update blog.