In domestic commercial transactions, a direct debit mandate empowers the creditor to collect variable sums directly from the debtor's bank account on agreed dates, whereas a standing order is an instruction issued by the debtor requiring their bank to transfer only a predetermined fixed amount at set intervals.
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Answer
The statement is TRUE because a direct debit allows the creditor to initiate collections of fluctuating amounts, whereas a standing order is a debtor-issued instruction for unvarying, fixed payments.
The statement accurately contrasts direct debit and standing order mechanisms. A direct debit provides operational flexibility for settling recurring bills of variable amounts because the creditor originates the collection request under prior authority. A standing order is a fixed-sum payment instruction under the exclusive control of the payer.
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Key Concept
Operational and structural distinctions between Direct Debit and Standing Order in home trade