Monthly Direct Debits

A direct debit is an agreement with a third party, allowing them to draw specified funds directly from our bank account or credit/debit card.

Some direct debits are voluntary; you establish them to make your life easier. Some are a condition of sale or service; the third party requires you to pay in regular instalments.

There are also fixed and variable direct debits – our mobile phone charges or rent may be a set amount each month, but our spend on electricity and water will likely vary.

Some of the most common types of direct debit are:

• Bills: mobile phone, utilities, internet

• Rent or mortgage payments

• Insurance: health, house, travel, car 

• Subscriptions: Foxtel, Netflix, Stan, Spotify or other streaming services, magazines, computer software

• Memberships: gym, professional organisations

• Education: childcare and school tuition

• Charitable donations

• Transportation: road tolls, public transport

• Buy now, pay later plans

For all their benefits, direct debits also come with potential drawbacks:

• Service may no longer be needed

• Cost of the service may need to be re-negotiated

• We may not have the funds in our account to cover a transaction 

• Our contracted service provider could turn out to be untrustworthy

Which subscriptions are essential, and which can be paused or ended completely? Also check whether you’re now paying for any of those ‘free trials’ you signed up for, but don’t use.

1. Xero Reconciliation

• Each time the accounts are reconciled in XERO

2. Yearly Review

• It is important that Admin & James sit down and review each direct debit and ask the questions:

  • Do we still need this?

  • Is this the best service provider?

  • Is there a more cost effective solution?

  • Can we renegotiate the cost? 

Before you pause or end direct debit payments, check the fine print on any contracts you’ve signed – some memberships, for example, have minimum terms or exit fees attached. If you can readily contact the third party to cancel your service and associated direct debit, and to discuss any affected terms in your contract, then do so.

If this proves difficult, you can contact our financial institution to request a cancellation, specifying when you want it to begin. By law, our bank is required to cancel the direct debit transaction and notify the third party. Usually it takes one working day before your next payment for the cancellation to come into effect.

It’s a good idea to have cancellations in writing, so you’ll be prepared to dispute any fees that continue to be debited from your account.