As a way to grasp which debit order solution to make use of you should first require a comprehension of the differences inside the three important collection procedures: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Service
Starting with the eldest and the most commonly used method, EFT. The EFT service is provided by quite a few contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables businesses to process payments completely by computerised means. The service can be utilised for both acquiring payments from clients (EFT debits) as well as for paying (EFT credits). Payments can be done for salaries, creditors, paychecks etc. Your organization can lodge payments and collections by means of their bank to all collaborating banks.
Transacting using the EFT service
Both debit and credits may be processed with the system.
The next few conditions applies:
- Credits may be processed towards cheque, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions greater or equivalent to R5 million rand are not accepted and will be homed back using the reason it surpasses industry enforced restraints. These kinds of transactions ought to be sent through the actual time lines and not the operator.
- Debits are processed from cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. A highest value ceiling of R500,000 per transaction is in place. - The breaking up or splitting of transactions to avoid limit restrictions aren't permitted.
Coverage of the EFT service
The EFT service covers all kinds of accounts permitted by the EFT service rules and which are kept in the Common Monetary Area by partnering financial institutions. A listing of participating banking institutions is accessible on application.
NAEDO Service
The NAEDO service is supplied by participating financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to collect payments completely by computerised means. The service can be used for collecting repayments from clients (debits). NAEDO doesn't make allowances for a credit facility and EFT credit might be utilised if needed.
NAEDO payment instructions support multiple presentments thereof. If these are unpaid after the first presentment, credit tracking can be invoked. Credit monitoring is elective and when chosen, the unpaid NAEDO repayment instruction may be represented during the afternoon of the same working day and for the sequential amount of days chosen, two times a day, on business days till payment is received or till expiration of the tracking period selected.
All NAEDO repayment instructions, will be randomised supplying all users an identical opportunity of getting money and therefore are effected as close as possible after salary credits are paid into the banking accounts of Customers early in the day.
Transacting by way of the NAEDO service
Merely debits may be processed via the system. The following conditions will apply:
- Debits can be effected from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't authorized. - A highest value limit of R5 000 per transaction is in place. The dividing of transactions to avoid the limit restrictions is not acceptable. - All NAEDO payment instructions ought to be distinctively identifiable by the Agreement Reference and repayment cycle.
Coverage of the NAEDO service
The NAEDO service includes a variety of accounts acceptable through the NAEDO Service guidelines and which are located in the Common Monetary Area by partnering financial institutions. A directory of collaborating financial institutions is accessible on application.
AEDO Service
The AEDO service is just like NAEDO in most respects, but can not be very easily disputed as the transaction is initiated using the account holders card and pin. AEDO is an excellent strategy to minimize collection risk and defaults on payment.
Bottom line
Instances of where EFT and NAEDO services can be used is provided in my preceding post. The AEDO service could effectively be used for collection in almost any circumstance when NAEDO might have been made use of.
EFT Service
Starting with the eldest and the most commonly used method, EFT. The EFT service is provided by quite a few contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables businesses to process payments completely by computerised means. The service can be utilised for both acquiring payments from clients (EFT debits) as well as for paying (EFT credits). Payments can be done for salaries, creditors, paychecks etc. Your organization can lodge payments and collections by means of their bank to all collaborating banks.
Transacting using the EFT service
Both debit and credits may be processed with the system.
The next few conditions applies:
- Credits may be processed towards cheque, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions greater or equivalent to R5 million rand are not accepted and will be homed back using the reason it surpasses industry enforced restraints. These kinds of transactions ought to be sent through the actual time lines and not the operator.
- Debits are processed from cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. A highest value ceiling of R500,000 per transaction is in place. - The breaking up or splitting of transactions to avoid limit restrictions aren't permitted.
Coverage of the EFT service
The EFT service covers all kinds of accounts permitted by the EFT service rules and which are kept in the Common Monetary Area by partnering financial institutions. A listing of participating banking institutions is accessible on application.
NAEDO Service
The NAEDO service is supplied by participating financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to collect payments completely by computerised means. The service can be used for collecting repayments from clients (debits). NAEDO doesn't make allowances for a credit facility and EFT credit might be utilised if needed.
NAEDO payment instructions support multiple presentments thereof. If these are unpaid after the first presentment, credit tracking can be invoked. Credit monitoring is elective and when chosen, the unpaid NAEDO repayment instruction may be represented during the afternoon of the same working day and for the sequential amount of days chosen, two times a day, on business days till payment is received or till expiration of the tracking period selected.
All NAEDO repayment instructions, will be randomised supplying all users an identical opportunity of getting money and therefore are effected as close as possible after salary credits are paid into the banking accounts of Customers early in the day.
Transacting by way of the NAEDO service
Merely debits may be processed via the system. The following conditions will apply:
- Debits can be effected from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't authorized. - A highest value limit of R5 000 per transaction is in place. The dividing of transactions to avoid the limit restrictions is not acceptable. - All NAEDO payment instructions ought to be distinctively identifiable by the Agreement Reference and repayment cycle.
Coverage of the NAEDO service
The NAEDO service includes a variety of accounts acceptable through the NAEDO Service guidelines and which are located in the Common Monetary Area by partnering financial institutions. A directory of collaborating financial institutions is accessible on application.
AEDO Service
The AEDO service is just like NAEDO in most respects, but can not be very easily disputed as the transaction is initiated using the account holders card and pin. AEDO is an excellent strategy to minimize collection risk and defaults on payment.
Bottom line
Instances of where EFT and NAEDO services can be used is provided in my preceding post. The AEDO service could effectively be used for collection in almost any circumstance when NAEDO might have been made use of.
About the Author:
Make use of debit order to collect payment from debtors and improve your business cash flow today. Steven is an expert in NAEDO collections.
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