Payments from client's bank accts ?

How does one go about having your clients on a payment plan by billing their checking or savings each month? What kind of recourse do you have if they don't have the funds at that time? (they already have the product)
It seems to me that having the right to debit someone's bank acct is very serious. What are the legal ramifications?
Thanks, Dave

Dave:

At the top of this board is a link called "Search." By clicking it and using the search ability of this board, you are able to find posts which answer your question.

I mention this because I answered this very same question about two weeks ago. You can see it here:
http://www.sowpub.com/cgi-bin/forum/webbbs_config.pl?read=11972

To copy and paste from that answer:

"Go into YOUR bank and ASK them what details they need to direct debit someone's account.

Each bank is different and may want the necessary info to do this presented in a different way.

At a minimum they will need a signed authorization document - signed by the account holder. This document should include their name, address, bank account name, account number and date. As well as language which states the amount to be debited and the frequency of the debit.

Your local bank will tell you more."

As to the what happens if there is not enough money in the account at the time of debiting?

The bank will take the money out of the account and send the account into the red! They will then add their "account overdrawn" charges and fees on top of that. You will still get your money. And the bank's customer (the one whose money was taken out and put into your bank account) will have to wear it.

The legal position is (I am not a financial advisor or lawyer): The customer made a promise to pay, they knew the payment date was coming up and should have made sure enough money was in the account to pay it.

This is bank policy.

The bank's rules protect you in this instance.

For more details about using direct debit, contact your bank.

Michael Ross

P.S. A direct debit form is a legally binding document. If you want MORE protection, get the customer to also sign a Promissory Note for the full amount should payment not be received - or have the promissory note amount go down in value for each direct debit payment received. (A promissory note is also a legally inforcable document which can be actioned through a small claims court)

P.P.S. I am not a financial advisor nor a lawyer. I offer no legal or accounting advice. Only opinion. Taking action on anything written in this post is your full responsibility. For legal or accounting advice, see a designated and government authorised professional.

Michael,

Sorry for overlooking the search. Now that you mention it, I do recall seeing that post. ( info overload ) I do have to thank you for taking the time to answer again, because you gave some good advice, oops, I mean opinion, that was not in the other post.
I'm sure that I'm not the only one out here who greatly appreciates your expressed opinions (and others).
The disclaimer is a nice touch. What a sad state of affairs we're in when that is such a necessity.
Thanks again, Dave

PS: Off subject a bit but related: what kind of liability risk is running a forum and how do you protect yourself? (now that I asked, do I recall a post advising lots of insurance?) I'll try search :)