To be able to understand which debit order method to utilize you may first have to have an understanding of the differences with the three important collection techniques: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Debits
Starting with the first and the most commonly used method, EFT. The EFT services are provided by many contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), that permits organisations to process payments completely by computerised methods. The service can be utilized for both collecting payments from clientele (EFT debits) and for paying (EFT credits). Payments can be made for salaries, creditors, paychecks etc. Your company can lodge payments and collections by means of their bank to all collaborating banks.
Transacting using the EFT service
Both debit and credits can be processed with the system.
The next few conditions applies:
- Credits may be effected against current, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions higher or equivalent to R5 million rand are not accepted and will be homed back using the reason it surpasses market enforced limits. Such transactions should be sent via the actual time line and not the operator.
- Debits may be processed from cheque, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't allowed. A highest value ceiling of R500,000 per transaction was in place. - The separating or dividing of transactions to prevent limit restrictions are not permitted.
Coverage of the EFT service
The EFT service handles all sorts of accounts allowed by way of the EFT service rules and which are held in the Common Monetary Area by collaborating financial institutions. A listing of partnering banking institutions can be acquired on request.
NAEDO Service
The NAEDO service is available from collaborating financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which permits companies as well as other bodies to collect repayments entirely by computerised method. The service can be used for recovering repayments from consumers (debits). NAEDO doesn't make provision for a credit facility and EFT credit will likely be employed if required.
NAEDO payment instructions aid multiple presentments thereof. If they're unpaid following the first presentment, credit tracking may be invoked. Credit tracking is elective and when selected, the past due NAEDO payment instruction can be represented during the mid-day of the same business day and for the consecutive number of days selected, twice a day, on working days until payment is acquired or till expiry of the tracking period selected.
All of the NAEDO repayment instructions, are randomised supplying all users an equal chance of receiving payment and are processed as near as is feasible after salary credits are payed into the bank accounts of Customers early in the day.
Transacting with the NAEDO service
Only debits are processed with the system. The below conditions will apply:
- Debits may be effected against current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not permitted. - A highest possible value ceiling of R5 000 per transaction is in place. The breaking up of transactions to avoid the limit constraints is not allowed. - All NAEDO payment instructions ought to be distinctively discernable by way of the Agreement Reference as well as settlement cycle.
Scope associated with the NAEDO service
The NAEDO service handles all types of bank accounts allowed by the NAEDO Service guidelines and which are held in the Common Monetary Area by partnering banking institutions. A listing of participating banking institutions is accessible on request.
AEDO Service
The AEDO services are much like NAEDO in most respects, but can not be easily questioned as the transaction is initiated with the customers credit card and pin. AEDO is an excellent strategy to minimize collection risk and failures on payment.
Conclusion
Instances of where EFT and NAEDO services can be utilised is offered within my previous post. The AEDO service could effectively be used for collection in any situation whenever NAEDO had been made use of.
EFT Debits
Starting with the first and the most commonly used method, EFT. The EFT services are provided by many contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), that permits organisations to process payments completely by computerised methods. The service can be utilized for both collecting payments from clientele (EFT debits) and for paying (EFT credits). Payments can be made for salaries, creditors, paychecks etc. Your company can lodge payments and collections by means of their bank to all collaborating banks.
Transacting using the EFT service
Both debit and credits can be processed with the system.
The next few conditions applies:
- Credits may be effected against current, savings and transmission bank accounts, and in specific situations, bonds, loans and subscription share accounts. Transactions higher or equivalent to R5 million rand are not accepted and will be homed back using the reason it surpasses market enforced limits. Such transactions should be sent via the actual time line and not the operator.
- Debits may be processed from cheque, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't allowed. A highest value ceiling of R500,000 per transaction was in place. - The separating or dividing of transactions to prevent limit restrictions are not permitted.
Coverage of the EFT service
The EFT service handles all sorts of accounts allowed by way of the EFT service rules and which are held in the Common Monetary Area by collaborating financial institutions. A listing of partnering banking institutions can be acquired on request.
NAEDO Service
The NAEDO service is available from collaborating financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which permits companies as well as other bodies to collect repayments entirely by computerised method. The service can be used for recovering repayments from consumers (debits). NAEDO doesn't make provision for a credit facility and EFT credit will likely be employed if required.
NAEDO payment instructions aid multiple presentments thereof. If they're unpaid following the first presentment, credit tracking may be invoked. Credit tracking is elective and when selected, the past due NAEDO payment instruction can be represented during the mid-day of the same business day and for the consecutive number of days selected, twice a day, on working days until payment is acquired or till expiry of the tracking period selected.
All of the NAEDO repayment instructions, are randomised supplying all users an equal chance of receiving payment and are processed as near as is feasible after salary credits are payed into the bank accounts of Customers early in the day.
Transacting with the NAEDO service
Only debits are processed with the system. The below conditions will apply:
- Debits may be effected against current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not permitted. - A highest possible value ceiling of R5 000 per transaction is in place. The breaking up of transactions to avoid the limit constraints is not allowed. - All NAEDO payment instructions ought to be distinctively discernable by way of the Agreement Reference as well as settlement cycle.
Scope associated with the NAEDO service
The NAEDO service handles all types of bank accounts allowed by the NAEDO Service guidelines and which are held in the Common Monetary Area by partnering banking institutions. A listing of participating banking institutions is accessible on request.
AEDO Service
The AEDO services are much like NAEDO in most respects, but can not be easily questioned as the transaction is initiated with the customers credit card and pin. AEDO is an excellent strategy to minimize collection risk and failures on payment.
Conclusion
Instances of where EFT and NAEDO services can be utilised is offered within my previous post. The AEDO service could effectively be used for collection in any situation whenever NAEDO had been made use of.
About the Author:
Make use of debit orders to collect payment from debtors and improve your business cash flow today. Steven is an expert in NAEDO systems.
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