Direct Debit

Once the policyholder agreed to pay the premiums by direct debit, the insurer initiates a direct debit activation procedure in order to notify the payer's bank about the payment arrangement. After the mandate is activated by the bank, the insurer must regularly send the necessary direct debit payment instructions files, in order for the bank to respond by transferring the agreed premium amounts into insurer's accounts.

The Billing and Collection solution helps SEPA* and UK insurers to handle direct debit payment operations - starting with the direct debit mandate activation procedure (in order to notify the bank about the payment arrangement between insurer and insured) up to the moment the payment is collected.

For example, for direct debit payments that respect some rules (such as providing the correct payment details, having an active mandate, and a bank account available for charging), the process of direct debit collection is completely automated, and the insurer does not need to intervene at all. Also, when the system receives a notification about the cancellation of a mandate, it changes the status of the specified mandate from Active to Cancelled, and logs this change into the mandate history. Second to that, some functionalities allow manual interaction - descriptions provided in the pages related to this topic.

The Billing and Collection direct debit functionalities can be applied to policies that have the payment type set to Direct Debit, and their business status is in InForce or Suspended. For those policies, the solution is going to process all the invoices that are in Generated business status - with their due date less or equal to the current date, added to the value set in the numberOfDaysInAdvance parameter. Consequently, for every valid policy with direct debit payment that has an invoice generated according to its payment schedule, the solution generates a payment instructions file that informs the bank to operate the direct debit payment (charge the premium amount on behalf of the insurer).

In order to accommodate the differences regarding the direct debit payments, the solution has dedicated workflows for the SEPA and for the UK financial area. Each flow has different menu items that display their respective functionalities and help you to handle direct debit payments processing according to SEPA or UK regulations.

*Single Euro Payments Area (SEPA) allows customers to make cashless euro payments – via credit transfer and direct debit, to anywhere in the European Union.

IMPORTANT!  
The solution does not allow for any direct debit mandate to be manually deleted.

Related To This Topic:

Direct Debit Business Workflow

FTOS_PYMT_DirectDebitMandate is the master business workflow that handles the different types of changes affecting a direct debit mandate during its lifetime - like transitioning the mandate through different versions and business states (from Draft to Expired). All the updates are logged in the mandate history tab, for further analytical use.

Below, an example of the FTOS_PYMT_DirectDebitMandate business workflow - as it is displayed on Innovation Studio:

DIDE BW

The Billing and Collection solution can be applied to two types of direct debit processing:

  • DIDE Sepa - functionality used for the European area,

  • DIDE UK - functionality used for the UK area.

For implementing a certain direct debit flow, you must choose its corresponding direct debit type - either Sepa or Uk. In order to do so, please consult the Setting the solution for DIDE processing section, on the Solution Configurations page.

Below, an example of the Billing and Collection direct debit menu items:

Direct Debit menu items

Depending on your configurations, you see either DIDE SEPA or DIDE UK menu items.

The following are the behaviors - characteristic to any mandate, managed by this business workflow:

  • Every mandate (or mandate version) starts in Draft status and must go through an approval process before reaching the Active status. Approval is automatic, based on bank response.

  • Once a mandate is in Active status, its settings can no longer be modified.

  • If you want to manually update an Active mandate, you must create a new mandate version. After editing, you must manually approve the new mandate version; use the status picker to pick the Approved status.

  • When you create a new mandate version, the current version is retired.

  • Only one version of a mandate can be live at one time.

  • Only one draft version can be active at one time. If the case, you must close the current draft version and then, open another one.

  • Mandates in Cancelled status cannot be edited (versioned) - by you or the system.

  • No mandate can be deleted manually from the system.

  • The system also can automatically adjust a mandate, based on mandate data received. All adjustments are automatically integrated into a new version of the mandate, and logged into the mandate history.

A direct debit mandate stage can take one of the following values:

  • N (new),

  • D (deleted, cancelled), or

  • M (modified).

These stages are registered by the solution, following the processing of payment files/ payment data. For example, if a request for payment through an active mandate is denied (a number of times, which you can configure), this is picked out and sorted by the system, and the mandate is transitioned to the Deleted stage. The system also automatically logs this update on the relevant mandate record (this is done by creating an actualized version of the mandate).

Status name Description
Proposal Initial state for any mandate registered in the system.
Draft Initial state for any mandate registered in the system.
Pending Ongoing state - the mandate is pending approval from the bank.
Active Ongoing state.
Version Draft When the selected mandate becomes editable.
Version Unapproved When a draft version of a mandate is canceled.
Approved Ongoing state.
Version Closed When a draft version of a mandate is closed.
Expired Final state. The mandate is expired. The mandate cannot be moved from this state to any other states.
Cancelled Final state. The mandate is cancelled. The mandate cannot be edited or moved from this state to any other states.
Transition Description
_Proposal Initial state.
Active_Cancelled When the system registers a notification about the mandate cancellation.
Active_Expired When the mandate reaches its end day. The expiration triggers the automatic change of the payment type on the policy, from Direct Debit to Bank Transfer (OP).
Active_VersionClosed When a version of the mandate is closed. Used for mandate versioning.
Approved_Active When the mandate reaches its start day.
Approved_Draft When a change of the policy payment type from Bank Transfer (OP) into Direct Debit is performed on a policy.
Approved_Expired When the number of days for the activation of a mandate were exhausted.
Cancelled_Active When a mandate is reactivated. This status is only visible/ available for DIDE UK processing.
Draft_Active When the mandate reaches its start day.
This transition is triggered automatically by a specific job that verifies if the current date is the mandate begin date and changes the status to Active for all eligible mandates.
Draft_Cancelled When the system registers a notification about the mandate cancellation.
Draft_Expired When the number of days for the activation of a mandate were exhausted. The expiration triggers the automatic change of the payment type on the policy, from Direct Debit to Bank Transfer (OP).
Draft_Pending After the instruction file for the mandate's activation is generated, and the mandate is pending approval from the bank.
Draft_VersionDraft When the mandate versioning process starts.
Pending_Active When the mandate reaches its start day.
Pending_Cancelled When the system registers a notification (e.g. AUDDIS file) about canceling the mandate, or a user manually cancels the mandate.
Proposal_Active When the mandate reaches its start day.
Proposal_Draft When the mandate is registered in the system but it is not activated yet, or its begin date is yet to come.
Proposal_Expired When the number of days for the activation of a draft mandate were exhausted.
VersionDraft_Approved When a version of the mandate is approved. Used for mandate versioning.
VersionDraft_VersionUnapproved When the opened version is not approved. Used for mandate versioning.
HINT  
For more details, consult also the Flow Parameters And Scheduled Jobs page.