SEPA Direct Debit reconciliation
SEPA Direct Debit reconciliation is the process of matching the payments received from customers against the outstanding invoices or payments due. Reconciliation is important for merchants to ensure that all payments have been received, correctly matched, and to identify any discrepancies or errors in the payment processing.
Here are the steps involved in SEPA Direct Debit reconciliation:
Obtain the bank statement or report from the bank: This shows all the payments received and debits made.
Compare the bank statement to the list of outstanding payments: This is done efficiently by importing the file of the bank in an accounting package where the outstanding invoices are stored. This will help to identify any discrepancies or errors in the payment processing. It can be done manually also but this is not recommended.
Identify and investigate discrepancies: Any discrepancies or errors in the payment processing should be investigated to determine the cause and rectify the issue. This may involve contacting the customer, the bank or other relevant parties to resolve the issue.
By regularly (each day or once a week) reconciling SEPA Direct Debit payments, merchants can ensure that all payments have been received and matched correctly, and identify non paid invoices. This can help to improve financial accuracy and reduce the risk of errors and disputes with customers or the bank.
Banks can return information on SEPA Direct Debit through the use of return codes, which provide information on the status of a payment and the reason for its return. The return codes are used by banks to inform merchants of the status of a payment and the reason for its return. The return codes are mostly bundled in the day2day account infomcation in formats such as MT940, CAMT.05X, CODA.
When a payment is returned, the bank will provide the return code to the merchant along with additional information, such as the debtor's name, account number, the reason for the return and the (structured) message. Merchants can use this information to update their records and take appropriate action, such as contacting the customer to resolve the issue or adjusting their payment processing procedures to prevent similar issues in the future. It is recommended to do this process as automated as possible.
A PSP (Payment Service Provider) can return reconciliations information on SEPA Direct Debit transactions through the use of status reports and reconciliation files.
Status reports: A PSP can provide status reports to the merchant which indicate the status of each SEPA Direct Debit transaction, whether it was successfully executed or returned. The status reports are sent in real-time, depending on the agreement between the PSP and the merchant. Status reports can include information such as the transaction ID, the debtor's name, the transaction amount, the execution date, and the status of the transaction (successful, rejected, returned, etc.).
Reconciliation files: A PSP can also sometimes provide reconciliation files to the merchant which provide detailed information about the Direct Debit transactions, including the status of each transaction, Usually there is no extra information which makes it more difficult to make the necessary actions on non-succeeded transactions.
The format and content of status reports and reconciliation files may vary depending on the PSP and the merchant's requirements, but they generally include very basic information about the SEPA Direct Debit transactions and their status.