Small Business Bank Account - accept Direct Debits for customers?

russt93

Hi,

We are looking for a small business bank account that will accept Direct Debits for customers?

We are currently with Santander and they will only allow us to setup Direct Debits if our turnover exceeds £1 million. Our current turnover is a lot less than this, are there any business bank accounts we could set up and do this?

Any help is much appreciated!

Thanks,

Russ.

bengalknights

Try coop and smaller such banks that might be more feasible for it.

paddyrg

Actually Direct Debits, or will standing orders etc do? You may need to be over a certain size/have a certain capitalisation/have a long record with the bank as the bank has to honour the DD guarantee if you suddenly plunder all your customers accounts, or fail to advise them of a billing rate change etc.

If the amount is regular, any account should allow standing orders to be paid to you (as the client SENDS the money, not you PULLING it out), or if irregular maybe a credit/debit card charge would make more sense and be easier for a small business?

mildred1978

It will cost you more than £1k to be able to do DDs. Why not just use SOs?

BryanSmallBiz

I'd also ask the co-op (08457 213 213) - however, if you need access to a bank branch you might be out of luck, they have relatively few compared to the likes of Santander. Also consider Standing Orders too.

Premier_2

russt93 wrote: »

Hi,

We are looking for a small business bank account that will accept Direct Debits for customers?

We are currently with Santander and they will only allow us to setup Direct Debits if our turnover exceeds £1 million. Our current turnover is a lot less than this, are there any business bank accounts we could set up and do this?

Any help is much appreciated!

Thanks,

Russ.

I doubt any of the sponsoring banks will support an application to become a Direct Debit Originator by a small company.

Consideration by the sponsor includes:
- contractual capacity
- financial standing
- the quality of its administrative control

As you'll also need to provide unlimited (in terms of amount and time) indemnity against all actions, claims, damages, costs and expenses arising directly or indirectly arising ... and without you requiring any proof of or agreement to the validity of such demand.

For those reasons alone, it's unlikely a small business would be suitable as an Originator under the Direct Debit Scheme.

Why do you think you need to use the DD scheme??
The scheme itself is designed to be used by organisations that collect large volumes of payments (such as insurance companies, charities, local authorities, utilities, etc)
If you are a small company, you are not collecting a large volume of payments, hence the bank suggesting you need a minimum t/o of £1m before they will even consider an application.


Whats wrong with the usual invoice/payment system that most businesses use???
If you wish to receive regular monthly amounts, then ask the customer to set up a Standing Order in your favour.
(You can actually supply the paperwork all filled out to help them)

sidr2006

Direct Debit collections require sponsorship into the Bacs scheme from a bank. Typically business that has been established for less than 3 years or with turnover of less than £1m will be unable to gain sponsorship. And even if they do setting up the process with Bacs approved software is a time consuming and costly.

A better alternative is to use a Bacs approved Bureau that will act as your sponsor and debit in your name. They effectively manage the whole process and allow your customers to sign up via paper, over the phone or through a website.

The fee structure is similar to a merchant arrangement for credit card - charged on a very small percentage or pence per transaction.

The advantage of Direct Debit over standing order is the ability to support variable collections and also a standing order requires the payer to set up the agreement via their own bank. Direct Debit set up is much easier for the payer and they are covered by the Direct Debit guarantee.

Check out this Bacs approved Bureau. They've been about for a long time and are very dependable and affordable.

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