Standing order or direct debit
Both pay a regular bill without any work each month. The difference is who controls the amount and the date.
In this room: 3 tasks, 10 questions
- Who is in control4 questions
- Regular payments in the books3 questions
- When the amount changes3 questions
Both are regular payments out of a bank account. The difference is who sets them up and who decides the amount.
- Standing order
- the payer tells its own bank to pay a fixed amount on fixed dates. Only the payer can change it
- Direct debit
- the payer signs an instruction that lets the payee collect money. The payee decides the amount and the date, and both can change
So a standing order suits an amount that stays the same. A direct debit suits a bill that changes.
Answer the questions below
3 more questions follow in this task.
No document arrives on the day a standing order or a direct debit is paid. The bookkeeper still has to enter each one in the cash book, from a list of regular payments or from the bank statement.
Fernhill's insurer collects £1,380 a year by direct debit, in 12 equal monthly amounts.
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2 more questions follow in this task.
A standing order never changes by itself. If the amount goes up, the payer must tell its bank.
With a direct debit, the payee must tell the payer in advance before it changes the amount or the date.
If a direct debit is taken by mistake, the payer's own bank refunds it at once. This promise is called the Direct Debit Guarantee.
Answer the questions below
2 more questions follow in this task.