You have clients who pay every month, for a subscription, maintenance or a fixed monthly fee. Sending an invoice every month and then checking whether the money has arrived takes time. With a direct debit mandate (incasso machtiging) you have the amount debited on the agreed date, with your client’s permission. A few ground rules come with it, and they apply to you as the one receiving the money.
This article covers what you need as a business owner to collect by direct debit: a direct debit contract with your bank, a valid mandate from every client and a choice between the standard and the business direct debit. We also cover how to announce a collection, when the money is really yours, what to do if a collection comes back and how long to keep mandates.
In short:
- Contract: according to Betaalvereniging Nederland (the Dutch Payments Association), only a business or institution with a direct debit contract at its own bank can collect by direct debit.
- Mandate: every client gives permission first. Paper with a handwritten signature, Digitaal Incassomachtigen and iDIN Ondertekenen are the recognised routes.
- Two variants: with the standard European direct debit your client can reverse a collection for 8 weeks. With the business direct debit (B2B) that is not possible, but it is only for business clients.
- Announcing: you tell your client in advance when and how much you will collect. The EPC rules name 14 calendar days, unless you agree otherwise.
- Without a valid mandate: your client can have a collection refunded up to 13 months after the debit.
What is a direct debit mandate for you as a business owner?
A direct debit mandate is your client’s permission to debit amounts automatically from their payment account. According to Betaalvereniging Nederland, this can be one-off or recurring. You are then the creditor (incassant): you record the mandate in your records, decide yourself when to have an amount debited and inform your client in advance of the date and the amount.
Collecting with a mandate fits best when you know your client and provide a service on an ongoing basis. Betaalvereniging Nederland says direct debit is often the most suitable payment method in that situation. For a one-off job for a new client, an invoice can be simpler: you do not need a mandate and your client transfers the amount themselves. You can also combine the two: direct debit for regular clients and an invoice for the rest.
A direct debit contract with your bank
Betaalvereniging Nederland puts the direct debit contract (incassocontract) with your bank at the top of its conditions for creditors. You apply for a direct debit contract at a bank that offers one, for the business account into which you want to receive the collections. The bank can assess your application first. The contract can also state up to what amount you may collect per order and per period.
After signing, you receive a creditor identifier (incassant-ID). That identifier goes with every collection, so your client and their bank can see who is collecting, and in the Netherlands it is based on your KVK number. A contract also comes with costs. Banks can charge per collection, per file submitted and per returned collection, and the amounts differ. Ask for the rates before you sign, and work out what it costs for the number of clients you expect.
Without your own contract: through a payment service
Your creditor identifier is yours alone. You may not sign a contract yourself and then pass the identifier on to another party. If you want to outsource the whole process, a payment service that acts as the creditor can gather the mandates and run the collections. That party then signs the direct debit contract with its own bank. This can be useful if you have few collections and do not want to set up your own connection with your bank. Do compare the costs per collection and per reversal with those of your own contract.
Arranging a valid direct debit mandate
No mandate, no direct debit. Every client first gives you a mandate, and you record it completely and correctly. Betaalvereniging Nederland names three ways that hold up against a Melding Onterechte Incasso (MOI, a report of an unauthorised direct debit): a paper form with your client’s handwritten signature, Digitaal Incassomachtigen through your client’s own bank, or a digitally completed PDF form that your client has signed with iDIN Ondertekenen.
If you do not have a valid mandate, your client can report a collection to their own bank and have it refunded up to 13 months after the debit. Other forms of online consent, such as a tick box during sign-up or an iDEAL payment, are not among the three recognised ways according to Betaalvereniging Nederland. Especially when clients sign up online, it pays to use one of those three routes.
Digitaal Incassomachtigen
With Digitaal Incassomachtigen, DIM for short, your client gives the mandate online in their own banking environment. According to Betaalvereniging Nederland, it is just as legally valid as a paper form and meets the European SEPA standards. Your client recognises the route by its own logo. With the business variant, giving the mandate and registering it at your client’s bank happen at the same time.
For you as a creditor, DIM is mainly useful if you regularly sign up new clients. You connect to it through your bank or through a service provider. The costs can consist of a fixed monthly amount and an amount per new or changed mandate, so it may only pay off from a certain number of clients.
What goes on the mandate
If you use a form, include at least all the fields and the mandate text of your bank’s model form, even if you design it yourself. The European direct debit rules of the European Payments Council (EPC) set out which details it must contain:
Apart from that, a few optional fields, such as a description of the contract, may be added, and otherwise only your logo and a field for internal use. You choose the mandate reference yourself. Do not change it once you have made the first collection under that mandate.
One-off or recurring
With a recurring mandate you collect again and again with the same reference, for example every month. A one-off mandate is used once, after which the reference can no longer be used. So only choose one-off if you are sure no second collection will follow. If you submit no collection under a mandate for 36 months, the EPC rules require you to cancel it. If you want to collect again after that, you need a new mandate.
Standard or business direct debit (B2B)
There are two variants of the European direct debit. Which one you use depends on who your clients are and how much certainty you want about the money coming in.
| Standard European direct debit | Business European direct debit (B2B) | |
|---|---|---|
| For whom | Consumers and businesses | Businesses and institutions only |
| Reversal by your client | Within 8 weeks, without giving a reason | Not possible for a collection with a valid mandate |
| Without a valid mandate | Refund up to 13 months | Refund up to 13 months |
| Registration at your client’s bank | Not needed | Needed before the first collection |
| Starting | Straight after receiving the mandate | After your client has registered it |
So the B2B direct debit gives you more certainty, but your client first has to register the mandate with their own bank. If that registration is missing or incorrect, the collection cannot be carried out. With business Digitaal Incassomachtigen the registration happens automatically. If you have both private and business clients, you always use the standard direct debit for private clients.
With the business direct debit, according to the EPC rules, your client’s bank checks every collection against the registered mandate. If your client changes or cancels the mandate, they also have to tell their own bank. If a collection does not match the registered details, the bank can refuse it. So always use exactly the reference and the creditor identifier that are on the mandate.
From direct debit contract to first collection in 5 steps
This is how it goes from the application to the first debit:
Apply for the contract at your bank. After signing, you receive your creditor identifier.
Have every client give a mandate on paper with a signature, through Digitaal Incassomachtigen or with iDIN Ondertekenen. Give every mandate its own reference.
If you use the business direct debit, your client registers the mandate with their own bank. With the standard direct debit you skip this step.
Tell your client in advance when and how much you will collect, for example on the invoice or by email. Put the period in your terms, otherwise 14 days applies.
Submit the direct debit order to your bank, for example as a file or through your bookkeeping software. Then check which collections succeeded and which came back.
When is the money really yours?
A successful collection shows up in your account, but the amount only becomes final later. Your client and their bank can still reverse a debit for some time. The main periods at a glance:
| Moment | What can happen |
|---|---|
| No later than 14 days before | You announce the date and amount, unless you have agreed a different period |
| Up to 1 working day before | Your client can still refuse an announced collection |
| A few working days after the collection date | Your client’s bank can still return the collection |
| 8 weeks after the debit | The right to reverse a standard direct debit ends |
| 13 months after the debit | The period for having a collection without a valid mandate refunded ends |
| 36 months without a collection | You cancel the mandate and need a new one for a new collection |
In addition, according to Betaalvereniging Nederland, banks offer their clients nine ways to limit or block direct debits, for example all direct debits from one creditor or the direct debits from one creditor above a certain amount. A collection can then fail, even with a mandate that holds up against an MOI. Take that into account in your planning, especially if you match fixed costs to the income from direct debits.
If a collection does not go through
If a collection comes back, first find out what is going on. Your client may have set up a block, chosen a maximum amount or cancelled the mandate. If the mandate has been cancelled, do not collect under it any more and record the cancellation in your records.
According to Betaalvereniging Nederland, a reversal does not release your client from the obligation to pay. If there is an agreement, you can still demand payment. Agree with your client how the amount will be paid, for example with an ordinary transfer. If payment still does not arrive, the usual route follows with a reminder and possibly a formal notice.
Keeping mandates
A mandate is your proof if a client disputes a collection. According to the EPC rules, you keep a signed mandate, on paper or digital, for as long as the mandate runs. After a cancellation you keep it for as long as the law and your bank’s terms require, and for as long as your client can have an unauthorised collection refunded.
Keep digital mandates in a secure environment. For a paper mandate, enter the details digitally in your records, because those details go to your bank with every collection. The usual retention duty also applies: according to the Belastingdienst (Dutch Tax Administration), you generally keep your records for seven years.
Direct debits and your business account with Vivid
You use a business account with Vivid for your business’s payments, including the direct debits of suppliers and services that you pay. If you want to collect from clients yourself, you also need a direct debit contract, as described above. For direct debits and invoices, this is how it works at Vivid:
Vivid in short: a business account with Dutch IBANs and invoicing in every plan. You pay direct debits with it. In every plan, you can move existing direct debits free of charge through Qwist GmbH. Find out more at Vivid Business.
Your business payments in one place
A business account with a Dutch IBAN and invoicing that you can apply for online.
Frequently asked questions
What do you do with a direct debit mandate as a creditor?
You record your client’s mandate and keep it. With it, you have amounts debited from your client’s account one-off or recurring, and you announce every collection in advance with the date and amount.
Can you collect without your own direct debit contract?
Yes, through a payment service that acts as the creditor. It gathers the mandates, runs the collections and signs the direct debit contract with its own bank. If you want to collect yourself, you do need your own direct debit contract with your bank.
Is a tick box on your website enough as a mandate?
Not to protect you against a Melding Onterechte Incasso. Your client can then have such a collection refunded for up to 13 months. Use paper with a signature, Digitaal Incassomachtigen or iDIN Ondertekenen.
How far in advance do you announce a collection?
According to the EPC rules, at the latest 14 calendar days before the collection date. You can agree a different period with your client, for example in your terms. Any format will do: an invoice or email works too.
When can you be sure a collection has come in?
With the standard direct debit your client can reverse it for 8 weeks, and have it refunded for up to 13 months without a valid mandate. With the business direct debit the right to reverse does not apply, so you have certainty sooner.
When do you use the business direct debit?
Only if your client is a business or institution. Your client first registers the mandate with their own bank and cannot reverse a collection after that. For private clients you use the standard direct debit.
How long do you keep a mandate?
For as long as the mandate runs, and after a cancellation for as long as the law and your bank require. Keep it at least until your client can no longer have an unauthorised collection refunded.
What do you do if a client cancels the mandate?
Stop collecting under that mandate and record the cancellation in your records. Agree with your client how outstanding amounts will be paid, for example with a transfer against an invoice.
This article provides general information and is not legal advice. The rules mentioned are as published by Betaalvereniging Nederland, the European Payments Council (EPC) and the Belastingdienst, and may change. Terms and rates of direct debit contracts differ per bank. Vivid’s payment services are provided by Vivid Money S.A., an electronic money institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg; its Dutch branch is registered with De Nederlandsche Bank (DNB) as an electronic money institution.
