Direct Debit before invoice

jmarr

Hello, wasn’t sure what category this would come under, but I’m unsure what to think about this:

I live in a new development and we have a factoring company that looks after the maintenance of the development and communal buildings and spaces. They send an invoice to me every 6 months (May and Nov) and I set up a direct debit to pay for this to spread the cost out over the year. It was £41 per month.

As of May this year I was £177 in credit. They sent an invoice which included building insurance (which had doubled because they doubled the value of the building for the insurance), and two electric charges (which they admitted they made a mistake and would refund the £62), but everything else was normal. I figured we should probably reduce my direct debit since I was paying too much before but with the increased buildings insurance I thought I’d see how it was in Nov before assessing.

Imagine my surprise when £60 comes out my account this month, with no prior warning. They wrote to me to apologise, but didn’t say the amount was a mistake, just that they were sorry they didn’t give me 10 days notice.

What Iv worked out is that they are taking over payments from me so when the next invoice is sent out in November, I will already be at zero and they will then start taking payments from me for 6 months before the next invoice is sent out.

Is this allowed or normal?! Iv only ever paid for things with direct debit after Iv been invoiced, never in advance. How can they take money from me for something they don’t is going to cost them yet?

Also the overpayment electric charge hasn’t been credited back to my account either.

I want to get my facts right before I contact them, so any knowledge would be fab.

Thanks in advance!

Hoenir

To fund the expenditure they'll need to retain a cash reserve in hand.  Otherwise they'll need to borrow money , i.e. utilise an overdraft.  This would be at your expense. 

glennevis

I had a very similar experience in July. It could even be the same factors.

The factors sent an unexpected insurance invoice however the email did include a letter explaining the reason, which seems reasonable:

"...we would be introducing an essential change to the billing arrangements for insurance premium. Typically, we have billed premiums quarterly in arrears, 

however, this is no longer sustainable and we need to introduce ‘quarterly in advance’ payment in terms of insurance premium. We are pleased that xxxxx has been able to negotiate ‘zero finance’ on premium payment arrangements with xxxxxx, but in turn we need to be in a position to meet the premium due by regular instalment from renewal, which has prompted this billing change."

OP said "I want to get my facts right before I contact them, so any knowledge would be fab."

What does the factor's written statement of the terms and standards of service say? That would be your starting point.

eskbanker

jmarr said:

Imagine my surprise when £60 comes out my account this month, with no prior warning. They wrote to me to apologise, but didn’t say the amount was a mistake, just that they were sorry they didn’t give me 10 days notice.

The direct debit guarantee means that if a DD originator fails to notify the customer of the amount of a forthcoming DD (not necessarily in invoice form as such), then technically it can be reversed, but that's unlikely to be particularly productive when you'd still owe them the money.

The underlying issue of whether or not they can move to payment in advance rather than arrears is a separate matter from the actual mechanism of paying though, so, as above, comes down to the terms of the agreement with the company, and their (asserted) rights to change these....