Waiting for payments from customers is undoubtedly one of the most frustrating aspects of running a...
The continual growth of facilities management
In the payments industry, there is a growing trend of more small and medium enterprises (SMEs) adopting a facilities management model. SMEs can find it difficult to get a Service User Number (SUN), so more companies are making use of facilities management tools. So, what exactly is facilities management and why are companies adopting the model?
What is Interbacs’ facilities management and how does it help businesses?
Interbacs offers a Direct Debit Facilities Management service which enables certain businesses, that do not have the sponsorship of their bank, to make Direct Debit collections. All of the administration and monitoring processes would be managed by Interbacs, which helps small and medium-sized businesses focus more of their time on core business operations.
The facilities management model is ideal for smaller companies, like start-ups, that do not have a Bacs SUN. By adopting a facilities management model to take care of their Direct Debit solutions, companies can gain access to all of the benefits of Direct Debits, including their business name appearing on customer statements, without the administrative and financial burden of managing Bacs payments services in-house. This provides a cost-effective and efficient way of processing payments, as it doesn’t require a full team to manage finances. This cost saving is hugely beneficial to smaller businesses, which is why the facilities management model is so popular.
How did the facilities management model start?
Facilities management started as a small rule in the Service User guide. Originally, it was only intended to allow a company to take payments on behalf of another without the need to go through stringent banking procedures.
When it was initially created, the rules around facilities management were short and vague, and the wording never clearly defined a relationship between companies. This allowed a group of businesses to take their opportunity to control Direct Debits on behalf of one another.
Over the past 10 years, since its inception, larger companies have expanded and pushed the market boundaries. This had a positive impact on enabling Direct Debits to a much wider range of companies. However, this growth and popularity brought it to the attention of regulators to the point that, in 2018, Bacs decided that any company wishing to operate in this space had to be a Bacs approved facilities management provider.
Interbacs were involved with the pilot scheme and were one of the very first companies to gain accreditation. It has been a challenging process for Bacs to regulate this space as, even now, they’re identifying companies that are operating without a licence.
They have engaged with the Financial Conduct Authority (FCA) to try to ascertain whether facilities management providers should have an FCA licence in order to operate. After a lengthy period of negotiation, the FCA were inconclusive in their response, concluding that any company operating in the space should have the knowledge and expertise to decide themselves whether they should be registered and regulated.
Growing use of facilities management
The interest the facilities management industry has attracted is evidenced by the number of new Service User Numbers being registered in the UK, according to Bacs. However, this has led to a decline in Direct Service User Numbers. Companies that apply directly to their banks to collect Direct Debits are granted an SUN.
There are two more methods of operating a Direct Debit service, and they are:
- Indirect service users
- Facilities management service users
Indirect service users
Indirect service users apply for an SUN in their own name, but outsource all of the administrative function entirely for a Bacs bureau who have a licence to operate the Direct Debit facility on their behalf. All funds flow through the service user’s bank account and not that of the bureau.
There is a growing number of indirect service users as the administrative requirement is often quite heavy in terms of training and expertise required, versus the actual time needed to process the payments. Many companies now prefer to outsource Direct Debit management to an expert company.
Facilities management service users
The other method is using a facilities management company, which is by far the fastest-growing method of managing payment processes and Direct Debit solutions.
Companies that offer the service often have much more latitude to offer the service than the banks who administer the SUNs directly. Banks will often insist on quite a large amount of security in order to allow users to obtain an SUN.
Facilities management companies will ensure they do their due diligence but they can control and limit the amounts collected in a way that a bank does not. This allows them to limit the risk exposure. It also allows them to set up a company on their service much faster than if you’d applied directly through your bank.
Direct Debit Facilities Management with Interbacs
The relative ease of access with the facilities management model means that a much higher number of smaller companies that might fail a bank’s minimum requirements for an SUN, even if they’re responsible and well-run, can gain access to what is a very well established financial service.
An advantage that Interbacs offers as a company is that users who start with our facilities management service can eventually apply for their own SUN, which allows them to evolve and grow as a company. The main advantage of having an SUN in your own name is that the funds get to your account faster, which can be an important factor for many businesses.
Direct Debit Facilities Management allows companies to spread costs, reduce fees and administrative overheads by automating their payment process. It’s a great way to help control and manage finances, and it allows customers to control and understand their spending with you.