When payment requests are handled separately from signed payment agreements, it’s easy to lose paperwork or miss getting an important signature. Standardized payment agreement templates:
- Reduce errors and missing signatures
- Link a signature directly to the corresponding payment
- Make sure authorizations comply with NACHA and Regulation E of the Electronic Funds Transfer Act (EFTA)
Read on to learn more about the basics of payment agreements, getting customer approvals on your payment terms, and following compliance rules. Then, check out three popular workflow examples used by PDCflow customers.
What is a Payment Agreement?
A payment agreement is the consent a payer gives to initiate a one-time or recurring schedule of payments.
This agreement can be as simple as an instant signature with a payment, or as complex as attaching contracts, forms, or a payment schedule approval in one request.
What is a Payment Agreement Template?
A payment agreement template is the preconfigured workflow administrators create for all office personnel to follow. It should include both a payment request and a method for gathering signed consent for the payment.
Offices create these templates to make sure authorizations are all handled the same way every time and comply with payment rules and regulations. This ensures that authorizations and transactions are unified in one request and can be easily viewed later.
Payment agreement template requirements
For most businesses, Regulation E requirements apply to pre-authorized electronic fund transfers (recurring payments). When setting up a payment plan:
- Authenticate the consumer
- Provide the consumer with a copy of the authorization
- Be able to recall proof that the consumer consented to the payments
Payments can be subject to different rules as well, based on the payment method or channel. For example, NACHA guidelines state that online ACH payments require companies to:
- Validate the payer’s identity
- Get permission to run a payment
- Provide revocation language, so they know how to cancel a payment if needed
- Offer a receipt
- Store the authorization for two years
- Provide this authorization to Originating or Receiving financial institutions within 10 days, if asked
Make sure you understand what rules apply to the type of payments your company gathers, so you can take the correct steps to comply. This includes internal company guidelines for sending contracts or work approvals with a payment request.
Payment Agreement Template Best Practices
Payment agreement templates should give your organization structure. They make it easy for every staff member to follow the same process and protect against customer complaints or compliance risks.
Here are some best practices to create and manage payment agreements:
1) Use legally binding esignature software for agreements
2) Create a template management process
3) Use consistent naming conventions
4) Control access to templates
5) Store templates in one central location
Keep all templates in one centralized location. Don’t spread out templates or process rules across SOP documents and different folders. Use software like PDCflow to:
- Create the workflows your whole team needs
- Track and manage the payment requests employees send
- Access individual audit reports and comprehensive overview reports of past transactions
Three Simple Payment Agreement Templates With PDCflow
1) Simple signature with a payment request (no document upload)
For many payment requests, companies only need customers to verify that they approve a payment. This doesn’t involve filling out forms or signing a contract.
Without software to collect a signature and payment in one request, this process gets more difficult. Companies end up creating needless paperwork, or use one software for a signature and a different one for the payment.
Instead, PDCflow unifies this process. Our Simple Signature option lets you get a fast authorization directly within the payment request. No extra documents, steps, or software required.
2) Combine an agreement contract and a payment request
For companies with more complex sales, a contract might be necessary to agree to the terms and conditions. With PDCflow, businesses can upload their company-specific agreement into a template for signing with a payment request.
Track, gather, and store essential paperwork alongside the corresponding payment.
- Speed up the time it takes to send requests by combining documents, signatures, and payments in one email or SMS message.
- Request event notifications, so you know when a request was opened, completed, expired, or disputed.
- To verify customer identity by adding a security PIN to requests
3) Set up a recurring payment schedule, gather approval, and take the first payment in one request
It is essential for Regulation E compliance that customers review and approve recurring payment schedules before you take the first payment. PDCflow recurring payments include built-in compliance measures, keeping your schedules secure.
- Require a PIN to verify customer identity
- Send the payment schedule terms, including total amount, payment due dates, and number of payments
- Get a signature authorizing the schedule, and even take the first payment
Want to learn more about PDCflow for document, esignature, and payment workflows? Sign up for a demo today.
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- ABOUT THE AUTHOR -
Hannah Huerta, Marketing Specialist
Hannah Huerta is a Marketing Specialist at PDCflow. She creates content for the accounts receivable and payment industry.
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