Purpose

Direct Debit functionality enables leasing companies to facilitate the collection of payments from customers through the direct debit payment method.

Setup

Go to the Payment Methods page. Click New to create a net payment method. Enter Code, Description, and check Direct Debit.

Go to Leasing Setup and assign Default Payment Method. It will be automatically assigned to every new leasing application.

Process

Direct Debit Schedule

When an application with the direct debit payment method is activated and becomes a contract, the Direct Debit schedule is automatically created. Initially, it matches the contract installment schedule. To view the Direct Debit Schedule, navigate to the active contract list, open the contract card, and click the DD Schedule action.

Direct Debit Schedule has the following columns:

• Payment Order No. - unique number of direct debit schedule line.
• Date – date of direct debit collection.
• Amount - amount of direct debit collection.
• Installment No. - number of the installment schedule line.
• Type - direct debit entry type:
  • Scheduled Installment – auto created direct debit schedule line from contract installment schedule line.
  • Promise To Pay – manually created direct debit schedule line, typically used when customer is in arrears and promised to pay specific amount.
  • Payment Arrangement - manually created direct debit schedule line to collect specific amount from customer.
  • Scheduled Installment (Auto Reapply) - auto created direct debit schedule line from contract installment line when initial collection was dishonored. 
• Status – specifies the status of direct debit schedule line:
  • Cancelled – specifies that the user cancelled line.
  • Processed – specifies that line was suggested to Cash Receipt Journal
  • Exported – specifies that line was exported to a bank file.
  • Posted – specifies that line was posted in Cash Receipt Journal
  • Paid – specifies that line was actually paid.
  • Dishonoured – specifies than line was dishonoured in the bank and payment collection failed.
• Dishonour Letter Created – specifies if dishonour letter was created.
• Notes – free text field to input notes for specific line.

Payment Arrangements

To create a payment arrangement, open Direct Debit Schedule and click New.

Input Date and Amount and click Close.

A new direct debit schedule line for a Payment Arrangement was created:

Direct Debit Collection

A fee can be charged to a customer for direct debit collection. This is configured on Financial Product in Direct Debit Fee Incl. VAT and Direct Debit VAT Group.

The collection of Direct Debit payments is performed in the Cash Receipt Journal. To proceed, navigate to the Cash Receipt Journal and select the action Suggest Direct Debit Payments.

Enter DD To Date, Posting Date, and optionally, Contract No. If Contract No. is left blank, the procedure will search for direct debit payments for all active contracts. Click OK.

Procedure will suggest direct debit payments which are due by DD To Date:

Following the suggestion for direct debit payments, these can be exported to a bank file from the Cash Receipt Journal. Since bank file formats may vary by country, this process should be handled as an extension.

Once the bank file is exported and sent for processing, click Post to post the Cash Receipt Journal. 

Note: You may skip bank file export for testing purposes.

Go to Direct Debit Schedule to verify that the direct debit schedule line status has been updated to Posted:

Go to Customer Ledger Entries to view the entry with the payment type:

Direct Debit Dishonour

If a direct debit payment is rejected by a bank, it must be recorded as a dishonoured payment in the system.

Start by setting up the bank transaction codes. Go to Bank Transaction Code Setup to create a transaction code for dishonour.

Bank Transaction Code Setup has the following columns:

• Transaction Code – specifies transaction code. May differ per country or per bank.
• Description – specifies the description of transaction code.
• For Dishonour – specifies that transaction code is related payments rejected by bank.
• Skip Dishonour Fee - specifies if customer will not be charged for a dishonour fee.
• Reapply Amount Option has the following options:
  • Blank - no auto reapply.
  • Full Installment – specifies if amount will be reapplied as full rejected installment.
  • Split by Component – specifies if interest, principal, services, insurance will be reapplied as separate payments.

In the event of a rejected payment, a fee may be charged to the customer. This can be configured under Financial Product in the sections Dishonor Fee Incl. VAT and Dishonor Fee VAT Group.

To handle a rejected payment, go to the Cash Receipt Journal. Enter the Posting Date, Contract No., choose the Transaction Code for dishonor, and select the Dishonoured CLE No. Click Post.

A bank response file can be imported to the Cash Receipt Journal. However, as file formats may vary by country, this should be implemented as an extension.

Navigate to Direct Debit Scheule and see created auto reapply entries:

Navigate to Customer Ledger Entries to see created entries:

Add Sales Invoice to Direct Debit Schedule

You can automatically add posted sales invoices to the contract direct debit schedule.

Create sales invoice and enable flag Include In DD Schedule.

A Direct Debit Schedule line will be automatically created as a Payment Arrangement after the invoice is posted.