To be able to recognize which debit order method to use you will first have to have an understanding of the variations with the three main collection methods: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Debits
Lets start with the oldest and most frequently used method, EFT. The EFT service is available from several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), that permits companies to process payments completely by computerised methods. The service can be utilized both for acquiring payments from clientele (EFT debits) as well as for making payments (EFT credits). Payments can be made for wages, creditors, paychecks etc. Your organization may lodge payments and collections through their bank to all collaborating banks.
Transacting through the EFT service
Both debit as well as credits may be processed from the system.
The following conditions applies:
- Credits can be processed against cheque, savings and transmission bank accounts, and in certain situations, bonds, loans and subscription share bank accounts. Transactions higher or equal to R5 million rand will not be accepted and will be homed back using the reason that it exceeds sector enforced restraints. These kinds of transactions should be re-routed via the realtime line but not the operator.
- Debits can be effected from cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts aren't allowed. A highest value ceiling of R500,000 per transaction is in place. - The separating or dividing of transactions to stop limit restrictions are not permitted.
Scope of the EFT service
The EFT service handles all types of accounts allowed by the EFT service rules and which are kept in the Common Monetary Area by participating banks. A listing of participating financial institutions can be acquired on request.
NAEDO Service
The NAEDO service is available from participating banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies and other bodies to collect repayments totally 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 need be.
NAEDO repayment guidelines aid numerous presentments thereof. If they are unpaid following the first presentment, credit monitoring may be invoked. Credit tracking is optionally available and if selected, the past due NAEDO repayment instruction may automatically be represented throughout the mid-day of the same day and for the successive amount of days chosen, twice daily, on business days till payment is received or till expiration of the monitoring period chosen.
All NAEDO repayment instructions, are randomised giving all users an equal possibility of obtaining payment and are processed as close as is possible after salary credits are payed in to the banking accounts of clients in the early morning.
Transacting using the NAEDO service
Merely debits are processed by way of the system. The below conditions will apply:
- Debits are effected from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't permitted. - A highest value limit of R5 000 per transaction is in place. The breaking up of transactions to prevent the limit restrictions isn't allowed. - All NAEDO payment instructions must be uniquely recognizable by way of the Agreement Reference as well as settlement cycle.
Scope of the NAEDO service
The NAEDO service handles all types of bank accounts permitted by the NAEDO Service regulations and which are kept in the Common Monetary Area by partnering banking institutions. A directory of collaborating financial institutions can be acquired on application.
AEDO Service
The AEDO service is just like NAEDO in all respects, but cannot be easily challenged as the transaction is established using the account holders credit card and pin. AEDO is an effective approach to offset collection risk and failures on payment.
Bottom line
Instances of where EFT and NAEDO services can be utilised is given in my previous article. The AEDO service could efficiently be used for collection in almost any scenario whenever NAEDO might have been used.
EFT Debits
Lets start with the oldest and most frequently used method, EFT. The EFT service is available from several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), that permits companies to process payments completely by computerised methods. The service can be utilized both for acquiring payments from clientele (EFT debits) as well as for making payments (EFT credits). Payments can be made for wages, creditors, paychecks etc. Your organization may lodge payments and collections through their bank to all collaborating banks.
Transacting through the EFT service
Both debit as well as credits may be processed from the system.
The following conditions applies:
- Credits can be processed against cheque, savings and transmission bank accounts, and in certain situations, bonds, loans and subscription share bank accounts. Transactions higher or equal to R5 million rand will not be accepted and will be homed back using the reason that it exceeds sector enforced restraints. These kinds of transactions should be re-routed via the realtime line but not the operator.
- Debits can be effected from cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts aren't allowed. A highest value ceiling of R500,000 per transaction is in place. - The separating or dividing of transactions to stop limit restrictions are not permitted.
Scope of the EFT service
The EFT service handles all types of accounts allowed by the EFT service rules and which are kept in the Common Monetary Area by participating banks. A listing of participating financial institutions can be acquired on request.
NAEDO Service
The NAEDO service is available from participating banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies and other bodies to collect repayments totally 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 need be.
NAEDO repayment guidelines aid numerous presentments thereof. If they are unpaid following the first presentment, credit monitoring may be invoked. Credit tracking is optionally available and if selected, the past due NAEDO repayment instruction may automatically be represented throughout the mid-day of the same day and for the successive amount of days chosen, twice daily, on business days till payment is received or till expiration of the monitoring period chosen.
All NAEDO repayment instructions, are randomised giving all users an equal possibility of obtaining payment and are processed as close as is possible after salary credits are payed in to the banking accounts of clients in the early morning.
Transacting using the NAEDO service
Merely debits are processed by way of the system. The below conditions will apply:
- Debits are effected from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't permitted. - A highest value limit of R5 000 per transaction is in place. The breaking up of transactions to prevent the limit restrictions isn't allowed. - All NAEDO payment instructions must be uniquely recognizable by way of the Agreement Reference as well as settlement cycle.
Scope of the NAEDO service
The NAEDO service handles all types of bank accounts permitted by the NAEDO Service regulations and which are kept in the Common Monetary Area by partnering banking institutions. A directory of collaborating financial institutions can be acquired on application.
AEDO Service
The AEDO service is just like NAEDO in all respects, but cannot be easily challenged as the transaction is established using the account holders credit card and pin. AEDO is an effective approach to offset collection risk and failures on payment.
Bottom line
Instances of where EFT and NAEDO services can be utilised is given in my previous article. The AEDO service could efficiently be used for collection in almost any scenario whenever NAEDO might have been used.
About the Author:
Make use of debit orders to collect payment from debtors and improve your business cash flow today. Tim is an expert in NAEDO collections.
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