So that you can understand which debit order strategy to use you will initially need to have an awareness of the distinctions inside the three main collection techniques: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Debits
Lets start with the eldest and most widely used method, EFT. The EFT service is provided by many participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which makes it possible for organisations to process payments entirely by computerised methods. The service can be utilised for both collecting payments from customers (EFT debits) and for making payments (EFT credits). Payments can be done for salaries, creditors, wages etc. Your enterprise can lodge payments and collections through their bank to all collaborating banks.
Transacting via the EFT service
Either debit as well as credits may be processed with the system.
The next few criteria is applicable:
- Credits may be processed from cheque, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions bigger or equivalent to R5 million rand will not be acceptable and will be homed back using the reason it surpasses industry enforced restraints. Such transactions ought to be routed over the actual time line and not the operator.
- Debits can be effected from cheque, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't permitted. A highest value limit of R500,000 per transaction was in place. - The separating or splitting of transactions to prevent limit restrictions are not authorized.
Scope of the EFT service
The EFT service handles all kinds of accounts acceptable by the EFT service rules and which are kept in the Common Monetary Area by participating banks. A list of collaborating banking institutions is accessible on request.
NAEDO Service
The NAEDO service is available from participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to process repayments totally by computerised method. The service can be used for collecting payments from customers (debits). NAEDO does not make provision for a credit facility and EFT credit will probably be utilized if needed.
NAEDO payment instructions support multiple presentments thereof. If most are unpaid after the first presentment, credit monitoring may be invoked. Credit monitoring is optional and when selected, the past due NAEDO payment instruction may be represented during the afternoon of the same day and for the successive number of days chosen, two times a day, on trading days until payment is received or until expiry of the monitoring interval chosen.
All of the NAEDO repayment instructions, will be randomised giving all users an identical possibility of obtaining payment and therefore are effected as close as is possible after wage credits are paid in to the bank accounts of consumers early in the morning.
Transacting through the NAEDO service
Just debits are processed through the system. The following conditions will apply:
- Debits are processed from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not allowed. - A highest value limit of R5 000 per transaction is in place. The splitting of transactions to avoid the limit constraints isn't acceptable. - All NAEDO payment instructions should be distinctively discernable by way of the Agreement Reference and repayment cycle.
Scope associated with the NAEDO service
The NAEDO service covers a variety of bank accounts allowed by the NAEDO Service policies and which are kept in the Common Monetary Area by partnering financial institutions. A listing of partnering banks is obtainable on application.
AEDO Service
The AEDO service is similar to NAEDO in all respects, but can't be easily disputed as the transaction is established with the customers credit card and pin. AEDO is an excellent approach to mitigate collection risk and defaults on payment.
Summary
Instances of where EFT and NAEDO services can be utilized is given within my preceding article. The AEDO service may successfully be used for collection in any scenario whenever NAEDO might have been utilised.
EFT Debits
Lets start with the eldest and most widely used method, EFT. The EFT service is provided by many participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which makes it possible for organisations to process payments entirely by computerised methods. The service can be utilised for both collecting payments from customers (EFT debits) and for making payments (EFT credits). Payments can be done for salaries, creditors, wages etc. Your enterprise can lodge payments and collections through their bank to all collaborating banks.
Transacting via the EFT service
Either debit as well as credits may be processed with the system.
The next few criteria is applicable:
- Credits may be processed from cheque, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions bigger or equivalent to R5 million rand will not be acceptable and will be homed back using the reason it surpasses industry enforced restraints. Such transactions ought to be routed over the actual time line and not the operator.
- Debits can be effected from cheque, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't permitted. A highest value limit of R500,000 per transaction was in place. - The separating or splitting of transactions to prevent limit restrictions are not authorized.
Scope of the EFT service
The EFT service handles all kinds of accounts acceptable by the EFT service rules and which are kept in the Common Monetary Area by participating banks. A list of collaborating banking institutions is accessible on request.
NAEDO Service
The NAEDO service is available from participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to process repayments totally by computerised method. The service can be used for collecting payments from customers (debits). NAEDO does not make provision for a credit facility and EFT credit will probably be utilized if needed.
NAEDO payment instructions support multiple presentments thereof. If most are unpaid after the first presentment, credit monitoring may be invoked. Credit monitoring is optional and when selected, the past due NAEDO payment instruction may be represented during the afternoon of the same day and for the successive number of days chosen, two times a day, on trading days until payment is received or until expiry of the monitoring interval chosen.
All of the NAEDO repayment instructions, will be randomised giving all users an identical possibility of obtaining payment and therefore are effected as close as is possible after wage credits are paid in to the bank accounts of consumers early in the morning.
Transacting through the NAEDO service
Just debits are processed through the system. The following conditions will apply:
- Debits are processed from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not allowed. - A highest value limit of R5 000 per transaction is in place. The splitting of transactions to avoid the limit constraints isn't acceptable. - All NAEDO payment instructions should be distinctively discernable by way of the Agreement Reference and repayment cycle.
Scope associated with the NAEDO service
The NAEDO service covers a variety of bank accounts allowed by the NAEDO Service policies and which are kept in the Common Monetary Area by partnering financial institutions. A listing of partnering banks is obtainable on application.
AEDO Service
The AEDO service is similar to NAEDO in all respects, but can't be easily disputed as the transaction is established with the customers credit card and pin. AEDO is an excellent approach to mitigate collection risk and defaults on payment.
Summary
Instances of where EFT and NAEDO services can be utilized is given within my preceding article. The AEDO service may successfully be used for collection in any scenario whenever NAEDO might have been utilised.
About the Author:
Make use of a debit order system to collect payment from debtors and improve your business cash flow today. Steven is an expert in EFT facilities.
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