Us­ing a stand­ing or­der

The Punch - - PERSONAL BANKING -

A stand­ing or­der is an au­to­mated method of mak­ing pay­ments, where a per­son or busi­ness in­structs their bank to pay an­other per­son or busi­ness a fixed amount of money at reg­u­lar (fixed) in­ter­vals, ac­cord­ing to go­card­less.com.

The payer con­trols the stand­ing or­der; they set it up them­selves, and choose the amount and fre­quency. Stand­ing or­ders are cre­ated to cover a set pe­riod of time (e.g. ev­ery month for a year), or un­til they are can­celled.

Any per­son or com­pany with a cur­rent ac­count can set up a stand­ing or­der, ei­ther on­line, over the phone or at in per­son at a branch of their bank.

A stand­ing or­der is dif­fer­ent to a di­rect debit pay­ment. A stand­ing or­der is es­sen­tially an in­struc­tion from the payer to their bank, telling their bank to ‘push’ funds to an­other per­son or or­gan­i­sa­tion.

In con­trast, when you set up a di­rect debit, the per­son or or­gan­i­sa­tion re­ceiv­ing pay­ment asks per­mis­sion from the payer to ‘pull’ funds from their ac­count on a re­cur­ring ba­sis.

Some small busi­nesses col­lect reg­u­lar pay­ments from cus­tomers by stand­ing or­der. Re­ceiv­ing pay­ment by stand­ing or­der gen­er­ally costs noth­ing, and, once the or­der is up and run­ning, the busi­ness can rest as­sured that pay­ments will be col­lect­ing au­to­mat­i­cally and on time.

How­ever there are draw­backs: a cus­tomer can change or can­cel the pay­ment with­out no­ti­fy­ing you, so you will have to rely on them to get this part right.

How does a stand­ing or­der work?

The first step in set­ting up a stand­ing or­der re­quires the payer to con­tact their bank to re­quest it. With some banks, stand­ing or­ders can be set up on­line or over the phone. The payer then com­pletes a stand­ing or­der form (pa­per or on­line) and gives it to their bank. This will in­clude de­tails of the ac­count num­ber and sort code of the per­son or or­gan­i­sa­tion be­ing paid.

Banks don’t usu­ally charge any­thing to the payer or payee for set­ting up or us­ing stand­ing or­ders. It is im­por­tant to keep in mind that cus­tomers can can­cel a stand­ing or­der at any time, or change the amount or pay­ment date.

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