Avoiding a Returned Direct Debit

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Direct Debit is a convenient and popular method for businesses to collect recurring payments from customers. However, dealing with a returned Direct Debit can be both frustrating and time-consuming for businesses, leading to disruptions in cash flow and customer relationships. To ensure smooth and hassle-free payments, here are some essential tips to avoid returned Direct Debits:


  1. Maintain Accurate Customer Information:

Ensure that all customer details, especially bank account information, are accurately recorded and up-to-date. Any inaccuracies or outdated data can result in failed transactions.


  1. Communicate Clearly with Customers:

Provide clear and transparent communication about payment schedules, amounts, and payment dates. Notify customers in advance about upcoming payments to prevent unexpected withdrawals from their accounts.


  1. Conduct Regular Account Reconciliation:

Regularly reconcile your accounts to ensure there are sufficient funds available before initiating Direct Debit collections. Monitor account balances and timing to avoid processing payments when funds are insufficient.


  1. Use Automated Notifications:

Consider implementing automated notifications to alert customers before Direct Debit payments are processed. Reminders can help customers ensure adequate funds are available in their accounts.


  1. Offer Flexible Payment Options:

Provide customers with flexible payment options, such as different payment dates or payment frequencies, to accommodate their financial situations. This flexibility can reduce the likelihood of failed payments.


  1. Monitor and Act Promptly on Failed Payments:

Monitor returned Direct Debits promptly. Upon notification of a failed payment, take immediate action to rectify the issue by contacting the customer and resolving any payment discrepancies.



  1. Opt for Direct Debit Guarantee:

Emphasise the benefits of the Direct Debit Guarantee to customers. This guarantee assures customers that they can request a refund for any incorrect or unauthorised payments, instilling confidence in the payment process.


  1. Employ Professional Direct Debit Services:

Consider partnering with reliable and experienced Direct Debit service providers. Professional services often have robust systems in place to minimise the risk of failed payments and offer guidance on optimising the process.


  1. Regularly Review and Update Processes:

Continuously review and refine your Direct Debit processes to adapt to changing circumstances, technologies, and customer needs. Regular updates ensure efficiency and accuracy in payment collections.


  1. Provide Exceptional Customer Support:

Offer dedicated customer support to address any payment-related queries or concerns promptly. A responsive support system can assist in resolving issues before they escalate.


In conclusion, avoiding returned Direct Debits requires meticulous planning, clear communication, and proactive measures from businesses. By implementing these strategies and maintaining diligence in managing Direct Debit transactions, businesses can significantly reduce the occurrence of failed payments and foster stronger relationships with their customers.


Common Causes of Failed Direct Debits


When a Direct Debit payment fails, you’ll receive an Automated Return of Unpaid Direct Debits Service (ARUDD) notification from Bacs. This notification contains specific reason codes explaining the cause of the failure.


ARUDD messages are generated by automated banking systems when Direct Debit transactions are unsuccessful. Typically, these reports reach the collecting company on the following working day after the scheduled debit date.


The ARUDD message contains 12 distinct reason codes that provide valuable insights into the issues encountered:


ARUDD 0 – Refer To Payer

ARUDD 1 – Instruction Cancelled

ARUDD 2 – Payer Deceased

ARUDD 3 – Account Transferred

ARUDD 4 – Advance Notice Disputed

ARUDD 5 – No Account Or Wrong Account Type

ARUDD 6 – No Instruction

ARUDD 7 – Amount Differs

ARUDD 8 – Amount Not Yet Due

ARUDD 9 – Presentation Overdue

ARUDD A – Service user differs.

ARUDD B – Account Closed


The most frequently encountered reason codes are ‘Refer to payer’ and ‘Instruction cancelled’. These codes often indicate insufficient funds or the cancellation of the Direct Debit instruction by the payer or their bank.


If you are looking for affordable pricing and need help with your payments?

At FastPay, we help a multitude of businesses and organisations take care of their payments. From our Direct Debit Managed service and Powerful Integrations to the FastPay Direct Debit Bureau, we’re committed to providing a payment solution tailored to our client’s needs.

Start a conversation with our friendly team today by calling 0161 737 5290 or get in touch online.


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