Standing orders are typically used to make rent payments, monthly charity donations or regular payments into a savings account. A standing order amount will remain the same, unless you amend your instruction. With standing order payments the money is transferred through the Faster Payments Service, and will be processed on the same day. Standing orders can be simpler than direct debits, mainly because the business is not involved in claiming payments from you, but offer less consumer protection.
The beneficiary can be anyone. Whereas you set up a standing order yourself, a direct debit is set up by a company, using your sort code and account number.
When you sign a direct debit form or mandate, you give that company permission to take a certain amount each month. Direct debits are often used for mortgage, phone, energy or gas bills.. The main advantage of direct debits is the flexibility, as the payments can vary in amount or frequency. The variable nature means that organisations or individuals can claim different amounts at different times. Its usually better to pay by direct debit as it gives you more consumer protection.
A recurring card payment - also known as a continuous payment authority or future card payment - is set up by a company using your debit or credit card details, instead of your current account details. For example, subscriptions for Amazon Prime, Netflix, Spotify and magazines take card payment details for recurring payments e. Subscriptions can usually be changed or cancelled by contacting the company taking the payment, although your card provider must cancel these payments if you ask them to.
If further payments are taken by mistake after you've asked for a cancellation, your card provider must refund them. If a company is refusing to cancel recurring payments because you signed a contract, you can still ask your bank to step in but if you are in breach of contract think carefully first as you will owe the company money.
Usually, you have to sign a direct debit form, although some particularly trusted companies are authorised to set up direct debits over the phone.
If that sounds a little risky, remember that the company must have obtained the bank account details from you and that you are protected by the Direct Debit Guarantee. Standing orders are particularly useful for making regular payments from one individual to another, where Direct Debit would be a less straightforward option.
A good example of this would be a tenant setting up a standing order to their landlord for monthly rent payments. Useful for making recurring payments between private individuals such as tenant to landlord. No payment notifications. This means it could potentially take a payee weeks to find out that a payment had failed either because the payer cancelled it, or because their account lacked the necessary funds to cover the payment amount. If this happens, the payee will need to chase the payer to set up payment all over again.
Less flexibility. Changing the amount or date of a payment requires the payer to cancel the standing order and create a new one. Risk of late payment. Many businesses struggle to get customers to set up their standing order quickly, or to amend it as or when required. This brings back the risk of late payment, potentially causing cash flow problems for a business.
High admin. Businesses taking payments by standing order may end up constantly checking their bank to see if payment has arrived and manually updating accounts once it does. This is time and labour that could be better spent elsewhere. This section will guide you through the fine details of using standing orders, including when to use them, how to get access, set up, change and cancel them, their timings, and a useful comparison chart with other recurring payment methods.
For starters, think about how many customers you currently have. Standing orders are generally a good fit for small businesses, organisations or clubs with less than 25 customers, as a certain level of trust is helpful when using standing orders. Secondly, think about whether you trust your customers to set up and make their payments on time.
If yes, then standing order could be a good option for you, as your customer does all the hard work in setting it up. If most of your customers pay by regular, fixed payments, then either standing order or Direct Debit can be used. For variable payments, standing orders are less useful. The customer does most of the heavy lifting.
All you have to do is inform the customer of the payment amount and due date. They then need to handle the access and set up process via their usual bank. To do this, your customer will need to cancel the standing order and then create a new one. If they request a refund from you, the terms of your contract will dictate whether or not this happens. They risk incurring fees or penalties for non-payment, which could affect their credit rating and appear on their credit file.
Whenever your customer sets up a standing order, they must make sure they use the correct sort code and account number for your business account. Customers using standing orders do have a certain level of consumer protection. For example, if someone makes a fraudulent standing order from their account, then the bank must issue an immediate refund once they are informed of the problem.
Your customer must authorise each standing order payment in advance, and their bank must help them trace any funds that go astray.
Still not sure? Take our quick quiz to decide if standing orders are right for your business. Customers like certainty and control, which standing orders provide. Your step-by-step guide:. Log in to the mobile app. Select the account that you want to set up the standing order to come from.
Select the 'Standing order' section. Select 'Create' in the top right of the screen to add a new standing order. Choose your payee from the lists provided - either to a payee or one of your own accounts.
Follow the steps on-screen to set up the description, amount and payment intervals. Review and confirm the details. Your Step-by-step guide:.
Log in to Online Banking. Select 'Payments and transfers' from the left-hand menu. Under the 'Standing orders' header select 'Create a standing order'. Type in the Payee's name.
Type in their bank account number. Type in their sort code. Select one of the payment period options and click 'Next'. Choose the account the standing order is to be paid from.
Select when and how often you want your standing order to be paid. Click 'Next'. Once authorised with your card reader, your new standing order will be set up. Access to your NatWest app. Select the account that the standing order comes out from. Lots of utility providers, such as gas and electricity, give you a discount for paying by Direct Debit.
You do need to stay in control. Try setting yourself a reminder to check. This is easy to do, especially if you have online access to your account. Anyone with a Current account and a Basic bank account.
Some prepaid cards or credit union accounts can also be used, but Post Office card accounts cannot. The organisation collecting the payments will tell you what to do. Usually, you fill in a form and send it to them, or set it up online or over the phone. You can cancel a Direct Debit at any time by contacting your bank — you can sometimes do this through online banking. But watch out for refused payments.
Even if they do make the payment, you might go overdrawn without noticing. Many banks will try to contact you if a payment has failed, so you have time to put money in. This means you avoid a fine. The Direct Debit Guarantee protects you. This means that if the bank or the organisation collecting the Direct Debit makes a mistake — such as taking the wrong amount — you can get a refund.
You can use a standing order to transfer money to your savings account automatically. Start with a small amount and watch your savings grow. When you set up a standing order you tell your bank or building society to make regular payments to a particular bank or building society account.
They pay exactly the amount you choose — not the amount you owe to an organisation. You can set them up to keep on paying indefinitely, to end on a certain date, or after a set number of payments. For example, to make regular payments to a person such as your landlord. You can use them to move money between your own accounts. This might be useful if, for example, you want to pay a set amount each month into a savings account. You can set up standing orders from Current accounts and Basic bank accounts.
You can also use some prepaid cards or credit union accounts — but not Post Office card accounts. You usually need to be over 11 to use Direct Debits. You can complete a standing order form and give it to your bank. But look out for refused payments. Even if the bank does allow the payment, you might go overdrawn without noticing. Many providers will get in touch with you on the day if a payment has failed.
This is so you have time to put money into your account. MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper. Download app: WhatsApp. For help sorting out your debts or credit questions. For everything else please contact us via Webchat or telephone.
Got a pension question? Our help is impartial and free to use. Get in touch online or over the phone on Benefits if you have children Entitlements to help with the cost of pregnancy or bringing up children. Benefits if you're sick, disabled or a carer Understand what support is available for coping with ill health. Benefits in later life You may be entitled for help with other costs on top of your State Pension.
Problems with benefits What to do if something goes wrong with your benefits. Benefits All Benefits guidance. Tool Money Navigator. Money Manager. Banking How to choose, use and manage bank accounts. Budgeting How to budget, find the best deals and switch to save money. Buying and running a car How to buy and finance a car, deal with problems with car finance, and cut running costs.
Credit and purchases Credit basics, applying for credit, credit ratings and problems with credit. Insurance Insurance for cars, health, travel, and help with insurance.
0コメント