What is a Standing Order and How Does it Work?
Let’s start with the basics. What does “standing order” actually mean? What is a standing order, and how do people use them?
Standing orders are a type of automatic payment. You may use them to make regular payments of the same amount, at the same intervals. If you know what you want to pay, and when you want to pay it, a standing order means you can instruct your bank to pay it automatically – so you don’t need to remember an identical payment time and time again.
With standing orders, you choose how much to pay, how often (for example, weekly, monthly, or annually) and when to make the payment. For instance, you could choose to pay on the 6th day of every month. The benefit of this scheduling is you can tailor it to suit your needs, and once you’ve set up your standing order, it won’t change - unless you make those changes yourself.
A common standing order example is the payment you might make for rent, or a person whose services you regularly employ, such as a cleaner or personal trainer.
Standing orders aren’t the only kind of automatic payments out there. Read about the benefits of paying via direct debit here.
How Do I Set Up a Standing Order?
We’ve covered the standing order definition, but how do standing orders work, exactly?
Setting up a standing order is fairly simple. The first step is for you to access your bank account. You can do this from home, either online or over the phone. Next, you give the instruction to set up a standing order by completing a simple form. This will ask you who you are paying, how much and when. Just make sure you know the account number and sort code of the person you are paying.
As for how standing orders work, once you’ve given the bank your instruction, the standing order payment will go ahead automatically, exactly as you directed it. The only way this changes is if you change or cancel it yourself.
Useful to know: most banks won’t charge anything for setting up or using a standing order. If you want to change or cancel your standing order, you can do so at any time.
What Time Are Standing Orders Paid?
You’ve set up a standing order or you’re expecting a standing order payment from someone else. When can you expect the money to move in or out of your account?
With standing orders, you can give exact instructions as to which day the payment takes place. Until recently, different banks processed standing orders at different times during the day. However, the introduction of the Faster Payments Scheme means most banks are required to process standing orders in the early hours of the morning, when the system is least busy with other payments.
What If I Want to Change a Standing Order?
If you need to make changes to or cancel your standing order, it’s your responsibility.
It’s important you have all the correct information to hand when you create your standing order, as you are less protected (compared to direct debits) if a payment goes out in error. The same goes for if you forget to cancel a standing order.
You can change or cancel a standing order from home via online banking or over the phone. Useful to know: Standing orders don’t usually have payment notifications, so it’s up to you to check if the payment has gone ahead.
If you have more questions about standing orders, you may want to check out our blog post on standing orders vs direct debits. If you want to learn more about similar topics, check out our articles below:
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