In today’s ever expanding world of payment collections the debit order reigns supreme as the ultimate low cost solution to efficient bulk payment collection. If you have thought about starting to utilize debit order payments for your collections then read this article to get an overview of this payment collection system.
Let’s first have a look at what a debit order is. A debit order is defined as a payment instruction typically used for the monthly collection of funds. A debit order gives a third party authority to collect money from your bank account or credit card given permission to do so by a written, telephonic or electronic mandate.
But then you may ask, what is the difference between a debit order and a stop order? Well, it is pretty simple, a stop order is an instruction that you issue to your bank to make a series of future dated recurring payments, whereas a debit order is an instruction that you provide to a third party.
Now that we have that cleared up, did you know what there is more than one type of debit order? Yes, there are actually three types of debit order in common use throughout the payment collection industry:
- EFT debit orders
- AEDO (Authenticated Early Debit Orders)
- NAEDO (Non Authenticated Early Debit Orders)
All of these are facilities that allow for a third party to collect money from a client’s account. EFT debit orders are the standard debit order payment instructions directed by a third party to the credit card or bank account of a paying customer in terms of a mandate granted by the customer. Aedo and Naedo are payment systems which facilitate the processing of Early Debit Orders (EDO) which is simply a debit order processed close to a credit payment. Aedo require pin authentication from a point of sale while Naedo’s do not. This restricts Naedo debit order submission to bank accounts only.
Now that you know what they are, why should you use debit orders? It’s simple; debit orders help you take control of your payment collection. Naedo’s allow tracking on accounts to process a payment close to a credit payment so your chance of collecting payments increase and with that so does your cash flow. You save your clients money on bank charges and you receive accurate reconciliation information regarding paid and unpaid payments immediately.
All things considered adopting debit orders for your businesses payment collections will give you greater control over payment collection, increased revenue and leave you in a better financial position.