To be able to understand which debit order option to utilize you are going to initially need to have an understanding of the variations inside the three primary collection approaches: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Service
We begin with the eldest and the most widely used method, EFT. The EFT services are offered by quite a few participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which in turn makes it possible for enterprises to process payments entirely by computerised methods. The service can be utilized for both collecting payments from clientele (EFT debits) and also for paying (EFT credits). Payments can be made for wages, creditors, wages etc. Your enterprise can lodge payments and collections through their bank to all participating banks.
Transacting using the EFT service
Either debit and credits may be processed through the system.
The subsequent requirements is applicable:
- Credits can be processed against current, savings and transmission accounts, and in certain circumstances, bonds, loans and subscription share accounts. Transactions greater or equal to R5 million rand will not be accepted and will be homed back with the reason it surpasses sector imposed restrictions. These kinds of transactions needs to be sent via the actual time line but not the operator.
- Debits are processed from current, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts are not allowed. A highest value ceiling of R500,000 per transaction was in place. - The separating or dividing of transactions to stop limit restrictions aren't allowed.
Coverage of the EFT service
The EFT service covers all sorts of accounts permitted by the EFT service rules and which are kept in the Common Monetary Area by collaborating banking institutions. A listing of participating financial institutions is obtainable on application.
NAEDO Service
The NAEDO service is provided by participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables companies as well as other bodies to process repayments fully by computerised methods. The service can be used for collecting payments from clients (debits). NAEDO doesn't make provision for any credit facility and EFT credit will be implemented if need be.
NAEDO repayment guidelines aid numerous presentments thereof. If they are unpaid after the first presentment, credit tracking can be invoked. Credit monitoring is optional and when picked, the unpaid NAEDO repayment instruction can be represented throughout the mid-day of the same day and for the sequential amount of days selected, twice daily, on trading days till payment is received or till expiration of the tracking interval selected.
All NAEDO payment instructions, are randomised offering all users an identical possibility of obtaining payment and therefore are processed as near as is possible after wage credits are paid into the banking accounts of clients in the early morning.
Transacting using the NAEDO service
Just debits can be processed by way of the system. The subsequent conditions will apply:
- Debits are processed against cheque, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not permitted. - A highest value ceiling of R5 000 per transaction is in place. The breaking up of transactions to prevent the limit restrictions isn't acceptable. - All NAEDO payment instructions must be distinctively recognizable by the Agreement Reference and also the repayment cycle.
Coverage of the NAEDO service
The NAEDO service covers all types of bank accounts allowed through the NAEDO Service policies and which are kept in the Common Monetary Area by collaborating banking institutions. A directory of partnering banks is accessible on application.
AEDO Service
The AEDO services are comparable to NAEDO in most respects, but can't be very easily contested as the transaction is initiated with the customers credit card and pin. AEDO is an effective strategy to offset collection risk and failures on payment.
Bottom line
Instances of where EFT and NAEDO services can be employed is provided within my preceding post. The AEDO service may efficiently be used for collection in a scenario whenever NAEDO had been put to use.
EFT Service
We begin with the eldest and the most widely used method, EFT. The EFT services are offered by quite a few participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which in turn makes it possible for enterprises to process payments entirely by computerised methods. The service can be utilized for both collecting payments from clientele (EFT debits) and also for paying (EFT credits). Payments can be made for wages, creditors, wages etc. Your enterprise can lodge payments and collections through their bank to all participating banks.
Transacting using the EFT service
Either debit and credits may be processed through the system.
The subsequent requirements is applicable:
- Credits can be processed against current, savings and transmission accounts, and in certain circumstances, bonds, loans and subscription share accounts. Transactions greater or equal to R5 million rand will not be accepted and will be homed back with the reason it surpasses sector imposed restrictions. These kinds of transactions needs to be sent via the actual time line but not the operator.
- Debits are processed from current, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts are not allowed. A highest value ceiling of R500,000 per transaction was in place. - The separating or dividing of transactions to stop limit restrictions aren't allowed.
Coverage of the EFT service
The EFT service covers all sorts of accounts permitted by the EFT service rules and which are kept in the Common Monetary Area by collaborating banking institutions. A listing of participating financial institutions is obtainable on application.
NAEDO Service
The NAEDO service is provided by participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables companies as well as other bodies to process repayments fully by computerised methods. The service can be used for collecting payments from clients (debits). NAEDO doesn't make provision for any credit facility and EFT credit will be implemented if need be.
NAEDO repayment guidelines aid numerous presentments thereof. If they are unpaid after the first presentment, credit tracking can be invoked. Credit monitoring is optional and when picked, the unpaid NAEDO repayment instruction can be represented throughout the mid-day of the same day and for the sequential amount of days selected, twice daily, on trading days till payment is received or till expiration of the tracking interval selected.
All NAEDO payment instructions, are randomised offering all users an identical possibility of obtaining payment and therefore are processed as near as is possible after wage credits are paid into the banking accounts of clients in the early morning.
Transacting using the NAEDO service
Just debits can be processed by way of the system. The subsequent conditions will apply:
- Debits are processed against cheque, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not permitted. - A highest value ceiling of R5 000 per transaction is in place. The breaking up of transactions to prevent the limit restrictions isn't acceptable. - All NAEDO payment instructions must be distinctively recognizable by the Agreement Reference and also the repayment cycle.
Coverage of the NAEDO service
The NAEDO service covers all types of bank accounts allowed through the NAEDO Service policies and which are kept in the Common Monetary Area by collaborating banking institutions. A directory of partnering banks is accessible on application.
AEDO Service
The AEDO services are comparable to NAEDO in most respects, but can't be very easily contested as the transaction is initiated with the customers credit card and pin. AEDO is an effective strategy to offset collection risk and failures on payment.
Bottom line
Instances of where EFT and NAEDO services can be employed is provided within my preceding post. The AEDO service may efficiently be used for collection in a scenario whenever NAEDO had been put to use.
About the Author:
Make use of debit orders to collect payment from debtors and improve your business cash flow today. Debby is an expert in NAEDO debits.
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