So as to recognize which debit order option to use you will first require an understanding of the distinctions with the three main collection approaches: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Service
Starting with the first and most commonly used method, EFT. The EFT service is offered by several contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), that enables organizations to process payments entirely by computerised means. The service can be utilised both for obtaining payments from clientele (EFT debits) and for making payments (EFT credits). Payments can be made for salaries, creditors, paychecks etc. Your organization can lodge payments and collections by means of their bank to all contributing banks.
Transacting using the EFT service
Both debit and credits may be processed with the system.
The next few conditions is applicable:
- Credits may be processed towards cheque, savings and transmission bank accounts, and under specific situations, bonds, loans and subscription share accounts. Transactions greater or equal to R5 million rand will not be acceptable and will be homed back with the reason that it surpasses industry enforced restraints. These kinds of transactions should be re-routed over the real time line but not the operator.
- Debits can be effected against current, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't permitted. A max value ceiling of R500,000 per transaction is in place. - The separating or dividing of transactions to avoid limit constraints will not be permitted.
Scope of the EFT service
The EFT service covers all kinds of accounts allowed by the EFT service rules and which are kept in the Common Monetary Area by collaborating financial institutions. A listing of partnering banking institutions can be obtained on request.
NAEDO Service
The NAEDO service is available from partnering banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to process payments completely by computerised method. The service can be used for obtaining repayments from clientele (debits). NAEDO does not make allowances for a credit facility and EFT credit might be implemented if required.
NAEDO payment instructions aid numerous presentments thereof. If most are unpaid following the first presentment, credit tracking can be invoked. Credit tracking is elective and when selected, the past due NAEDO payment instruction may be represented throughout the mid-day of the same day and for the sequential amount of days chosen, twice a day, on trading days until payment is received or until expiry of the tracking period selected.
All of the NAEDO repayment instructions, are randomised giving all users an equal possibility of getting money and are processed as close as is feasible after salary credits are paid into the banking accounts of clients early in the morning.
Transacting using the NAEDO service
Just debits may be processed with the system. The following criteria will apply:
- Debits can be processed from cheque, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't allowed. - A maximum 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 uniquely recognizable by the Agreement Reference and also the repayment period.
Coverage of the NAEDO service
The NAEDO service handles a variety of bank accounts permitted by the NAEDO Service rules and which are held in the Common Monetary Area by collaborating banking institutions. A listing of partnering banking institutions is accessible on request.
AEDO Service
The AEDO service is just like NAEDO in most respects, but cannot be easily questioned as the transaction is started with the account holders credit card and pin. AEDO is an effective solution to reduce collection risk and defaults on payment.
Summary
Instances of where EFT and NAEDO services can be utilized is given in my preceding article. The AEDO service may efficiently be utilized for collection in a scenario whenever NAEDO might have been utilised.
EFT Service
Starting with the first and most commonly used method, EFT. The EFT service is offered by several contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), that enables organizations to process payments entirely by computerised means. The service can be utilised both for obtaining payments from clientele (EFT debits) and for making payments (EFT credits). Payments can be made for salaries, creditors, paychecks etc. Your organization can lodge payments and collections by means of their bank to all contributing banks.
Transacting using the EFT service
Both debit and credits may be processed with the system.
The next few conditions is applicable:
- Credits may be processed towards cheque, savings and transmission bank accounts, and under specific situations, bonds, loans and subscription share accounts. Transactions greater or equal to R5 million rand will not be acceptable and will be homed back with the reason that it surpasses industry enforced restraints. These kinds of transactions should be re-routed over the real time line but not the operator.
- Debits can be effected against current, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't permitted. A max value ceiling of R500,000 per transaction is in place. - The separating or dividing of transactions to avoid limit constraints will not be permitted.
Scope of the EFT service
The EFT service covers all kinds of accounts allowed by the EFT service rules and which are kept in the Common Monetary Area by collaborating financial institutions. A listing of partnering banking institutions can be obtained on request.
NAEDO Service
The NAEDO service is available from partnering banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies as well as other bodies to process payments completely by computerised method. The service can be used for obtaining repayments from clientele (debits). NAEDO does not make allowances for a credit facility and EFT credit might be implemented if required.
NAEDO payment instructions aid numerous presentments thereof. If most are unpaid following the first presentment, credit tracking can be invoked. Credit tracking is elective and when selected, the past due NAEDO payment instruction may be represented throughout the mid-day of the same day and for the sequential amount of days chosen, twice a day, on trading days until payment is received or until expiry of the tracking period selected.
All of the NAEDO repayment instructions, are randomised giving all users an equal possibility of getting money and are processed as close as is feasible after salary credits are paid into the banking accounts of clients early in the morning.
Transacting using the NAEDO service
Just debits may be processed with the system. The following criteria will apply:
- Debits can be processed from cheque, certain savings and transmission bank accounts. Debits to bond and subscription share accounts aren't allowed. - A maximum 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 uniquely recognizable by the Agreement Reference and also the repayment period.
Coverage of the NAEDO service
The NAEDO service handles a variety of bank accounts permitted by the NAEDO Service rules and which are held in the Common Monetary Area by collaborating banking institutions. A listing of partnering banking institutions is accessible on request.
AEDO Service
The AEDO service is just like NAEDO in most respects, but cannot be easily questioned as the transaction is started with the account holders credit card and pin. AEDO is an effective solution to reduce collection risk and defaults on payment.
Summary
Instances of where EFT and NAEDO services can be utilized is given in my preceding article. The AEDO service may efficiently be utilized for collection in a scenario whenever NAEDO might have been utilised.
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.
