Before looking into the details of the direct debit management system and how this system works, it is necessary to understand the term direct debit – the system being followed currently in Australia and various other nations for financial transactions.
What is Direct Debit?
A direct debit, also known as direct withdrawal, is a financial transaction through which an individual or a company can withdraw funds from another person’s or company’s bank account.
Direct Debit is an instruction from you to your bank or any other financial institution that authorizes the person or organization you need to pay to collect amount from your account.
For this you will be required to give advance notice of the amounts and collection dates. Once the process is set, the amounts will be deducted or debited automatically on pre-decided date.
In case the person or the company you are paying wants to change an amount or collection date, they have to intimate you in advance to have your prior approval.
In fact, paying through direct debit means that you have authorized a third party to withdraw funds from your bank account and credit to someone else’s bank account as per pre-fixed time.
This procedure of financial transaction is also referred as a pre-authorized debit (PAD) or pre-authorized payment (PAP).
Compared to earlier time where you were required to transfer funds yourself as per need and schedule, direct debit management system works automatically. Direct debits are invariably used for making recurring payments, where the payment amounts usually vary from one payment to another as in case of credit card payments and utility bills.
In Australia, direct debit is performed through a direct entry system i.e. BECS (Bulk Electronic Clearing System) or CS2 which is managed by the Australian Payments Network Limited. It is considered as a direct entry system as there is no central clearing-house to instruct for direct entry payments
Through this official direct debit management system any account holder can authorize an individual or an organization to collect funds.
There are many companies that act as third party for direct debits like Payleadr in Australia. This direct debit management system with Payleadr for direct debit payments, once set, works automatically for the convenience of their clients.
Where can you use direct debit facility?
The direct debit management system with Payleadr is being widely used in Australia for making recurring and time bound payments without any default. Direct debit has been found extremely useful for making payments of variable amounts.
Direct debit facility is used for:
- Insurance Companies
- Health and Fitness sector
- Beauty Parlors and Hair Saloons
- Sports Academies
- Utilities and Rent
Direct Debit is considered as the most simple and convenient mode of paying regular like magazine subscriptions bills as well as occasional bills like council bills and taxes.
In addition, direct debit management system with Payleadr enables clients and other large organizations to receive regular payments on time.
When you need an efficient direct debit facility for your business in Australia, you can save lot of your effort, finances and time – a costly commodity, by using customer friendly and online direct debit management system with Payleadr.