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Using Direct Debit

You prepare direct debit orders based on entries, which represent a payable amount of money, and upload them to your bank. The way you create or retrieve entries depends on the integration of JustOn Cash Management with your Salesforce org, for example, with JustOn Billing & Invoice Management.

About SEPA Direct Debit

The European Payments Council (EPC) has established the single euro payments area (SEPA) to standardize cashless euro payments across Europe. It defines, among others, SEPA Direct Debit schemes (SDD): one primarily designed for B2C businesses (SDD Core), and one exclusively for B2B businesses (SDD B2B). The two schemes set common rules for transferring money from a debtor to a creditor, but vary in details (see SEPA Direct Debit).

SEPA Direct Debit is centered around a mandate, which allows the creditor to prove their request for collecting money. The collection is initiated by the creditor, submitting the order to their bank. The order includes information like mandate ID, amount, collection date and debtor IBAN. The bank then executes the order, withdrawing the money from the debtor's account and putting it to the creditor's account.

The common rules include:

  • The mandate is signed by the debtor before the first transaction (typically 14 days before the first collection).
  • The mandate allows one-off or recurrent collections and can be revoked by the debtor at any time.
  • The due date of a collection must not be more than 14 days in the future.

Depending on the scheme (Core or B2B), various timeframes and rules apply for the debtor to object to the money transfer and to order a reverse transaction.

The SEPA Direct Debit Core scheme is mandatory for transactions with consumers (B2C) and optional for transactions with businesses (B2B). Under SDD Core, a debtor can request a refund ("no-questions-asked") within eight weeks of the collection date. In case of an unauthorized transaction – which must be proven –, a debtor can ask for a refund within 13 months of the collection date.

The SEPA Direct Debit B2B scheme is exclusively for businesses. Under SDD B2B, the debtor is not entitled to obtain a refund for an authorized transaction. The debtor's bank, however, may still return a transaction under certain circumstances within three days. To ensure that a transaction is authorized under SDD B2B, the debtor's bank must check whether there is a valid mandate before executing the collection.

This overview on SEPA Direct Debit does not constitute any legally effective advice. JustOn cannot and must not provide such services. For any detailed questions and current information on implementing SEPA Direct Debit, contact your bank.

SEPA Direct Debit transaction workflow

This section describes the typical workflow (assuming that all entries are eligible and the business setup is complete) and the lifecycle of a SEPA Direct Debit transaction in JustOn Cash Management.

(1) User opens EBICS Direct Debit dialog from entry list view
This displays a confirmation, prompting for either continuing or aborting the process.
(2) User starts direct debit job
JustOn Cash Management validates the input records (business entities, payment instruments, entries). The dialog shows the job progress.
As a result of the job execution, JustOn Cash Management
  • Creates Payment records with the status Issued
  • Creates Entry Item records with an Expected Amount, which prevents entries from being processed repeatedly
  • Builds SEPA XML files (including a unique end-to-end ID) and sends them to the bank via EBICS
(3) Authorized user releases orders
The signature (under the EDS class E or A/B) must be given in the banking system.
As a result, the bank processes all direct debit requests and collects the money.
(4) User retrieves bank statements
When a matching bank statement item is found (according to an end-to-end ID or through data comparison), it is automatically associated with the corresponding payment. Consequently, JustOn Cash Management
  • Updates the amount on the payment (as related to entries)
  • Sets the payment status to Collected
  • Adjusts the amount on the entry item

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Eligible Entries for SEPA Direct Debit

To collect an entry successfully via SEPA Direct Debit, make sure that the following information is set accordingly:

Field Description
Account The associated account for the debtor
Type The type of the entry, must be Debit
Business Entity Lookup to the related business entity
Must match the business entity of the payment instrument.
Open Amount The overall open amount
For a debit, it must be a positive amount.
Statement Date The effective date of the (legally binding) original statement
Statement Payment Due Date The payment due date of the statement, that is, the agreed collection date
Requested Payment Method The requested payment method for the entry, must be SEPA
Requested Payment Instrument Optionally, allows to select a particular active payment instrument. Falls back to the first active payment instrument of the account if empty.
Requested Bank Account Your (the creditor's) bank account – the target of the collection. Falls back to the Preferred Bank Account of the business entity if empty.
Payment Reference Describes the purpose of the payment, a human-readable description for the money transfer. Will be displayed in the bank account statements.

The key date for SEPA transactions is the Statement Payment Due Date of the entry. Entries are eligible if the date is not empty and not beyond the next 14 days from today. If the date is in the past, JustOn Cash Management corrects it to TODAY + 1 for it to be accepted by the bank.

Storing SEPA Mandates

Exporting SEPA Direct Debit orders requires SEPA Direct Debit Mandates, a customer's authorization for a business to collect money. Hence, you need a way to store and manage the SEPA mandate information for your accounts.

JustOn Cash Management uses payment instruments to save your customers' (debtors') SEPA mandates as well as bank account information.

After you have obtained a SEPA mandate from a customer (electronically or via postal mail), you add it to the payment instrument assigned to the corresponding account.

  1. Open the payment instrument you want to modify, or create a new one if necessary.
  2. Click Edit and specify the information as required.

    The mandatory information include:

    Field Description
    Business Entity Lookup to the related business entity
    A SEPA mandate cannot be used for different business entities or SEPA Creditor Identifiers.
    Account Holder The name of the bank account holder (debtor)
    IBAN The bank account number
    BIC The SWIFT BIC of the bank account
    Required if the debtor's or the creditor's bank is located in non-EEA SEPA countries Andorra, Monaco, San Marino, Switzerland, United Kingdom or Vatican City State.
    Bank Name The name of the debtor's bank
    Direct Debit Mandate Type The type of the direct debit mandate, either Core or B2B
    Direct Debit Mandate Granted The date on which you received the debtor's SEPA mandate
    Direct Debit Mandate Reference A unique string that identifies the SEPA mandate
    Money Flow Incoming Must be unrestricted, is treated as unrestricted if empty
    Type The payment instrument type, must be SEPA Mandate (allows for direct debits and credit transfers)
  3. Click Save.

    This completes the payment instrument configuration, preparing it for the direct debit order creation.

Creating Direct Debit Orders

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Make sure to inform your debtors about an upcoming payment collection. To this end, you send a prenotification (typically, an invoice) to your customer – the debtor – with an appropriate lead time prior to creating direct debit orders.

To start the direct debit order generation:

  1. Open the Entries tab.
  2. Select the entries to be processed.

    Continuing without selection includes all listed entries.

  3. Click EBICS Direct Debit.

    This displays a summary of the entries to be processed.

    pay_app_entry_sepa_dd.png

  4. Optionally, enable Cancel Issued Payments.

    pay_app_entry_sepa_cancel

    This will cancel all payments that have been issued previously for the involved entries to allow them for being charged again.

    Use this option with extreme care. Multiple submissions may cause multiple charges in case the bank has already processed the original payment order.

  5. Click Next.

    This starts the SEPA order creation and upload. The page shows the job progress and log messages.

    pay_app_entry_sepa_dd_progress

    Even in case of an error, the job may still complete. To be sure of the direct debit order generation, review the Error Message field of the processed entries, or create a report to show the result.

    Clicking Finish returns you to the Entries tab.