Use Pre Authorized Debit Payments to Get Paid on Time, Every Time

Give Canadian customers a flexible and convenient payment method for recurring invoices.

pre authorized debit

Congratulations, you’ve just won a client who happens to need your services every month. And whether you’re renting them equipment, or charging them a monthly consulting fee—the best way to make sure they get continuously billed is with a Recurring Invoice.

But when it comes time to get paid for that invoice, they may have forgotten it was being sent, or they don’t want to pay for a subscription on credit, or worse yet – they may have insufficient funds. Long story short: It’s frustrating chasing payments.

That’s where Pre Authorized Debit Payments can help. They allow you to automatically debit a client’s bank account to withdraw funds when a payment is due (with their permission, of course). It’s simple, easy, and convenient – and sends the money directly from their bank or financial institution to yours.

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    What Are Pre Authorized Debit Payments?

    A Pre Authorized Debit (PAD) is an easy way to collect an invoice payment on your client’s behalf. Just create a recurring invoice with PAD enabled, and when your client pays they can enter and save their bank details (one-time only). This allows you to then draw funds straight from their bank account, every time a recurring payment is due.

    Who Can Use Pre Authorized Debit?

    Right now, this feature is only available to Canadian based users billing Canadian clients using Stripe payments.

    How Do I Enable Pre Authorized Debit?

    To enable the use of Pre Authorized Debit:

    1. Log into your FreshBooks account and click the gear icon in the top left corner.
    2. Click Online Payment Settings. Here’s what it looks like in-app:

    pre authorized debit

    1. Scroll down to Other Ways To Get Paid and select Connect with Stripe:
      pre authorized debit
    2. Verify your email, business information, and add a bank account.
    3. That’s it, PAD is now enabled!

    Now you’ll have the option to accept a PAD Payment on any Recurring Template:

    1. Click Accept Online Payments on the right of the invoice.
    2. Select Stripe and click the checkbox beside Pre Authorized Debit.
    3. Choose whether it’s for Business or Personal Debit.
    4. Click Done.

    Here’s what it looks like on an Invoice:

    pre authorized payment

    Note: When your client receives their first invoice from the Recurring Template, they’ll be asked a few questions to link their bank account.

    How Exactly Does Pre Authorized Debit Work?

    PAD Payments, sometimes referred to as a pre authorized debit agreement, allow you to debit a customer’s bank account through bank-to-bank transfers. You send a client a pre authorized debit form, which acts as an agreement of the amount and time period you will bill. And then using a Recurring Invoice, you can charge their account for the agreed upon amount monthly.

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    Note: Different financial institutions have different processing times, so check with your bank.

    Why Should I Use Pre Authorized Payments?

    Instead of waiting for a customer to send a payment, a Pre Authorized Debit gives you the pre authorization to withdraw recurring payments when they’re due. The result? No more chasing payments, or worrying about getting sent the wrong amount. Other benefits include:

    • Automatic payments mean less awkward follow-ups
    • Perfect for recurring invoices (e.g., rent, subscriptions)
    • Only a 1% fee + $0.40 per transaction

    Need Help With Pre Authorized Debit Payments?

    If you have any questions on how to get started with Pre Authorized Debits, or any other payment method, feel free to reach out here.

    This post was updated in September 2022.


    Written by FreshBooks

    Posted on September 15, 2022