Barriers to saving millions revealed by BACS
A report aimed at saving millions of pounds for local government has been welcomed by BACS, the company behind Direct Debit in the UK.
[UKPRwire, Wed Jun 14 2006] A report aimed at saving millions of pounds for local government has been welcomed by BACS, the company behind Direct Debit in the UK.
The Audit Commission identified opportunities for massive savings on administration costs if councils and housing authorities move payment over to Direct Debit – but concluded that councils needed to understand the reasons for people choosing alternative methods in order to improve take up, information which has not been available to date.
Through its annual Consumer Payments Survey (CPS), BACS can reveal the key drivers for different customers to move to Direct Debit as well as help identify the reasons behind reluctance.
Michael Chambers, managing director of the not-for-profit organisation, said: “As the report showed, if uptake of Direct Debit for council tax collection were to increase to an average of 70 per cent nationally, the potential savings would be huge: more than £15 million - and that’s a substantial amount of money which could be used to great effect elsewhere. Hence we feel it’s important to share our findings with local authorities to help improve payment by Direct Debit.”
BACS research shows that more than a third of people (39 per cent) choose a method of payment other than Direct Debit because they feel it gives them control over when they make their payment. Offering flexible payment dates would help overcome the issue, with people nominating the best date for funds to leave their account.
A further 14 per cent say they are not offered the facility, with 13 per cent claiming there’s no financial incentive to move to Direct Debit. Six per cent simply haven’t thought about using Direct Debit to pay.
Conversely, BACS research shows that 82 per cent of all users say that saving time is one of the main benefits of Direct Debit, 78 per cent that it prevents them from forgetting to pay the bill and 76 per cent that it helps spread payments and make bills more manageable.
Michael continued: “We are aware of the particular challenges faced by local authorities and have been working with them for many years to encourage take-up, as well as highlight the benefits of a smoother and more cost-effective administration through use of Direct Debit.
“We are also in the early stages of working to improve understanding of Direct Debit among people who may be reluctant to use the service for household bills like council tax or rent.”
BACS, with 15 years of working directly with local authorities, is ideally placed to share best practice along with results from previous campaigns to improve uptake of Direct Debit. And the company’s case studies are not limited to those from local government, with learnings also available from commercial business sectors. Through its extensive research, BACS is also able to help organisations identify potential Direct Debit payers from customer bases.
Improving Income Collection: Efficient Collection of Council Tax, Housing Rent and Other Income by Direct Debit, from the Audit Commission, contains practical guidance for councils and housing authorities on how to increase take-up of the payment service.
BACS organises and presents the annual LA (Local Authority) Challenge Awards, recognising and encouraging best practice among local government bodies tackling council tax collection rates by converting residents to automated Direct Debit payments. This year the LA Challenge Awards will be announced on October 12 at the Institute of Revenue Ratings and Valuation annual conference which takes place at the Hilton Brighton Metropole. For more information on the award scheme, go to: http://www.bacs.co.uk/BPSL/directdebit/businesses/Awards_events/Challenge/LA_challenge.htm
Improving Income Collection: Efficient Collection of Council Tax, Housing Rent and Other Income by Direct Debit, an Audit Commission report, is available from the Audit Commission website on www.audit-commission.gov.uk
For further information on the Consumer Payments Survey or BACS Payment Schemes Ltd (BACS), please contact the BACS Press Office on 01223 557 601 or email email@example.com
About BACS Payment Schemes Ltd (BACS):
BACS Payment Schemes Limited (BACS) – is a not-for-profit, membership-based, industry body.
BACS is responsible for the processing of 5 billion payments a year with over 75 million on a peak day. In order to cope with this demand the system is constantly reviewed and updated. As of 1 January 2006 BACSTEL-IP was introduced as a totally new delivery channel to give more control, increased security, easier processing management and a far faster service all round to over 100,000 corporates accessing BACS services.
BACS has been at the heart of the payments industry for over 40 years providing the two principle electronic payment services; Direct Debit and BACS Direct Credit. These have increased convenience and provided ‘peace of mind’ for tens of millions of consumers through the delivery of safe and efficient payments.
BACS is wholly owned by some of the UK and Europe’s leading banks and building societies. For further information please visit www.bacs.co.uk.
More about Direct Debit:
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. This can be used to ensure regular, safe and efficient payments of anything from household bills to charitable donations. 2.7 billion Direct Debit payments are processed by BACS a year and 73% of adults are positively disposed to using this payment method. For further information on how to set up a Direct Debit to help you keep your accounts in order please contact your bank or building society.
More about BACS Direct Credit:
Direct Credit is mainly used for paying wages and salaries - in fact over 70 per cent of the UK workforce is paid via Direct Credit. In total, BACS Direct Credit is used for paying over four million wages every week and nearly 25 million salaries a month.