Hi
I live in Leeds, I work in Finance and mad about woodwork & DIY
Hi
I live in Leeds, I work in Finance and mad about woodwork & DIY
Member since:24.01.2003
Reviews:11
Standing Orders & Direct Debits.
I work in the finance industry and know how these payments work. I am aware not everyone is though.
Without going into boring detail, I will try to give you basic understanding of the 2. For those interested you can either drop me a line or visit;
(http://www.apacs.org.uk/about_apacs/htm_files/bacs.htm - Company that controls these payments) (http://www.apacs.org.uk/about_apacs/htm_files/debits.htm - Direct Debits) (http://www.apacs.org.uk/about_apacs/htm_files/storders.htm - Standing Orders)
A direct debit is an agreement set up between you (the customer) and the company (such as British Gas, BT, etc) that will take fundsdirect from your account. It is used by companies that are registered with the company that controls direct debits (called BACS).
A standing order is an agreement between you and your bank to send a certain amount of money to another account on a regular basis. It offers two benefits over the direct debit system. You have more control over the payment going to the company/individual, not the other way round. You can set them up to go to any account that accepts them (virtually all of them).
Standing orders can be used to pay bills, but companies prefer direct debits. It is easier for companies to track funds & bills by direct debit as they have more control. With standing orders they have to wait for the funds to credit their account, then they match them up with your bill.
An example of direct debit would be, - you want to pay your TV license by direct debit, rather than cheque, or whatever. Ring the TV License Company, they can either take your details over the phone or at the most they will need to send you a paper mandate (direct debit form), you complete the relevant boxes (there are not many usually). Send it back to the TV License Company and a few days later it appears on your bank account. The TV License Company will then take the money agreed previously with you.
An example of a standing order, - You want to put £30 in your friends account on the 25th of the month, starting this month for the next 30 years. You will need their Branch Sorting code (usually 6 digits) and their account number (usually 8 digits). When you send the payment you send it with a reference – from Steve - this allows your friend to identify the credit. You tell your bank to do this for you and your friend has no control over your account.
I would say by and large the only disadvnatage of the above methods of payment is that some people feel they are loosing control of their finances, but in reality they are just becoming easier, whilst problems can occur with them, similar problems can occur if you pay by other methods.
I hope this has helped you gain a clearer picture of these payments. They are an easy way to avoid sending cheques, or going to the post office and paying tiresome bills. I would recommend them to anyone.
If you have any queries about banking issues, please don’t hesitate to contact me, I will try to assist where I can.
Cheers
Charliebuoy
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Good OP and wish you could help me! I agree Direct Debits look fine in principle, but you can lose control of finances without realising. Standing orders are far better because YOU can Cancel at the bank. A company can be tricky to stop especially if they're unscrupulous. Of course, banks defence is to refer you to the 'agreement' with the company, not the bank. You try this when you swamped with requests for direct debits!
SueMagee 07.02.2003 09:28
Interesting points made about the advantages but I'd like to have known rather more about the disadvantages.
petitesquirt 07.02.2003 01:44
So, why do companies prefer direct debits instead of
standing orders?
Advantages: Quick and simple to set up; Never get into arrears with bill payments Disadvantages: Might be difficult to budget for if you are not paid monthly
Advantages: Saves you time and effort, free to set up, leaves the money in your account to the last possible moment Disadvantages: If you're no careful you can lose track of spending, mistakes have been known to happen
Advantages: Quick and simple to set up; Never get into arrears with bill payments Disadvantages: Might be difficult to budget for if you are not paid monthly
Advantages: Saves you time and effort, free to set up, leaves the money in your account to the last possible moment Disadvantages: If you're no careful you can lose track of spending, mistakes have been known to happen
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