Standing Order v Direct Debit

[TMProject]

If someone creates a Standing Order Mandate, do they give it to me (and send to my bank) or do they give to their bank? It's just that I have seen some examples where they have stated that the person needs to send it back to the company after completing the mandate.

Same question for Direct Debit.

Thanks

 

[Onion4Sage]

Can't speak for Direct Debit, but I've dealt with Standing Orders a bit in the past.

Firstly, a key feature of a Standing Order is that it is an instruction from a person/company to their own Bank to make payments to a specified recipient. The reason they are often routed through the recipient's hands is so that the recipient can add a reference that will identify the payer in the narrative that will appear on their bank statement. On receipt, you would not send it to your bank. You would add any necessary reference and forward it on to the bank of the person/company completing the mandate.

I hope this helps.

 

[TMProject]

Ah, so if their bank is Natwest, I would have to pop into any Natwest and hand it in?
What if they have an online bank?

 

[Onion4Sage]

I've never "handed one in". I've always just posted it to the postal address of the bank branch recorded by the person/company who has completed the mandate. If there has been any problem with the postal address, I've either: clarified with the originator; or, looked up the address recorded for the bank sort code online and sent it there.

P.S. try Googling "bank sort code address XX-XX-XX", where XX-XX-XX is your own sort code, and you'll see how easy it is to find the proper address.

 

[Newchodge]

The Direct Debit is an instruction by you to your bank to take money from your customer's account. The Standing Order is an instruction by your customer to their bank to make a payment to you.

On principle I would not return a standing order mandate to my supplier on the grounds that they may neglect to send it to my bank, or make changes to it without my knowledge or anythking else. If a reference number is needed I would ask the supplier to let me know what it is.

It is common to return a Direct Debit mandate to the supplier, as it is their instruction.

 

[NRLtd]

In addition to what has been said, a standing order continues until either the "payer" tells their bank to stop or the end date is reached. Also, direct debits can be varied whereas standing orders are the same amount for each payment - to change would involve cancelling one standing order and setting up a new one. Direct Debits usually carry the direct debit guarantee giving some protection to the payments made.

Standing orders can work for anyone, but for direct debits you'll need your bank to set up the facility.

 

[MyAccountantOnline]

If someone creates a Standing Order Mandate, do they give it to me (and send to my bank) or do they give to their bank? It's just that I have seen some examples where they have stated that the person needs to send it back to the company after completing the mandate.

Same question for Direct Debit.

Thanks

Ultimately the standing order mandate needs to go to the bank of the person paying you as it is set up by their bank - whether you do it or ask your client to do it is your choice.

I use standing orders to collect pay monthly fees and always send clients a standing order mandate which they can either use to complete and send to their bank or use to get the details to set it up online, which nearly all of them do.

Direct debit is very different to standing order and isn't something you can offer unless you make arrangements with your bank or use a third party company.

 

[Maslins]

Typically a standing order form you would never need to see. They'd deal with it with their own bank (though probably online rather than completing a paper form these days). This would then lead to a set amount going from their account to yours each month, nothing you can do about it.

Direct debit (DD) is different, they'd send a mandate to you, which effectively gives you the ability to take what you want when you want from their account. Of course they're protected by the DD guarantee...which basically means if you take cash you shouldn't have, they can claim it back immediately.

We use DD, main benefit for both us and the client is that we can tweak amount up/down as required if invoicing amount changes, or VAT rate changes. Leads to far fewer under/overpayments...but as Nicola suggests, we had to jump through a few hoops to be able to offer this method, and pay a fee for it, unlike for standing orders.

 

[Virtual Phone Numbers]

If someone creates a Standing Order Mandate, do they give it to me (and send to my bank) or do they give to their bank? It's just that I have seen some examples where they have stated that the person needs to send it back to the company after completing the mandate.

Same question for Direct Debit.

Thanks

I would guess the only reason the company are asking for it back is to check all details are correct (or to add their own reference, as mentioned). Once a Standing Order has been created, if it hasn't been set up correctly it can only be changed by the sender, often leading to more admin and delayed payments.

This differs to a direct debit where the receiver is able to determine the amount of money and change it accordingly each month if necessary. As mentioned, can only be done through the banks, although there some good direct debit collection services that allow you do it for a nominal fee - Fastpay is one I can recommend. Reduces administration, although probably depends on the type of service or product on offer which payment service you use. Also, on the type of client - someone who pays on time or someone who doesn't. A direct debit can be claimed from their bank.

Good luck