Questions and answers about the processing of direct debits.
Cash management, transaction costs, transaction currencies
What impact do the direct debit procedures have on my liquidity management?
The LSV+ payments that you receive as a creditor are final and are only carried out if the debtors have sufficient coverage in their accounts and if there are valid direct debit authorizations on hand. You can access the funds as soon as they arrive if no objection is received on time. However, objections by creditors are rare. Based on experience, only approximately 0.5% of the debits are contested.
BDD payments that you receive as a creditor are final and only checked for sufficient debtor account coverage and a valid direct debit authorization. You have unlimited access to the funds as soon as they arrive, because with this procedure there is no right of objection.
As the creditor, can I count on receiving my funds on time?
LSV+ and BDD are ideal tools to ensure the timely receipt of payments. As the creditor, you set the date upon which the debtor’s account is debited.
What transaction prices will be charged by the debtor’s bank?
Your bank’s customer service representative will be happy to advise you.
For which currencies can I use the direct debit procedures, and in which countries?
You can make transactions in LSV+ and BDD in francs and euro. LSV+and BDD were primarily developed for the Swiss market, but can also be used by banks, debtors or creditors in other countries. To use LSV+ and BDD, the respective banks must participate in the Swiss payment systems SIC and/or euroSIC. However, there is no direct interoperability with the direct debit systems of other countries.
Can I use the direct debit procedure to settle payments with customers within the EU zone in euro?
Though LSV+ and BDD were primarily developed for the Swiss market, they can also be used by banks, debtors or creditors in other countries. To do so, the respective banks must be direct participants in the payment systems SIC and/or euroSIC. However, there is no ability to directly communicate with the direct debit systems of other countries.
Organizational and contractual issues
As the creditor, how much time should I plan for sending reminders?
LSV+ and BDD, in contrast to ISR, make the sending of bills redundant and also significantly reduce the dunning process.
What effects does the direct debit procedure have on my accounting?
LSV+ and BDD require market customary open-item-accounting similar to that used for the ISR process.
How must the dispatch of bills be organized?
LSV+ and BDD make the sending of bills unnecessary.
What manual procedures do I need to complete as a direct debit procedure participant?
Basically, all processes can be handled automatically as long as:
LSV+: the debtor's bank account has sufficient coverage, there is a direct debit authorization, the account data is correct and there is no objection by the creditor;
BDD: the debtor’s bank account has sufficient coverage, there is a direct debit authorization and the account data is correct.
Which direct debit procedure provides the right of objection?
The right of objection is only possible with LSV+.
Should I expect objections to be raised often with LSV+?
No. You should anticipate objections from debtors for only a very small portion, less than one-half of one percent of all debits.
Alternatives to the direct debit procedure
As a creditor, what alternatives do I have should I prefer not to accept the direct debit procedure LSV+ with the right of objection?
BDD or another tool for billers offered by your financial institution are suitable if you prefer a direct debit procedure without the right of objection. Your bank’s customer service representative will be happy to advise you.
Which alternative payment methods should I recommend to my debtors if they prefer not use the direct debit procedure?
There are payment transfer products available as an alternative for recurring payments with constant payment amounts (e.g. standing orders). Please contact your banks customer service representative.