If you don’t currently use electronic banking to pay bills and collect payments, you may be surprised at just how easy it is to arrange.

Paying bills by Direct Debit or electronic BACS payment is really easy to set up.  So, it’s perhaps not surprising that 63%* of individuals in Great Britain currently use online banking.

If you still use cheques to pay insurance premiums, our team will be happy to guide you through setting up a Direct Debit.  Simply email info@deacon.co.uk and we’ll be in touch.

But online banking isn’t just useful to make payments – it’s good for collecting cash for service charge invoices and other bills too!

Cashflow is vital for the smooth running of a building and collecting money from leaseholders can be time consuming. You might want to consider asking them to pay online or, even better, to set up direct debits.   That way you don’t have to chase every invoice.

Besides, if you also offer people the option to pay monthly, rather than annually or half yearly, they may be more inclined to set up a direct debit, ease your workload and help to reduce your bank fees.

After all, plenty of people pay for things monthly these days and for most of us our income arrives monthly too.

Some people we have spoken to have not realised that automatic collection is available as a service, even for a small residents’ management company, and usually a visit to your bank is all it takes to set it up.

Getting started

A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account as long as the customer has been given advance notice of the collection amounts and dates.

The Direct Debit system is run by Bacs [www.bacs.co.uk] Payment Schemes Limited (formerly known as Bankers’ Automated Clearing Services).   So too is Direct Credits – you can pay your bills just as easily.

​Once you have decided to introduce Direct Debit (and/or to start using Bacs Direct Credit to pay your regular suppliers) there are three easy steps to take:

1 Contact your bank

Provided you meet the required criteria, which involve checks for integrity, financial standing and administrative capability, you will be accepted onto the Scheme.

Your bank will advise you on the facilities you may need in terms of accessing the service and provide you with the Scheme Rules and procedural information necessary before you can offer Direct Debit to your customers.

2 Access the service

There are different methods for submitting your payment data to the Bacs service. The most suitable one for you will depend on your organisation’s size, needs and resources. Your bank will advise.

Direct access – for businesses processing a high volume of payments.

Indirect access  – via a bank or bureau and is often the most suitable method for those with a limited number of payments.

3 Learn how it works

Once you have become a service user you have a choice of two ways of setting up Direct Debit Instructions to collect payments from your leaseholders, either paper Instructions or by using Paperless Direct Debit.

To collect Direct Debit payments you then simply submit your payment data – including amount of each payment, bank account numbers, sort codes and dates – probably via your bank.

Best practice tips when billing leaseholders:

  • Remind customers making payments to include accurate reference information so you can easily identify their payment.
  • Help customers identify the reference by displaying it clearly and unambiguously at the top of the bill.

You can find out more about using the BACS system HERE.

Director of an RMC or Residents Association?

Remember, as the director of a resident’s management company you are responsible for protecting cash flow and you have a duty of care to manage funds responsibly. If things go wrong and, for example, you fail to undertake important repairs because of lack of cash flow you could be sued personally by a leaseholder. This is the case even if the situation arose as a genuine error. That’s why most blocks are happy to support their volunteer directors by providing them with the protection offered by Directors & Officers Liability cover.

* https://www.statista.com/statistics/286273/internet-banking-penetration-in-great-britain/


The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area.  We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.