What Are The Bacs Direct Debit Rules?

Direct Debit payment systems are a way of life for many UK businesses. The fact that Direct Debits are hassle-free transactions set up on an agreed date takes the stress out of payment processing.

According to data collated in 2024, 73% of businesses struggle with payment delays. When cash flows are disrupted, businesses may find it difficult to fulfil their obligations, pay their employees or achieve goals.

Planning strategically to implement payment systems that ensure transactions take place on time and are not overly time consuming is key to smooth financial streams that support your business.

Contents

• - Why do companies use Bacs Direct Debit?
• - Why are there Direct Debit rules?
• - What are the Direct Debit rules?
• - Peace of mind with Interbacs Direct Debit services.

Why do Companies use Bacs Direct Debit?

The amount of time and resources that go into chasing late or undelivered payments can be unsustainable for many organisations. Once a payment is late, it can take significant effort to communicate with the payee, work out why a payment is late and try to arrange a new payment date.

When there are multiple late payments, businesses can suffer substantial loss and increased costs. When companies operate using a Direct Debit payment system, many of these concerns fade as their financial situation becomes more consistent.

Alongside the benefit of automated payments, businesses can also maximise the benefits of direct debits to reassure customers with an easy, transparent transaction system. Employees are also freed from spending time chasing payments to work on more valuable target-related workflows.

Why are there Direct Debit Rules?

Security is at the heart of the creation of Direct Debit scheme rules. The rules exist so that payments and sensitive information are kept confidential. Additionally, the Direct Debit scheme rules ensure that the organisations using the scheme are fully compliant and customers’ money is protected.

In terms of security, the Bacs system is very robust and users can’t join without comprehensive security checks. Every organisation that uses the system has to have a ‘sponsor’ to ensure service users are trustworthy and genuine.

As a result, a clear set of rules have been established to safeguard the Bacs system and those customers who use Direct Debits.

Read our article to discover how to collect direct debits from customers.

What are the Direct Debit rules?

The full list of Direct Debit rules are detailed in their complete form. Here are some of the key Direct Debit scheme rules users of the system need to know.

• Scheme Sponsors

  Every business that wants to use the system has to have a sponsor, usually a bank or Direct Debit facilities management service. This is to make sure your business is fully set up to take Direct Debit payments and is also compliant with all necessary regulations relating to Direct Debit payment management. Your business also needs a UK bank account to be registered.
  

• Indemnity Agreement

Before being accepted into the scheme, a business has to sign a legal document called an indemnity agreement with their sponsor. This confirms that the business will repay any losses that affect the sponsor related to their business.

• SUN Number

A SUN (service user number) is essential to access the Direct Debit scheme as a service user. This number enables Bacs to identify which payments belong to your business and pay them to you. You can get your SUN as a business or you can use the SUN number of your Direct Debit facilities management service with their agreement.

• Direct Debit Mandate Form

Before you are an approved service user, your sponsor will need to approve your Direct Debit mandate forms to make sure that they are compliant, enable accurate payment processing and give the customer all of the information they need. Your sponsor can ask for changes or approve your forms.

The Direct Debit scheme has standard forms that can be used by all service users to ensure compliance and transparency throughout the system.

• Use AUDDIS and ADDACS
  
  

The AUDDIS, or Automatic Direct Debit Instruction Service must be used by new businesses to the service to submit new direct debit instructions (DDIs) to Bacs.

ADDACS, or Automatic Direct Debit Amendment and Cancellation service, is a way for the service user to electronically tell Bacs of any outdated or cancelled details. This method allows the service to run smoothly and keeps all stakeholders updated.

Peace of mind with Interbacs Direct Debit services

The last thing a busy organisation wants is to spend time and money on an inconsistent and unreliable payment collection system. As a result, many businesses rely on Direct Debit services to help them set up customers on a payment system that is easy to use and simple to understand.

Not only that, the system is extremely safe and protects confidential information with high levels of security. With Interbacs, your business has access to a wide range of Bacs Direct Debit services to suit your organisational needs.

Interbacs Direct Debit solutions greatly improve your cash flow. Streamlining your collection process can smoothen the customer journey with effortless sign up processes and performance solutions.

Whatever Bacs payment solution you need for your business, we can help you get it up and running successfully in no time.

Why not visit our Solutions Finder to discover more so we can support you in growing your business.