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07 December 2012

NAEDO: Sensible, debit orders that enhance your collection rates

By Tim Smart


Ask not what your small business is able to do for payment collection, but what competent, affordable payment collection is capable of doing with regards to your business. Just about the most efficient, affordable payment procedures available is a NAEDO or Non-Authenticated Early Debit Order. This payment procedure brings together the efficaciousness of debit orders together with the sensible tracking of credit payments to raise the likelihood of successful collections and minimize fees allocated to retries and returned debits.

NAEDO debit orders were launched in conjunction with AEDO or Authenticated Early Debit Orders in South Africa in September 2006. These relatively recent payment systems were brought to boost debit order efficiency by allowing intelligent, honest action of an debit order as near to a credit payment (e.g. salary deposit) as you can. AEDO payments are often connected with pos transactions where a future dated debit is mandated by pin authentication, on the debit or credit card or bank-account for instance. NAEDO debits will not require pin authorization, have got a R5,000.00 per item transaction cap and are only authorized to be submitted on banking accounts.

To eradicate the increasing problem of preferential payment access where some classes of beneficiaries always had use of account holder funds before others the NAEDO along with its contemporaries were released. The creation of new legislation allowed for the phasing out of existing preferential practices doing away with unfair reduced collection success rates for some beneficiary classes and establishing an equal field for everybody. NAEDO's are processed on a random, non-preferential basis, providing every beneficiary or vendor with a equal and fair opportunity to collect payments.

The magic behind a Non-Authenticated Early Debit Order (NAEDO) is that it is generally enhanced through tracking facilities. This implies the beneficiary or supplier can stretch the mandated date across a number of months allowing the debit order instruction to end up being kept active, but unprocessed, until a credit payment is receive in the account. This significantly improves the creditor's chances of collecting.

All taken into consideration, a NAEDO does not only give your business a fair possibility of collecting funds, but increases your likelihood for this by permitting tracking to bring about the debit at the most opportune time. In case you are concerned with your collection effectiveness now could possibly be the time to switch to NAEDO.




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