What Is A Payor`s Pad Agreement

Since you`re moving money between accounts of the same company or a closely related company, you don`t need to set up a PAD agreement with the other party. However, you will need an agreement (a recipient commitment) with the financial institution that processes these payments for you. If included in the PAD agreement, the payer and the payee may mutually agree to waive or shorten the reporting period. The most common type of authorization is a paper form that is completed personally by the payer. The payer usually provides an invalid cheque with the agreement reached to verify their identity and provide their account details. Easy to process, easy to verify. The only problem is that not all businesses can see their customers in person and on a regular basis. Note: Payer authorization is required prior to each sporadic PAD. This can be done, for example, via a password or secret code. If payments are made at fixed intervals, you must notify your customer at least 10 calendar days before the amount change, unless the agreement expressly provides for a change in the amount (if the customer requests it) or you and your customer agree to shorten or waive the notification period.

For paper agreements, it is a good idea to keep them for at least one year from the end date of the agreement. Yes, if they withdraw money from bank accounts held at participating financial institutions in Canada. Your agreements and related processes must comply with the mandatory requirements of Rule H1. Congratulations! You now have all the tools and information to create your own PAD agreement! REMEMBER: The purpose of a pre-authorized debit agreement is to ensure that the payer (your customer) and the payee (your business) are on the same page. So when you withdraw money from their bank account, there are no surprises. Yes, you can change the amount of a PAD contract if you inform your customer in advance within a certain period of time in accordance with rule H1. Okay, now that we`ve taken care of it, let`s dig into the agreements! If the agreements with the Company`s current clients include an assignment clause, the new owner may continue if the Company`s financial institution ”signs” the existing agreements (as well as any new ones). .