procedures for making payment in business

The Procedure for making payment is the means by which a buyer settles the seller after goods and services have been rendered. Payments can be made through the following ways:

1. Payments by cash: Coins and bank notes or currencies are usually referred to as legal tender, they are used to for making payments for goods bought or services rendered.

    2.   Payments by bank draft:Bank draft can be used to make payments or settle debts. A bank overdraft can be cashed over the counter when presented by the person who wants to pay (payer). Bank drafts are usually bought from commercial banks.

3.    Payments by credit card: Credit card is a financial instrument used to buy goods and services on credit and usually from the retailers.

4.  Payments by cheque: A cheque is a written order to a bank to pay on demand, a stated amount of money to the person whose name is written on it.

5.   Payment by traveler’s cheque: The traveler’s cheque is like a bank draft which is denominated in a major international currency depending on the where the traveler is going.

6.  Payment through NIPOST (Nigerian Postal Services): There are two major methods of paying through NIPOST, they are postal order and money order.

7.    E- Banking payment: E- banking payment is the Electronic banking service which provides opportunities for people to make payments in so many ways in a relatively simple way. It makes it possible to pay for goods without holding  cash or going to the bank.  For more, see: Preparation and acceptance of bill and invoice

E-Banking Methods

E- Banking methods are:

• Automatic Teller Machine (ATM): The ATM is a computerized self service device which allows the holder of an appropriate debit card and personal identification number (PIN) to withdraw money (cash) from his account.
• Autopay: This is designed for making multiple electronic payments that recur periodically like pension contribution, insurance premiums, payment of salaries etc. It can be divided into two; direct debit and direct credit
• Value card: It is an electronic purse that holds an electronic equivalent of cash; the electronic cash is generally accepted for payment of goods and services designed at an outlet.

Test and Exercise

1. Which of these is not an E-Banking paying method? (a) money order (b) ATM (c) autopay (d) value card
2. All the following are procedures for making payment except (a) payment by cash (b) payment by cheque (c) payment by receipts (d) payment by bank draft
3. ATM stands for (a) Automatic Teller Machine (b) Automated teller machine (c) Authentic Teller Machine (d) Autopay Teller Machine
4. The types of payment made by the NIPOST are (a) postal orders and money orders (b) demand order and supply order (c) autopay and value order (d) money order alone
5. PIN means (a) Pension Innovation in Nigeria (b) Personal Identification Number (c) Personal Identity Number (d) Public Information in Nigeria