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As a (small) business owner, you are likely to encounter direct debit payments being cancelled. Direct debit services can be cancelled at any time, however, a bank does need one day of notice before the upcoming payment date of the recurring payments. To be safe, it is advisable for customers and companies to have written confirmation of customers cancelling direct debits. Cancellations will always happen, so it is crucial for (small) business owners to make sure they know how to handle them. This is why we've compiled this short guide to some of the most important points regarding direct debit cancellations.
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How to best deal with direct debit services being cancelled - our 4 top tips
- You will be notified of a cancellation by ADDACS message. Make sure you receive an ADDACS message once the customer has cancelled. These messages get issued by banks after a mandate gets cancelled. Knowing a mandate is cancelled and having it in writing is key for small business. Direct debit can otherwise be an unreliable payment method.
- Once a client has cancelled their direct debit you are obliged to cancel their direct debit scheme immediately, or at least within three working days of the ADDACS message.
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- If a customer decides to cancel their direct debit, which they can do at any time by approaching your or their bank. So, if your client decides to cancel a direct debit payment, do make sure they have also approached their bank about this.
- If the cancellation cannot be enacted before the next upcoming payment, customers might try to claim indemnity. Again, it is crucial to hold on to records, such as ADDACS messages to be able to react to claims.
Direct debits can be a great payment method for small businesses. However, it is crucial that the cancellation process is regulated and done thoroughly. If you have any questions, Futrli is here to help.