Billing and invoicing solutions for subscription based e-commerce

E-commerce in the South African market has grown immensely in recent times as South Africans are becoming more comfortable buying products online.

This lucrative industry has seen a lot of success with companies generating billions of Rands and will continue to grow in future as consumers can easily access a wide range of products and services through the click of a button.

Subscription based e-commerce

Subscription based e-commerce is a fairly new concept to the market as e-commerce has always been known for its once-off transactions between the consumer and online store.

At the heart of embarking in this new direction will be to set up the recurring payment of subscription based products in such a quick and effective way so that the convenience factor of buying online does not get lost.

Sign electronic debit order mandates online

Direct Debit has the perfect solution for any subscription based e-commerce business in South Africa. We provide small to large enterprises with our electronic mandate solution, EFT or NAEDO debit order facilities and SnapBill for your invoicing and debit order collection needs.

The electronic mandate solution will allow consumers to complete a debit order mandate electronically, where they will be able to sign digitally from any device and the mandate then gets sent in PDF format to both the online shop and the customer. The mandate also gets stored as set out in the ECT Act and PASA regulations.
For more information regarding our electronic mandate solution, please visit: http://www.electronicmandate.com.

Our debit order facilities include both EFT and NAEDO which allow you to transact directly via Bankserv. We have a few debit order systems available including file upload, contract management and an integration option where the e-commerce store and our debit order systems can be directly linked.

We also offer other facilities like EFT credit facilities and account holder verification that can also be integrated with the e-commerce website.

SaaS billing solutions

SnapBill, one of our leading partners can provide an entirely automated process with regard to payment solutions as the e-commerce website will be able to add various payment gateways such as Direct Debit, PayPal, PayFast and Iveri only to name a few.

SnapBill also provides online invoicing, automatic reconciliation of payments, statements and SMS-messaging services all on one platform.

For more information regarding payment solutions and invoicing via SnapBill, please visit: http://www.snapbill.com.

Our recurring payment solutions will give your subscription based e-commerce business the convenience factor to differentiate it from all other e-commerce businesses.

Succeed in e-commerce with the help of Direct Debit, the future of debit order collections.

Best debit order collection and invoicing solutions

Direct Debit is a debit order collection company that provides comprehensive billing and invoicing solutions to businesses of all sizes who are looking for a direct and professional collection channel.

We provide businesses with a direct debit order facility with Bankserv where you will be able to collect your funds on your own user code and reference.

Instead of our debit order transactions being referenced “BUREAU 123456 YOUREF”, as in the traditional bureau collection model, Direct Debit references debit order transactions as “YOURCOMPANY 123456”. Your customer will be able to contact you directly when a query arises. They no longer have to deal with a middleman.

Your clients know your company and brand. Now that they are able to contact you directly it will promote a stronger trust relationship resulting in substantial reduction in debit order disputes. Increase your cash flow from day one by making use of Direct Debit's systems.

Our main goal is to automate the entire debit order collection process as far as possible. We do this in a variety of innovative and industry leading ways.

Electronic mandates, an industry first...

We’ve created the first ever electronic debit order mandate solution in South Africa. Your clients are now able to sign mandates electronically, the signed debit order mandate gets sent to both your company and your customer as a PDF document and is digitally stored and signed set out in the PASA regulations and Electronic Communications and Transactions Act 25 of 2002.

For more information regarding our electronic mandate solution, please visit: http://www.electronicmandate.com/

Credit checking system

Credit Office, our credit checking system will give credit providers access to a fully integrated credit management system that consists of various user-friendly components to provide a powerful and flexible solution.

If you’re looking for a system to reduce bad debt, improve profitability and speed of service, reduce the number of days’ sales outstanding and in doing so increase market share – Credit Office is made for you.

Credit Office connects you to services like Transunion, Experian, XDS, CollectIT, TraceIT, ListIT only but to name a few.

For more information regarding our Credit Office system, please visit: http://www.debitorder.com/solutions/credit-check-system/

Debit order collection services

Our debit order collection services include both the EFT and NAEDO debit order collection facilities, as well as EFT credit facilities where clients will be able to pay employees/suppliers using our systems.

Debit order systems at your disposal include the basic file upload system and a contract management system for a more automated debtor management process. We also provide custom integration capabilities based on your specific needs.

Account holder verification (AVS) is another great service we provide businesses with that helps in establishing if your clients supplied the correct banking details, if the account has been open for more than (3) three months or if debits are indeed allowed on the account.

Direct Debit strives to bring quality products and services at affordable prices to all our clients, whether you’re a small business or a large enterprise, we try to accommodate every business need.

SaaS (cloud-based) billing solution

We’ve recently integrated with a cloud-based online billing and invoicing company, called SnapBill. With SnapBill you are able to load your clients onto their web-based platform, send debit order batches (with a click of a button), automate reconciliation of payments, send bills, statements, past due warnings and hence obtain a complete billing solution with the necessary audit trails for your business.

For more information regarding SnapBill, please visit: http://www.snapbill.com/

Debit order solutions for any business

Our debit order collection services are especially designed for businesses in the following sectors: insurance industry, brokerages, funeral cover, security companies, internet service providers (ISPs), telecommunication companies, accountant and audit firms, schools, colleges, non-profit companies, churches, retirement villages, property administrators, medical practitioners, cleaning services, storage companies, the gardening industry, pest control companies, training, fitness, health centres, franchises and other businesses providing recurring or subscription-based services.

Benefits of using Direct Debit as your debit order service provider:

• Improve collection of monthly fees by using our debit order facilities.
• Better budget planning and increased cash flow.
• Seamless collection of fixed or varying amounts.
• Build a trust relationship with your clients and reduce dispute rates by collecting directly through Bankserv using your own user code.
• Reduce collection costs including legal fees, bank fees and administrative costs.
• Automate the payout of salaries and wages by using our EFT credit facility.
• Account Holder Verification services to verify account holders by matching their registration numbers or ID numbers.
• Automated debtors process, using SnapBill’s invoicing and billing solutions.
• Get client authorisation electronically using our electronic mandate solution.
• Credit vetting of fee payers, using Transunion, Experion and XDS.
• Perform criminal checks on staff members.
• SMS messaging service to send confirmations, notifications and news to customers.

If you would like some more information please contact one of our friendly account managers or request a free quotation today!

Direct Debit, the future of debit order collections.

Debit order collection for the cleaning industry

The cleaning industry in South Africa is a highly competitive and versatile industry that has shown immense growth in today's markets.

Let’s face it, we all need the attentive and effective cleaning services that the cleaning industry provides us with.

Individuals, small businesses and even larger enterprises need a clean environment to live and conduct business in, that is why cleaning services can be considered a core business service.

The cleaning industry prides itself in excellent service delivery which is not an easy task especially when you’re operating in a highly competitive field.

Things like debit order collection of payments and billing of clients usually is not a top priority as cleaning service providers are competing for business and trying to maintain excellent service levels.

Direct Debit has the ideal solution for the cleaning industry’s debit order collection and payment needs.

We provide EFT and NAEDO debit order collection systems to collect fees seamlessly and EFT credit that will make the headache of paying cleaning personnel something of the past.

We also tie in with an automated billing and invoicing system called SnapBill, that will automate debit order batch collections, conduct monthly invoicing and automate the entire debtors process, enabling you to focus on the excellent service that you provide your clients.

Direct Debit also provide other services including account holder verification, a credit checking system, SMS messaging to clients for promotion or reminders for payments as well as our electronic debit order mandate solution.

Private security industry debit order collection solutions

Direct Debit provides professional tailored debit order collection solutions for all types of security companies. The private security industry is known to be largest in South Africa.

This comes as no surprise to citizens living in our beautiful country as it has always been known for crime. Crime statistics unfortunately continue to rise and citizens are steering towards better protection through manned guarding, assets in transit, physical security , alarm monitoring and armed response only but to name a few.

The private security industry is performing basic security functions that once used to be the core functions provided by the police. This has led to the significant growth in the market where security companies are able to provide citizens with tailor-made solutions with a direct focus on their neighbourhoods and personal security needs.

The private security industry has also been a big contributor to the employment sector where private security training programmes and aspiring security guarding has come to be widespread in our risky society.

Along with the exponential growth and big contributions to our economy, the private security industry will never be able to do everything operationally by themselves. The industry has worrying operational factors like collection of monthly security fees from clients, administration costs, high banking fees and of course the large volumes of salary payments made to staff members.

We here at Direct Debit can make life a lot easier for one of the largest industries in our country. We are able to provide our NAEDO and EFT debit order collection system to collect monthly fees seamlessly, an EFT credit system to make timeous payments to guards and other staff and criminal record checking facilities to make sure that you employ only the best.

Our mission is to make every aspect of the debit order collection and debit order payment process as automated as possible, leaving more time to focus on your customer and their security needs.

Debit order system for Internet Service Providers (ISPs)

The Internet Service Provider (ISP) industry has been booming in the South African market in recent times. The commercialisation of the Internet as a whole made this emerging industry possible and will continue to create many new opportunities.

Internet Service Providers are companies that provide Internet services which includes access to the Internet, hosting of websites, building of websites and email accounts to individuals and businesses.

ISPs can provide their customers with one or more of the following Internet connection options; DSL, Cable, Satellite or Fiber-optic.

ISP companies have to take in to consideration costly factors like the speed of connections, data caps, introductory deals, bundling, day-to-day operations, administrative tasks and of course the billing and collection of their fees.

Direct Debit provides ISPs with the perfect debit order solution to solve their billing and payment collection woes.

We provide small-to-medium sized Internet Service Providers with a cost effective debit order system that will save them time and money.

Our innovative team will handle all your billing and debit order collection needs, which will leave you with more time to focus on the day-to-day operations of the business.

Our services include NAEDO debit orders, EFT debit orders, Account Holder Verification, Bulk SMS, credit checking services and of course our newly developed, one of a kind, electronic debit order mandate solution.

Debit order collection for churches, charities, NGOs and non-profit organisations

Non-profit organisations have one goal in mind and that is to inspire more giving by providing pro-social tasks in their communities.

These organisations have been growing in South Africa as our communities are moving towards the ideal of doing things for the greater good and moving away from tendency to chase financial gain.

The no margin, no mission approach has become something of the past, as the mission alone is fulfilling enough for individuals partaking in non-profit organisations and how they maximise to serve their societies within South Africa.

Non-profit organisations include a wide range of organisations including churches, charities, NGOs, educational institutions, medical, law, scientific, arts and culture, home owners associations and unions only to name a few.

This extensive range of organisations can all benefit from Direct Debit by using our debit order collection facilities to collect their monthly membership fees and donations to better serve their communities as funding is readily available. Direct Debit increases cash-flow by making it easier to process collections and payments via debit order.

Direct Debit not only provides NAEDO and EFT debit order systems, but also provides other beneficial services like our electronic mandate solution and bulk SMS services, that will save non-profit organisations on hefty administration costs, improve accessibility to their members and provide them with a professional audit trail.

Debit order facilities for property managers and administrators

The property management industry is an emerging industry and has been showing exceptional growth, especially with new rentals in the South African market.

The growth is due to the increasing foreclosures and stiffening mortgages in the buyer markets leaving the rental market to fill a growing gap.

Property management companies provide their clients with a wide variety of services that will save them time and unnecessary costs and give them access to experts in the field that will give them a good peace of mind.

The property management industry is responsible for many duties including collecting of levies or fees monthly (usually via debit order), tenancy contracting, proper interviewing or analysis of prospective tenant’s credit record, criminal history, payment history, responsibility for repairs and maintenance, record-keeping, compiling of budgets and conducting the annual general meetings.

Direct Debit provides property management companies with services that will lighten the load by automating the debtors process via our debit order systems and keeping out unwanted tenants.

Our debit order collection facilities will make collection of levies and fees monthly easy. This effectively saves property management companies both time and money.

We provide credit checking services, deed searches, property valuation and criminal checking services that will help with proper analysis of prospective tenants.

Direct Debit also developed an electronic debit order mandate solution for a more convenient way for your customers to authorise levies. Customers can now authorise transactions online via any web-enabled device. We provide the ability for customers to sign in full, using their hand, a stylus or mouse directly on their device.

Debit order collection for the insurance industry

Insurance in today’s day and age has become a basic need, like food or water, a life without it would be unimaginable.

Life happens and unforeseen events occur daily, which is the reason why people feel the need to feel protected from the unknown. So, what do they do?

They wrap themselves in their safety blanket. Insurance provides them with the protection and guidance they would need from the “unknown”.

Keeping people feeling secure and protected has led the insurance industry to be one of the fastest growing industries in South Africa with new, innovative, insurance products emerging daily.

Unfortunately, with growth comes an increasing in administration costs and banking fees.

This is why, Direct Debit has decided to create tailor made debit order solutions for the insurance industry in South Africa. We have gone out of our way to meet all of your debit order collection and billing needs and save you on unnecessary costs.

Our services include EFT and NAEDO debit order facilities, where we also provide you with your own bank account, a credit facility and your own user code as prescribed by the rules and regulations set out for insurance business.

We’ve also developed an electronic debit order mandate solution for a more convenient way for your customers to get insured. Customers can now authorise transactions online via any web-enabled device. We provide the ability for customers to sign in full, using their hand, a stylus or mouse directly on their device.

Direct Debit in alliance with SnapBill, provides cloud based invoicing and billing services to our clients, automating the process from start to end. SnapBill includes the ability to calculate multi-tier / reseller commissions in real-time based on actual collections.

Reduce your debit order dispute rates

The causes of high debit order dispute rates

There are many causes to high debit order dispute rates. Some of the most common include:

underhanded sales tactics,
lack of data capture procedures leading to human error,
failure to verify account information,
continually debiting clients who have previously disputed,
debiting clients who cannot afford your product/service and
client distrust related to the inability to communicate creditor / value received on a transactional referencing level.

We can help reduce debit order dispute rates

Direct Debit assists your business with putting in place debit order systems which ensure compliance with best practice sales methodology, enforcing data capture procedures and ensuring bank account information is verified.

Our credit check system allows you to determine your clients affordability ahead of time by seamlessly performing credit checks via Transunion, Experian and XDS.

The Direct Debit systems make sure customers who have previously disputed transactions are not debited again.

Direct Debit connects your business directly to BankServAfrica and allows your business to collect from customers on your own unique user/short code. We do not collect funds on your behalf. Funds are collected directly into your bank account.

Instead of transactions being referenced "BUREAU 123456 YOUREF", Direct Debit references transactions as "YOURCOMPANY 123456". This greatly increases your customers trust and reduces dispute rates.

If you're interested in discussing your businesses debit order requirements further then contact us and we'll assist in reducing your debit order dispute rates.

Intelligent debit order (IDO) collection facility

Direct Debit has been at the forefront of debit order collections for the last century. Since the addition of the EDO (NAEDO and AEDO) debit order services in 2006, to complement the existing EFT debit order service, not much has changed in the debit order collection space.

Direct Debit is now planning the first release of its flagship intelligent debit order or IDO debit order facility. This revolutionary facility is currently in beta and only available to a select group of Direct Debit customers.

Intelligent Debit Order

IDO is new debit order solution that makes use of artificial intelligence to learn when your customers have funds available. Once a customer has been analysed IDO ensures the best possible debit order collection rates via existing EFT and EDO collection channels.

The intelligent debit order facility continually monitors collections patterns and intelligently switches transactions between various debit order facilities. Maximising cost saving and increasing collection rates.

IDO may be used in conjunction with an existing EFT and NAEDO debit order facility. Intelligent batches are automatically created based on tried and tested algorithms. Direct Debit processes these batches as normal and recon reports are provided.

There will be no additional cost to make use of the IDO collection facility. Intelligent debit order will available to all Direct Debit customers as a percentage share of the actual collection fees saved. We believe if IDO does not save you money, it shouldn't cost you anything.

NAEDO facility for improved debit order collection rates

Your business and NAEDO collections

If you're struggling to collect funds from debtors then you may wish to consider looking at using a NAEDO collection facility. Unlike EFT debit orders, NAEDO collections improve your business chances of successful collection.

NAEDO transactions are presented and processed before the regular EFT debit order runs and your chances of successful collection is therefore greatly increased.

NAEDO transactions are also randomised which means all creditors have an equal chance of collecting successfully from their debtors.

NAEDO allows you to track your customers bank account for a number of days. Should funds not be available when the initial debit run is processed you may specify for how many days your customers bank account should be tracked for. If funds are received by your customer whilst NAEDO tracking is in effect, the funds will be blocked and debited from the account.

Many businesses are choosing to switch from our EFT debit order system to NAEDO for improved debit order collection rates.

If you're looking for an easy and cost effective way to improve your businesses debit order collections then NAEDO is the answer.

NAEDO collections for call centers

Call centers will find NAEDO collections to be the most effective way to collect funds from their customers. Direct Debit does offer its NAEDO collections services to businesses in the call center industry. These businesses pose a higher risk to Direct Debit and need to comply with the requirements as set out below:

• Copies of company documents
• Proof of business premises
• Copies of identity documents for all directors/members
• Proof of residence for all directors/members
• Confirmation of membership with the Direct Marketing Association (DMA)
• Business plan
• List of the products being sold
• All terms and conditions of use relating to the product/s sold
• Please indicate whether you are the owner of the products being sold
• If you are not the product owner and are purchasing the products and reselling, contracts to support the authority to sell these products will need to be provided
• Please indicate whether a paper/voice mandate is used or both
• If a paper mandate is used, a copy will need to be provided
• A copy of the document that will be sent to all clients within 21 days of a successful sale
• If voice mandates are used, the minimum requirements need to be adhered to, and we require sample voice recordings to verify this
• Proof of capability to retain voice mandates for 5 years
• Complaints policy
• Cancellation policy
• Site visit from a representative
• Indicate how leads are generated? If information is being bought, a copy/extract is to be provided
• If an existing debit order service provider is being used the following will apply:
  • Please indicate unpaid ratio
  • Last 3 months reports reflecting transactional history 
i.e. Number of successful transactions, unpaid transactions, transactions disputed

If your call center meets these requirements then request a quotation today to see how we can improve your debit order collection rates while saving you money on your existing debit runs.

EDO and EFT debit order collection

Direct Debit are industry leaders in debit order collections in South Africa. Whether you are looking for an EFT or NAEDO debit order facility, with or without Account Holder Verification, Direct Debit has you covered.

Debit Orders for Improving Cash Flow

Debit orders ensure your business the best possible cash flow obtainable while saving you and your clients on hefty bank fees. Direct Debit performs EFT debits and EFT credits at a fraction of the cost of your banking partner.

Direct Debit integrates with all major South African banks and ensure your transactions are settled in a reliable, timely and highly effective manner. Direct Debit is the trusted name in debit order collections.

EDO Solutions for Better Success Rates

As an EDO solutions provider, Direct Debit provides highly competitive NAEDO and AEDO collection services to clients across a broad range of industries. Competitive NAEDO tracking rates makes our NAEDO system a viable solution for any business looking to improve their debit order success rate.

Contract Management and Debit Orders

Our debit order contract management solutions ensures your business is empowered to manage and automate your clients debit order processing. We offer a variety of contract management solutions with various levels of integration available.

Get a Debit Order Quotation

Request a quotation today and discuss the best solution for your business.

Picking the best debit order system

When picking a debit order system you need to first establish the scope of your debit order requirements. Do you wish to debit your clients in an ad-hoc/once-off manner or will you be debiting on a recurring manner and will this be for a set amount or varying amounts?

Debit Order System

The above factors may quickly determine which debit order system will be best suited for your business needs. You will also need to consider whether you will be making use of NAEDO tracked or EFT debit orders. Some debit order systems have the ability to “learn” when your clients will have funds available, especially when making use of NAEDO collections. This will allow you to debit regular paying clients using a more cost effective debit order solution, such as EFT, while increasing your success rate at the same time.

Direct Debit

At Direct Debit we offer both a simple payment system for managing debit orders as well as a fully automated billing and CRM solution. If you are interested in more information on our debit order systems then please get in touch. We are in the process of developing a mobile debit order system which will be released early in 2013.

Should you be interested in joining our mobile debit order service beta program then please request a debit order quote and specify your interest in our mobile debit order application. You will need to have an active Direct Debit account to tryout our debit order mobile application. This application is browser based and works on any mobile device.

The benefits of using debit orders to collect funds

Using debit order collections to proactively fetch funds from your debtors obviously holds many benefits over waiting for them to get around to paying you.

Lets look into some of the benefits of using debit orders to collect funds:

Increase Cash Flow

When you control when you debit your debtors bank accounts you gain control over your cash flow. Why wait on your debtors to make payment when they feel like it. Get paid when payment is due and achieve more with your business.

Eliminate Cash Risk

Receiving cash is risky. Moving cash around and handling cash is expensive. Debit orders eliminate the need to deal with cash as all debit order processes take place electronically.

Reduce Bank Fees

Debit orders are a more cost effective solution than any traditional means of collecting and making payment. You and your debtors save. Cash and cheques are expensive and unreliable. Credit card transactions are plagued with fraud and expensive merchant fees. Switch to a debit order solution and enjoy the benefits of easier and more cost effective payments.

Better Budget Planning

When using a debit order service you initiate the instruction to debit your debtors bank account. You know when you will receive the funds debited with complete certainty and can therefore budget and plan your expenses better. Debit order places you in control.

Automate Debtors Process

The flexibility of the debit order system allows for easy automation of the entire debtors process. Request payment, reconcile and take action.

You can choose to integrate the debit order service with your existing software or accounting solution or make use of our payment system and billing system.

It's clear that the use of a debit order solution holds many benefits over traditional and more costly means of being paid. Get in the driving seat today and steer your business to success with our debit order solutions.

If you wish to obtain the best debit order pricing or for more information please visit Direct Debit.

Using AEDO, NAEDO or EFT debits to collect funds

In order to understand which debit order method to make use of you will first need to have an understanding of the differences in the three major collection methods: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).

EFT Service

Lets start with the oldest and most widely used method, EFT. The EFT Service is provided by numerous participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables companies to process payments entirely by computerised means. The service can be used both for collecting payments from clients (EFT debits) and for making payments (EFT credits). Payments can be made for salaries, creditors, wages etc. Your business can lodge payments and collections through their bank to all participating banks.

Transacting via the EFT service

Both debit and credits may be processed through the system.

The following criteria applies:

• Credits may be processed against current, savings and transmission accounts, and under certain circumstances, bonds, loans and subscription share accounts. Transactions greater or equal to R5 million rand will not be permitted and will be homed back with the reason that it exceeds industry imposed limits. Such transactions should be routed through the real time line and not the operator.
• Debits may be processed against current, certain savings and transmission accounts. Debits to bond and subscription share accounts are not allowed. A maximum value limit of R500,000 per transaction is in place.
• The breaking up or splitting of transactions to avoid limit restrictions are not permitted.

Coverage of the EFT service

The EFT service covers all types of accounts permitted by the EFT Service rules and which are held in the Common Monetary Area by participating banks. A list of participating banks can be obtained on application.

NAEDO Service

The NAEDO Service is provided by participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which enables companies and other bodies to process payments entirely by computerised means. The service can be used for collecting payments from clients (debits). NAEDO does not make provision for a credit facility and EFT credit will be used if required.

NAEDO payment instructions support multiple presentments thereof. If these are unpaid after the first presentment, credit tracking may be invoked. Credit tracking is optional and if selected, the unpaid NAEDO payment instruction will automatically be represented during the afternoon of the same business day and for the consecutive amount of days selected, twice a day, on business days until payment is received or until expiry of the tracking period selected.

All NAEDO payment instructions, are randomised giving all Users an equal opportunity of receiving payment and are processed as close as possible after salary credits are paid into the bank accounts of Customers in the early morning.

Transacting via the NAEDO service

Only debits may be processed through the system. The following criteria will apply:

• Debits may be processed against current, certain savings and transmission accounts. Debits to bond and subscription share accounts are not allowed.
• A maximum value limit of R5 000 per transaction is in place. The splitting of transactions to avoid the limit restrictions is not permitted.
• All NAEDO payment instructions must be uniquely identifiable by the Agreement Reference and payment cycle.

Coverage of the NAEDO service

The NAEDO service covers all types of accounts permitted by the NAEDO Service rules and which are held in the Common Monetary Area by participating banks. A list of participating banks can be obtained on application.

AEDO Service

The AEDO service is similar to NAEDO in all respects, but cannot be easily disputed as the transaction is initiated with the account holders card and pin. AEDO is an effective solution to mitigate collection risk and defaults on payment. Contact us if you are interested in the AEDO service.

Conclusion

Examples of where EFT and NAEDO services can be used is given in my previous article. The AEDO service may effectively be used for collection in any situation when NAEDO may have been utilized.

I will be exploring the legal requirements and implications of these three payment methods in a future article. If you wish to obtain an debit order quotation or for more information please visit our website at http://www.directdebit.co.za.

Choosing the best debit order solution

Many businesses are not aware of the benefits of making use of a debit order service to collect funds from their debtors, let alone which debit order solution would be the best for their needs.

Having dealt with many businesses payment collection methods I will try and explain why you should be using debit order as preferred payment collection method for your business as well as which debit order method would be most appropriate for your industry and type of client base.

Lets start with what a debit order is:

A debit order is an instruction that a bank or credit card account holder provides a business to collect funds directly from their bank account. They way in which a client gives this instruction is by completing a written or verbal (usually telephonic) debit order mandate.

A debit order, as we refer to it in South Africa, may be referred to as a direct debit in many parts of the world. For more information on direct debits please see the relevant Wikipedia page.

In South Africa there are commonly two types of debit order. Electronic Funds Transfer (EFT) and Early Debit Order (EDO) which may further be broken into Authenticated Early Debit Order (AEDO) as well as Non-authenticated Early Debit Order (NAEDO).

EFT debit orders run after EDO debit orders when processed via the standard banking debit order runs. Both AEDO and NAEDO debit orders run in a randomised manner before EFT debit orders and allow creditors an equal chance to collect funds from their debtors.

NAEDO debit orders were launched in 2006 due to a National Credit Act initiative and allow creditors to collect up to R5,000.00 in the most fair manner possible.

It is important to note that regular EFT debit orders make provision for collecting up to R500,000.00 per debit instruction.

EFTs are generally more cost effective than AEDOs and NAEDOs but do not include the ability to track a client account/credit card for up to 32 days. If funds were to arrive in the account within the tracking period, these funds would be reserved for collection by the party initiating the debit.

Some brief examples to clarify where EFT and NAEDO debit order collections would be used:

1. An investment company wishing to collect an additional contribution from one of their investors would most definitely make use of an EFT debit order as the likelihood of the client having funds available for collection is very high. The amount to be collected would also many times exceed the R5,000.00 NAEDO limit and cost of the collection would be a factor.

2. Insurance brokerages collecting a monthly premium from one of their clients for funeral cover would be best off making use of a NAEDO debit order run. The likelihood of this client having funds available is quite low and tracking will be useful to keep tabs on the clients account for when funds do arrive (usually their monthly salary).

Any micro lender would be best off making use of NAEDO as they deal with clients who usually do not have money available within their accounts especially on the standard debit collection dates. This is quite obvious as these individuals would have a history of applying for credit and would possibly have multiple debit orders to various creditors going off on the same day. It is because of this that the randomisation of NAEDO transactions may become a major benefit to ensure each creditor has an equal chance of being paid.

Conversely any service provider will likely choose EFT as their preferred debit order method as they maintain some form of leverage over their client in the form of ending/suspending service in order to obtain payment. Service providers also usually do not offer any credit terms and payment is done on a month to month basis.

I realise there are many situations and edge cases which may warrant a service provider or creditor choosing to make use of either EFT or EDO debit orders and will delve into these situations in more detail in my next post.

If you wish to obtain an unbiased debit order quotation or for more information please visit our website at http://www.directdebit.co.za.