UNDERSTANDING DIRECT DEBIT IN LINKS MODULAR SOLUTIONS

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1 UNDERSTANDING DIRECT DEBIT IN LINKS MODULAR SOLUTIONS

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3 FEATURES OF DIRECT DEBIT IN LINKS... 5 UNDERSTANDING WHAT DIRECT DEBIT MEANS... 6 CLASSES DIRECT DEBIT... 7 Differences between Bank Debit, Credit Card and Cash... 7 Bank Debit... 7 Credit Card... 7 Cash... 7 What happens when I run a Bank or Credit Card debit?... 7 The Direct Debit Screen... 8 What is the effect on the customer s financial file?... 9 Bank Debit & Credit Card Direct Debit... 9 Cash Direct Debit What is the advantage of trial mode? MEMBERSHIP DIRECT DEBIT Difference of Bank Debit and Credit Card Bank Debit Credit Card What happens when I run a debit? The Direct Debit Screen What effect does this have on the customer s financial file? Bank Debit & Credit Card Direct Debit What is the advantage of trial mode? IMPORTANT THINGS TO REMEMBER Classes Memberships... 15

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5 FEATURES OF DIRECT DEBIT IN LINKS The direct debit process within LINKS is a sophisticated and powerful process that offers the user a multiple of tools to control all payments by direct debit. This includes; Three forms of direct debiting for class payments Extraction of bank and credit card data for electronic transfer Formatted hard copy files for credit card payment processing Ability to process multiple class and membership types Ability to rollback a debit run in extreme circumstances Ability to view and report on all old debit runs Outcome reports can be printed or stored electronically All errors (i.e. customers missing debit details) can be printed Process for dealing with direct debit rejections Ability to check for incomplete direct debit details or expiring credit cards Quick processing time Direct debit process can be run at any time without interfering with other users of the program. This document will help explain the methodology of the Direct Debit Process in Links and the considerations you may have to make in relation to how you operate your business. For your convenience this document is written in two sections Classes and Memberships.

6 UNDERSTANDING WHAT DIRECT DEBIT MEANS Direct Debit or otherwise referred to as Direct Billing is the process of taking monies from a customers nominated bank account or credit card. There is privacy and amount restrictions that you may need to consider and you should contact your financial institution as to these regulations. Links doesn t actually debit the customers bank account or credit card. The Links system simply creates an electronic file which is uploaded through banking software for example ANZ Online, Cardlink or NPC. This is important to understand, because it allows you a little more flexibility. For example until you send that file through to your bank, you can make changes to customer accounts within Links and re create the file if required. We will discuss this is depth a little further on. Direct Debit can be enabled for both Memberships and Class Bookings. These contracts as they are referred to in Links must be sold on a perpetual basis. This means that the membership is sold with only a start date and only ceased when done so by a user. Students under much of the same process are booked into a class with a start date and then only ceased when also entered by a user. Direct Debit is a very handy tool as you can minimised the time spent collecting customer monies over the counter allowing you greater time to speak about other matters with your customers. The direct debit parameters are set by the user, allowing you to debit monthly, fortnightly or even weekly depending on how you run your business. You are able to set different parameters for memberships however you will need to select only one type for each class type. For example you could have Fortnightly Membership type and a Monthly Membership Type. Within classes you might have your swimming lessons debited monthly however you could also run gymnastic lessons which are debited fortnightly. Before you look into using the Direct Debit System within Links, you will need to make sure that you have the appropriate software from your financial institution and that Links is capable of producing a file in suitable format for your financial institution. If you have any queries regarding this, please make sure you speak to LMS support staff before making the decision to go ahead. You will also need to create a Direct Debit Authorisation form, which includes your company specific information. This form allows you to have the authority to debit the customers account, and must be signed by the customer before you can legally debit their account. There is an example form that can be found at the end of this documentation.

7 CLASSES DIRECT DEBIT The classes direct debit process is broken in three parts, Bank Debit, Credit Card and Cash, (or over the counter) payments. The details are recorded against a family and these details must be used for any student s bookings within that family. DIFFERENCES BETWEEN BANK DEBIT, CREDIT CARD AND CASH Bank Debit This process will create a file containing customer s bank account information and the amount they are to be debited. This file is then uploaded through the internet to a secure online banking website i.e. ANZ Online or Wells Fargo Credit Card This process will create a file containing customer s credit card number, expiry date, card holder name and the amount they are to be debited. This file is then uploaded through the internet to a secure online credit card clearing authority i.e. Cardlink or NPC. Some banking software also accepts Credit Cards. Cash This process will create an amount owing on customer s accounts for the fees that are due for that debit period. This amount is then payable through Point of Sale by either Cash, Credit Card, Cheque (Check) or Eftpos (Debit Card). WHAT HAPPENS WHEN I RUN A BANK OR CREDIT CARD DEBIT? There are a number of steps to the processing of a debit. The first part of the process searches the database for all the families who students are currently enrolled in a class. At this point it creates the electronic file as discussed above. This part of the process will show you a listing of the accounts that will be debited, along with accounts that are exceptions for that run i.e. Amount has been changed to a pool closed credit etc. The next step of the process is to select the reporting options that you wish to view. These reports can either be viewed, printed, saved electronically or a combination of these. The final step of the process is the updating of the customer accounts. Until this final step is completed you are able to work back and edit customer accounts if required. For example you may have received a late cancellation or have forgotten to apply a credit to a customers account. The details of the effect on the customer s financial file is discussed below

8 The Direct Debit Screen Denotes what direct debit run you are going to process Allows you to select to run all the class types together or separately The process is date sensitive, it shows the end of the last run date, the next period start is the run you are performing and when students will be billed to. Bank debit date for the electronic file Ability to run the process in Trial Mode. No accounts will be effected in the database but it does allow you to see who and how much will be charged in the next run. Allows you to specify where you would like the file saved to

9 WHAT IS THE EFFECT ON THE CUSTOMER S FINANCIAL FILE? Bank Debit & Credit Card Direct Debit When the final step of the Direct Debit process is done, financial transactions are made within your database. This means that there is a transaction through Point of Sale, Income is received for reporting in your Sales Category Report and details are placed on the customers financial file. Point of Sale Transactions Customers are debited per family. For example if there are 3 children in the family, booked into $50.00 a month per class the transaction amount will be for $ These transactions are recorded against a Till Id but are recognised as Direct Debit payments and are therefore this money is not expected to be physically in your cash drawer that day. It will however be recorded as income collected on the day that you completed the Direct Debit Process. Sales Category Report Any monies collected either through Point of Sale, i.e. The sale of a casual swim or through the direct debit process are recorded as income on either the day they are sold or the day the direct debit process is run. Customers Financial File For Bank Debit & Credit Card Direct Debits the system places both a debit line and a credit line on the customer s financial history. In other words, the charge for the booking and the payment for that charge. In the example below the four lines shows the fees and payments for two $78.00 per booking.

10 Cash Direct Debit The cash direct debit process although similar to the Bank and Credit Card has a few differences that you need to be aware of. There is no electronic file created as you do not need to send information to your financial institution. For Cash customers you do not record debit information The Cash Direct Debit process does not record income for the customers on the day of the debit run. The cash direct debit run follows much of the same process to the Bank and Credit Card run, however when accounts are updated there is only a debit line or charge line placed against their account. The payment line is only recorded once the payment is made over the counter and the income is then recorded for this day. Effectively the Cash Direct Debit Process is just raising a charge on the customer s accounts. WHAT IS THE ADVANTAGE OF TRIAL MODE? As seen earlier, the steps of the direct debit process allow you to create the file and view the accounts to be debited before updating the accounts in the database and creating financial transactions. As the electronic file is created in the first step of the debit process, we are able to check the debit run prior to it being processed and also if you notice a mistake with a customers account you can rectify the issue and re generate the file. As an LMS recommendation, we suggest that you always run the debit in trial mode, generate the electronic file for uploading, upload the file and then once it is accepted by your financial institution, complete the Direct Debit process and update the customer accounts. This gives you much more flexibility in allowing you compensate for errors.

11 MEMBERSHIP DIRECT DEBIT The membership direct debit process is broken in two parts, Bank Debit and Credit Card. There is no cash process for memberships. The details are recorded against the membership contract not the customer. For example a customer may have two membership contracts one for their gym membership and one for personal training. The customer could choose to have the gym membership come from their bank account and their personal training membership come from their credit card. DIFFERENCE OF BANK DEBIT AND CREDIT CARD Bank Debit This process will create a file containing customer s bank account information and the amount they are to be debited. This file is then uploaded through the internet to a secure online banking website i.e. ANZ Online or Wells Fargo Credit Card This process will create a file containing customer s credit card number, expiry date, card holder name and the amount they are to be debited. This file is then uploaded through the internet to a secure online credit card clearing authority i.e. Cardlink or NPC. Some banking software also accepts Credit Cards. WHAT HAPPENS WHEN I RUN A DEBIT? There are a number of steps to the processing of a debit. The first part of the process searches the database for all the members who have a membership current within the debit period. If a membership was started during the current period, they will be excluded as the first payment was collected at the time of membership sale. At this point it creates the electronic file as discussed above. This part of the process will show you a listing of the accounts that will be debited, along with accounts that are exceptions for that run i.e. A reduction in the debit fee due to the membership being suspended. The next step of the process is to select the reporting options that you wish to view. These reports can either be viewed, printed, saved electronically or a combination of these. The final step of the process is the updating of the customer accounts. Until this final step is completed you are able to work back and edit customer accounts if required. For example you may have received a late cancellation or have forgotten to apply a credit to a customers account. The details of the effect on the customer s financial file is discussed below

12 The Direct Debit Screen Denotes what direct debit run you are going to process Allows you to select to run all the membership types together or separately The process is date sensitive, it shows the end of the last run date, the next period start is the run you are performing and when students will be billed to. Bank debit date for the electronic file Ability to run the process in Trial Mode. No accounts will be effected in the database but it does allow you to see who and how much will be charged in the next run. Allows you to specify where you would like the file saved to

13 WHAT EFFECT DOES THIS HAVE ON THE CUSTOMER S FINANCIAL FILE? Bank Debit & Credit Card Direct Debit When the final step of the Direct Debit process is done, financial transactions are made within your database. This means that there is a transaction through Point of Sale, Income is received for reporting in your Sales Category Report and details are placed on the customer s financial file. Point of Sale Transactions Customers are debited per membership contract. This means that the financial information for that customer will be viewable by their contracts. If they hold two contracts within the system this information is viewed separately by the contract. These transactions are recorded against a Till Id but are recognised as Direct Debit payments and are therefore this money is not expected to be physically in your cash drawer that day. It will however be recorded as income collected on the day that you completed the Direct Debit Process. Gym Membership Sales Category Report Any monies collected either through Point of Sale, i.e. The sale of a casual swim or through the direct debit process are recorded as income on either the day they are sold or the day the direct debit process is run. Membership Income Gym Membership

14 Customers Financial File For Bank Debit & Credit Card Direct Debits the system places both a debit line and a credit line on the customer s financial history. In other words, the charge for the debit period and the payment for that charge. In the example below a membership contract information shows that there was a charge of $63.53 for the membership and a payment of $63.53 and the corresponding POS transaction ID (7891). WHAT IS THE ADVANTAGE OF TRIAL MODE? As seen earlier, the steps of the direct debit process allow you to create the file and view the accounts to be debited before updating the accounts in the database and creating financial transactions. As the electronic file is created in the first step of the debit process, we are able to check the debit run prior to it being processed and also if you notice a mistake with a customers account you can rectify the issue and re generate the file. As an LMS recommendation, we suggest that you always run the debit in trial mode, generate the electronic file for uploading, upload the file and then once it is accepted by your financial institution, complete the Direct Debit process and update the customer accounts. This gives you much more flexibility in allowing you compensate for errors.

15 IMPORTANT THINGS TO REMEMBER Classes Joining Date If you run the direct debit every month on the 1 st of the month, anyone who joins after the 1 st of the month will be expected to pay over the counter for that first month. The join date is the date of their first class. So this must be taken into consideration for when people book for weeks ahead For example The debit is run on the 1 st of every month A child is signed up for lessons starting on the 5 th May The day that the child is actually enrolled into that class was the 28 th April Even though they were physically enrolled before the 1 st of May their start date is not until the 5 th May, therefore they are expected to pay a pro rata from the 5 th of May through to the end of May. They would not pay by direct debit until the 1 st of June. Memberships Joining Date Much like classes the first payment is made over the counter at the time of membership sale. If a membership is purchased in advance then they will be excluded from the debit run and considered pre payed. Suspensions You must ensure that direct debit runs are kept up to date. When a suspension is entered a credit can be automatically apllied to the membership depending on your centre s specific terms and conditions. For example John Smith has a membership that costs $60.00 a month. In April he suspends his membership for 15 days, which reduces his cost to $30.00 for that month. The suspension should be entered before the debit is process so that he is charged the correct amount for the month. If the suspensions wasn t entered until April 5 th then a $30.00 credit would be applied to his account. When it came time for the May debit run, Links would recognise that there was a $30.00 credit on the account due to him being suspended for 15 days in April and it would only charge him $30.00 in May to compensate for the time off in April.