What is a standing order?

A standing order enables you to send a fixed payment from your bank account to a recipient on a regular basis. We look at how they differ to direct debits, how to set a standing order up and how to cancel one if it’s no longer required.

What is the difference between a direct debit and a standing order?

A standing order is a request from you to your bank instructing it to send the same amount of money to a recipient (a person or a company) on a regular basis. It could be for your rent or mortgage repayments, gym subscription or donating to your favourite charity. This standing order payment could be set up weekly, monthly, quarterly, annually or any frequency of your choosing. The date of the payment and the amount taken out remain the same every time unless updated by you as the account holder. You are the only person who can request a standing order from your bank account.

A direct debit allows the person or company you wish to pay to take out money from your account on a regular basis. Both the date the payment is made and the amount of money taken out can change. The person or company that sets up a direct debit with you can make changes at any time.

How do I create a standing order?

Depending on the bank and how you carry out day-to-day transactions, you may be able to set up a standing order by visiting your local bank branch, over the phone, through online banking or via a mobile banking app.

As mobile banking continues to grow in popularity, we have included the details on how to set up a standing order via a mobile banking app. Although each bank will have its own process, the following steps are likely to be similar for most:

Step 1. Log into your mobile banking app and go to the relevant account you wish to set up a standing order from.

Step 2. From the menu, select “Standing orders and direct debits” and click on “set up standing order.”

Step 3. Enter the details of the person or company you wish to pay on a regular basis. You can add new details or select a person or company already set up as an existing payment recipient within your app.

Step 4. Enter how much you wish to send your recipient along with how often you want the payment to be made. You may also need to add a reference, which you can choose to help you easily identify the payments in your transactions history.

Step 5. Check and confirm all the details are correct. Your standing order is now set up.

How soon will my recipient receive my standing order payment?

The time it takes for your recipient to receive your payment will depend on the bank but they are typically handled on the same day they are set up for. To be sure, you may need to give your bank up to 5 business days for it to be received.

What if there aren’t enough funds in my account to make a standing order payment?

Before making a payment, your bank will check to see if you have the relevant funds. If you don’t enough money in your account (and no overdraft facility set up), the payment won’t be made until the next payment date.

Some banks may try to send the standing order payment again, either on the same day or soon after but this is not always possible.

Your recipient may charge you for a missed payment. The bank may also charge you a fee if it is not able to make a standing order payment so be sure you have the necessary funds in your account.

How do I cancel a standing order?

As the account holder, you are the only person who can cancel a standing order. You’ll have the same options available to you for cancelling it as you did for setting it up. You can do this in person, over the phone, online or via your mobile app. The most important thing is to let your bank know in plenty of time so that a payment that you no longer wish to send, isn’t accidentally sent. This is because recovering your funds could be difficult or a lengthy process.

Cancelling a standing order could also lead to you being charged or fined for non-payment. This, in turn, could lead to the outstanding balance accruing interest and your credit score negatively affected.

Bottom line

Standing orders can help you manage your finances, especially if you have the same payments going out of your account on a regular basis. Standing orders are available from most financial institutions. They are simple to set up and simple to cancel but be sure you won’t face any fines for missed payments if you do stop a standing order.