Why every organisation collecting Direct Debits should link to a Bacs Approved Bureau
Do you possess your own Service User Number for collecting Direct Debits? If you do, you’ll need to make a crucial decision regarding how you transmit your Direct Debit collection data to Bacs. You have two primary options:
- Direct Submission to Bacs: In this scenario, your organisation acquires Bacs-approved software. You are then responsible for sending payment files and relevant information directly to Bacs.
- Indirect Submission to Bacs: Alternatively, you can opt for instructing a third party, known as a Bacs-approved bureau, to securely transmit the necessary information to Bacs on your behalf.
It’s noteworthy that over half of all Service Users engaged in Direct Debit submissions choose to utilise a Bacs-approved bureau. Even when businesses opt for direct submissions via their own software, there are compelling reasons to consider establishing a connection with a bureau.
Understanding Bacs Approved Bureaus:
Bacs approved bureaus are specialised organisations entrusted with the task of submitting Bacs transactions on behalf of Service Users. Typically, they handle sign-up information (AUDDIS) and collection data, transmit it securely to Bacs, and retrieve Bacs reports as needed.
A comprehensive list of Bacs approved bureaus is accessible on the Bacs website. Many of these bureaus function as ‘internal’ bureaus, centrally managing Direct Debit administration for a group of companies under the same legal entity, or as ‘payroll’ bureaus. A smaller number operate as ‘commercial’ bureaus, offering their services to businesses of various sizes and types.
All bureaus must undergo a rigorous approval process and regular re-approval to maintain their status as a Bacs bureau. Bacs conducts reviews of their systems, processes, understanding of scheme rules, IT infrastructure, and contingency plans. This stringent evaluation process ensures that Service Users can have confidence in the bureau’s adherence to the standards set by Bacs and the Direct Debit scheme.
Why Use a Bacs Approved Bureau:
There are numerous compelling reasons why businesses opt to work with a Bacs approved bureau, including:
- Some businesses, especially smaller ones or newly established entities may not meet all the criteria required to make direct submissions.
- For businesses with a limited number of monthly transactions, the cost of purchasing and maintaining software may not be financially viable.
- Some organisations lack the administrative resources necessary for managing submissions efficiently.
- A lack of in-house expertise in collecting payments can be a significant challenge, especially concerning compliance with Bacs scheme rules.
- Bureaus offer dedicated support teams staffed with experienced professionals.
- Peace of mind comes from the bureau’s responsibility for ensuring secure, resilient, backed-up processes and protected data.
- Flexibility allows businesses to scale their Direct Debit operations as needed.
- Cost savings can be realised by reducing software-related expenses.
- Quick setup and operation mean that bureaus can be up and running in as little as 24 hours, saving time on administrative tasks.
- Bureaus eliminate issues related to in-house software, such as installations, upgrades, and maintenance.
- No need for Smartcards means no worries about loss or damage.
- Bureaus mitigate personnel issues, such as staff departures or unexpected absences.
These are just a few of the compelling reasons to consider working with a Bacs approved bureau. Even businesses that choose direct submissions through their own software can benefit from these advantages.
Bacs Recommends Linking to a Bureau:
Bacs strongly encourages all Service Users to establish contingency arrangements. This is essential to ensure that Direct Debit collections remain unaffected in the event of system errors. It’s especially crucial to consider the impact of being unable to submit a file, as there can be significant business implications, including cash flow disruptions and damage to a company’s image. Additionally, rectifying such problems can incur substantial costs.
For Service Users using their own software, connecting with a bureau for contingency purposes provides an alternative submission method that helps mitigate the risks associated with processing interruptions.
In the words of Bacs themselves: “We recommend that all users have a relationship set up with a bureau that can submit on your behalf if needed.”
Contingency planning, as highlighted by Bacs, focuses on avoiding ‘single points of failure’ that could impede submission. This includes having multiple avenues to connect to Bacs, multiple contacts with smartcards, the presence of backup Hardware Security Modules (HSMs), backup software installations for contingency use, and the option to link to a different bureau than the one providing your regular software. Establishing a contingency plan and routinely testing it is critical, as is ensuring that all key personnel have access to it when needed.
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