Understanding Direct Debits (EFTs)

Purpose:  Use this document as a reference for understanding direct debits in ctcLink.

Audience:  Accounts Receivable

Understanding Direct Debits

  1. Direct debit is the electronic funds transfer (EFT) of a payment from one bank account to another bank account. You can hasten the deposit of customers' payments in your bank account by asking customers to directly debit payments from their accounts to your account.
  2. To initiate a direct debit of funds, you need to give payment information to your bank. In addition, you need to ask the customer to sign an agreement that authorizes you to collect payments directly from their bank account.
  3. Direct debit has a positive effect on cash flow because the funds are deposited into your account as soon as the payment is transferred from your customer's bank and you select the amount of the payment.
  4. To summarize, direct debit can improve the cash flow into a company because funds are electronically transferred from customers' bank accounts to the company's bank account.
  5. Process complete.


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