Direct Debit Questions

Hello Everyone,

First time poster here, must say that its great having all this info in one place.

Anyway my question to anyone in the know is,

What is involved in setting up a direct debit for my business as I want to be able to charge my customers by direct debit.

If anyone has experience of the above I would be grateful if you could let me know what requirements you need for a bank to set this up on your account.

Thanks
Kevin Maher

You need your Bank to set you up as a DD originator. This should be discussed directly with your own Bank.

Thanks Brendan, do you know if there are any specific requirements needed.
Such as trading history?? do you know how long it would take to set such as thing up?

Step 1. Contact your bank and agree sponsorship arrangements. You must be sponsored by a sponsoring bank (i.e. a bank that provides direct debit services) in order to become an originator

Step 2. Complete all required documentation including an indemnity and authorising resolution and forward to your sponsoring bank for approval

Step 3. If approved, your sponsoring bank will issue you with an Originator Identification Number (OIN)

Step 4. You can now invite your debtors to pay by direct debit by asking them to complete a Direct Debit Instruction (DDI)

Step 5. To help minimise failed/unpaid direct debits you can consider offering to collect on a date that suits your debtor

Unfortunately I have no details of the criteria required by sponsoring banks, nor the time lag in obtaining approval to become an originator. Any of the main banks should provide this information to you.

Hi Kevin

If you are a small business, it's unlikely that they will allow you to become a direct debit originator.

This allows you to suck money out of anyone's account. If the account holder objects, then the bank has to give the money back to the account holder. But you might have done a runner with the money.

By all means check with your bank, but don't be offended or surprised by a refusal.

If you are refused, try to get your clients onto standing orders.

Brendan

I did this back in 05 and we had to jump through a lot of hoops, took about a month then and we had good support from the manager at our branch along with a good 5 year trading history at that time. For us both of these were key.

If you are a direct debit originator they will give you a limit per month, as in you can only take e.g. €5k a month from customers, see if you can start at a small limit and work your way up. We started at 5k a month then went to 10k a year later and so on.

Thanks very much everyone for the very informative replies. I'll post up how I get on with the bank next week.

Brendan Burgess said:

Hi Kevin

This allows you to suck money out of anyone's account.

Click to expand...

That's a bit OTT, Brendan

His bank will only consider an application from a new or small business for participation as a DD originator (not Direct Debit Plus), and so the payers bank would only accept his DD if they have a signed mandate from each payer.

Your description, Brendan, could only be applied to Direct Debit Plus, and even then, is rather extreme

If you would like an easier more effective solution you could use Sentenial, based in Maynooth. You use their OIN and their own software.
I have 2 businesses, one with and one without oin and I use them for both.
The business I have with its own oin uses sentenial's software only to upload the file to the bank every month.
They charge 500-600 per annum for the licence on the software and something like 1.5% per transaction.

Hope this helps.

use a Bacs approved Bureau

Kevin
The easiest way to collect Direct Debits for your business is by using a facilities management service from a Bacs approved Bureau. The Bureau will effectively act as your sponsor into the Bacs scheme and some will be able to let you collect using your own branding. This is a completely outsourced solution and much cheaper than trying to set things up in house due to the cost of sorting out Bacs approved software to submit data.
I highly recommend First Capital Cashflow. They've been around years and work with SMEs through to the public sector.
Cheers