Setting up a standing order for your business

Standing orders let you automate the task of sending out regular payments, so you can spend more time building your business. In this guide, we explain when you might want to use standing orders and how to set them up – it’s easier than you might think.  

What is a standing order?

A standing order allows you to send regular, automatic payments of a fixed amount from your business bank account to a nominated payee. As you set the amount in advance, they’re typically used to pay fixed costs, such as the rent on your business premises or business insurance premiums. You can also use them to transfer money between accounts, which could be helpful if you want to regularly deposit an amount in a business savings account. If you’re a sole trader, you could also use your personal bank account to set up standing orders. 

How do I set up a standing order?

It’s quick and easy to set up a standing order – in most cases, it should be active in just a few minutes. Here’s what you need to do:

• Make a standing order request via your bank’s website or app, or pick up a form at your local branch

• Enter the name of the person or company you want to pay along with their account number and branch sort code

• State the payment amount, when you want payments to start and end and the payment frequency

• Include a reference so you can identify the recipient 

Why would a business set up a standing order?

Standing orders offer a convenient way to make regular payments. They’re ideal for:

• Paying monthly subscriptions

• Paying suppliers

• Paying fixed utility bills or rent

• Making mortgage payments

• Paying equipment rental costs or business vehicle finance

• Repaying business loans

• Paying monthly business insurance premiums  

• Transferring money to another person, company or account 

Why wouldn’t a standing order payment go through? 

One of the benefits of setting up a standing order is that your bank should never forget to pay it. So, if a standing order hasn’t gone through, ask yourself the following questions:

• Do you have enough money in the account to cover the standing order? If you don’t, your bank may alert you to this. If you don’t rectify the problem, the payment may or may not go through. If it does, you could face a penalty charge or incur overdraft interest.

• Did you set an expiry date on the standing order with the intention of reviewing the arrangement later on?

• Has the amount due increased, meaning the standing order no longer covers what you owe? In this case you need to contact your bank and request the standing order amount is increased. One way to do this is via online banking. Don’t forget to send a one-off payment to cover the shortfall.

• Has the intended recipient changed? You need to set up a new standing order whenever the payee changes - for instance, when changing to a new supplier. In this case, cancel the existing standing order and set up a new one for the intended payee. Don’t forget to request a refund from the old recipient.

These are just a few of the problems that can arise with standing orders and demonstrate why it’s important to check your account on the payment dates to ensure everything is in order.