Invisible Collector Of Companies: DDS

The answers to these questions are actually within the meaning of its abbreviation written as DDS and it even confuses us, researchers, a little. Direct Debit System! How has the system that has been around since 2002 turned out to be the most useful banking product of recent years?

In April 2000, the EFT2 system was activated around the world, and in this way, it became possible to perform DDS through this system. This system was introduced in the presentation made by the Central Bank of the Republic of Turkey in 2002 and led by Citibank. 

Undoubtedly, wouldn't one of the biggest problems of companies, whether national or international, be cost and collection? To what extent and in how many days do they collect their receivables, and to what extent and in how many days do they pay their liabilities? One of the reasons accepted by researchers and economists for recessions, crises, and even worse circumstances is the liquidity problem. The companies do not have funds, and even when they have, their maturities are very long. On the other hand, the maturity mismatches in the liability-receivable balances of the large companies throughout the country, the dramatically long collection periods of the liabilities, change the balance of the companies considerably. Large companies suffer a little more in this regard. Companies have huge problems in the collection of payments for the services they provide or the commodities they sell. The follow-up of the work, the intensity, the accumulation... and the list goes on. Large companies even employ personnel just to deal with these problems.  

Direct Debit System is a system developed to remedy all these problems. Seller companies guarantee the invoices of their buyers within the limits set by the banks for them in return for the service they sell. This reduces their workload and other operational costs as much as possible. The burdens of cheques, promissory notes, and other documents subject to purchase and sale from buyers are minimized. The aim of it is to eliminate the liquidity problem, one of the biggest effects and one of the main purposes of the creation of this system. Companies can achieve healthier cash flows. They contribute to the solution of many chronic problems not only in terms of companies but also in terms of the country's economy. One of these problems is the reduction of the informal economy. Auto invoices issued to companies and the officialization of trade through banks are the biggest factors here. The system is integrated from the most institutional banks to the least institutional ones. The gains of the system and the individuals, institutions, and organizations that it provides benefit are dominant. In summary, the system works as follows: the seller makes a statement to the buyers with whom it has an agreement about their integration into this system. The company that will receive the commodities or services allocates its limits at the contracted financial institution within the framework of its credibility. It is requested that the accounts of the buyer companies are made available within the specified maturity period. Accounts that are not available are credited at the current market credit rates of the relevant bank. In this sense, this system works like an invisible collector. 

Participation Banks have tried to comply with the modern banking structure both around the world and in Turkey, while preserving the principles of Islamic Banking, since their establishment. While presenting their products in the market, they took care to follow the modern trend. The use and provision of DDS can be shown as an example of that. Participation Banks desire to be more active in customer acquisition, and sales of other cross products by putting these systems on their radar more than conventional banks. All of the existing Participation Banks actively offer DDS. Here, by making agreements with large-scale companies throughout the country, they increase their penetration in the market by  achieving depth in the market and contributing to the automatic connection of other sub-dealers and subsidiaries that make agreements with the main dealers. All banks place importance on the knowledge that these systems will be effective in customer acquisition and in all other cross-sales. The fact that Participation Banks are active in modern systems will provide direct contributions and contributions to both their expansion and depth in the sector.

Ahmet Körüklü