Direct speech repeats, or quotes, the exact words spoken. When we use direct speech in writing, we place the words spoken between inverted commas (....) and there is no change in these words. We may be reporting something that's being said NOW (for example a telephone conversation), or telling someone later about a previous conversation
She says "What time will you be home?"
She said "What time will you be home?" and I said "I don't know! "
"There's a fly in my soup!" screamed Simone.
John said, "There's an elephant outside the window."
Reported speech is usually used to talk about the past, so we normally change the tense of the words spoken. We use reporting verbs like 'say', 'tell', 'ask', and we may use the word 'that' to introduce the reported words. Inverted commas are not used.
She said, "I saw him."
She said that she had seen him.
'That' may be omitted:
She told him that she was happy.
She told him she was happy.