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BreadcrumbResourcesDirect Debit: a beginner's guide

Introduction to taking payments with Direct Debit

The three things you need to know about taking payments with Direct Debit.

Once you have a Direct Debit Mandate set up with your customer, you can collect Direct Debit payments from them at any time. There are three things you need to know about taking payments with Direct Debit:

  1. You need to give customers advance notice. You need to give your customer 10 working days notice of the amount and date of the payment unless you have agreed a shorter notice period. To help you check whether you are giving Advance Notice correctly we have put together six quick questions for you.

  2. Payments clear in 3-5 days. When you’re ready to charge a customer simply submit a payment request to your bank via Bacs. How you do this will depend on your chosen Direct Debit provider – if you would like to find out more check out our guide to the three different options.

    Remember: Direct Debit payments are not instant; the Bacs three day cycle means they generally settle into your bank account after 3 working days. 

  3. Bacs will send you any failure reports. You will receive a message notifying you of the reason for the failure. You will then need to speak to your customer to resolve the issue (in GoCardless's experience this is usually due to insufficient funds). If you start managing Direct Debit payments in-house you are likely to have issues initially with unnecessarily high failure rates. Using a third-party provider like a bureau or GoCardless can help with this.

GoCardless takes all the hard work out of Direct Debit

GoCardless processes Direct Debit payments on your behalf, including:

  • Giving your customers advance notice - GoCardless sends customers a bank approved notice of each payment three days before a debit is made giving you more flexibility around collections.

  • Optimising payment timings - GoCardless submits mandates and payment requests for you according to our optimised payment timetable. You simply request payments in our online dashboard or via the API and we’ll do the rest for you. 

  • Handling any failure reports on your behalf - We receive reports from the bank and update your payment statuses so you know what's going on. GoCardless manages any payment failures for you and our simple system reduces failure rates to less than 1%.

Now that you know how taking payments with the Direct Debit system works, you’ll need to decide how to access it. There are three options for doing so - the one you choose depends on the size of your business and your requirements. To find out more, check out our 60 second Guide to accessing the Direct Debit scheme.

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GoCardless Ltd., Sutton Yard, 65 Goswell Road, London, EC1V 7EN, United Kingdom

GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration number 597190, for the provision of payment services. GoCardless SAS (23-25 Avenue Mac-Mahon, Paris, 75017, France), an affiliate of GoCardless Ltd (company registration number 834 422 180, R.C.S. PARIS), is authorised by the ACPR (French Prudential Supervision and Resolution Authority), Bank Code (CIB) 17118, for the provision of payment services.