Can a PAD be signed electronically?

Yes. Electronic signatures on PAD agreements are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and state UETA laws when the signature meets intent, consent, attribution, and record-retention requirements.

How does a payer revoke authorization?

Revocation procedures must be in the agreement; typically the payer gives written notice per the agreement terms. Process the revocation promptly and stop future debits to limit disputes.

What happens if the bank rejects a debit?

Rejected debits generate ACH returns or NSF fees; originators should reconcile returns, notify the payer, and follow NACHA return and re-presentment procedures.

Is notarization required for PADs?

Not typically. PAD authorizations rarely require notarization; check state or contract requirements and use notarization only where a counterparty or regulator explicitly demands it.

Who can sign on behalf of a business?

An authorized officer or signatory whose capacity is documented in the agreement should sign. Record the signer’s title and authority to prevent disputes over validity.

How long before the first debit occurs?

Allow time for account verification and any required notices; many organizations plan 3–7 business days for verification before initiating the first debit.

Electronic Signature
Templates
Miscellaneous
Business PAD Agreement

Business PAD Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

BUSINESS PAD AGREEMENT

This Business Pre-Authorized Debit Agreement (the Agreement) is made on between Payee Name: (the Payee) and Payer Name: .

RECITALS

WHEREAS the Payee is engaged in the business of providing goods and/or services to commercial clients and is a registered business in its jurisdiction with Registration/Business Number:

WHEREAS the Payer operates or controls the bank account identified in this Agreement and wishes to authorize the Payee to initiate pre-authorized debits (PADs) from that account for amounts owing under this Agreement; and

WHEREAS the Parties desire to set out the terms on which the Payee will debit the Payer’s account and the Payer will remit payment by PAD.

SCOPE OF WORK

Description of goods or services to be paid by PAD

PAYMENT TERMS

Payment Amount: $ Payment Schedule:

First Debit Date: Subsequent debits shall occur in accordance with the payment schedule set out above. The Payer authorizes the Payee to vary the amount and schedule where previously agreed in writing.

Late Fee: If any payment is not honored on presentation or is past due, the Payee may assess a late fee equal to or a flat fee of $ , whichever is greater. Such fees are intended as a genuine pre-estimate of loss and not as a penalty.

PAYMENT METHOD AND ACCOUNT INFORMATION

Account Holder Name Financial Institution / Bank Name

Transit / Branch Number

Institution Number

Account Number

Account Type (select one or both if applicable)

Chequing Savings

AUTHORIZATION AND ACKNOWLEDGMENT

By signing this Agreement the Payer authorizes the Payee to draw Pre-Authorized Debits (PADs) against the account identified above for amounts owing under this Agreement. The Payer warrants that they are an authorized signer on the account and have the authority to provide this authorization. The Payer acknowledges that:

They may revoke this authorization at any time by providing written notice to the Payee at least days prior to the next scheduled debit.
The Payee may reprsent a payment that is returned by the financial institution and may charge applicable re-presentment fees as set out above.
Disputes regarding individual PAD transactions must be raised promptly and in accordance with the dispute provisions below.

TERM AND TERMINATION

This Agreement commences on Start Date: and shall continue until End Date: unless earlier terminated in accordance with this section.

Either party may terminate this Agreement for convenience upon giving the other party at least days' prior written notice. Either party may terminate immediately for cause upon material breach by the other party that remains uncured for a period of 15 days after written notice specifying the breach.

CONFIDENTIALITY

Each party shall keep confidential all non-public information disclosed by the other party in connection with this Agreement, including banking information and business terms (Confidential Information). Confidential Information shall not be disclosed except to employees, agents or advisers who need to know and who are bound by confidentiality obligations. This obligation does not apply to information that is or becomes publicly available through no fault of the receiving party or is required to be disclosed by law.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of . The parties submit to the exclusive jurisdiction of the courts of that jurisdiction for any dispute arising under this Agreement.

MISCELLANEOUS

Entire Agreement: This Agreement, together with any schedules or written amendments signed by both parties, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior negotiations and agreements.

Amendment: No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties.

Severability: If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.

DISPUTE AND REVERSAL PROCEDURE

If a PAD is processed in error, the Payer may contact the Payee to request immediate reversal. The Payee will investigate and, where appropriate, arrange for refund or correction. The Payer retains all rights provided by applicable payment system rules to dispute a transaction with their financial institution.

Payee (Business):

By:

Date:

Payer (Account Holder):

By:

Date:

What the Business PAD Agreement Is and When It Applies

A Business PAD Agreement is a written authorization that allows a company to initiate ACH or bank debits from a payer's business bank account on a recurring or one-time basis. It records the payer's bank routing and account numbers, payment amount or variable payment method, frequency, effective date, and the payer's authorization to debit funds. In the United States the agreement is used alongside NACHA rules for ACH debits and can be executed electronically under the ESIGN Act and state UETA laws, subject to any industry-specific requirements.

Why a Clear Business PAD Agreement Matters

A clear PAD agreement reduces payment disputes, documents consent for recurring debits, and defines authorization mechanics. It protects both originator and payer by recording payment terms, revocation procedures, and bank details required for ACH processing.

Typical Users and Roles for a Business PAD Agreement

Proper role assignment ensures the agreement is completed, stored, and enforced consistently across the organization.

Accounts receivable and billing teams: Use PADs to collect subscriptions, recurring fees, and service charges with documented authorization.
Treasury and finance departments: Manage originator setup, bank verification, and reconciliation for ACH debit flows.
Vendors and service providers: Attach PAD agreements to contracts to confirm payment method and collection schedule.

Core Sections Found in a Professional Business PAD Agreement

A complete PAD agreement includes identity and bank data, explicit authorization language, payment schedule, revocation and dispute instructions, liability allocations, and compliance references to ACH rules.

Payer Identity

Full legal entity or individual name, business address, contact information and taxpayer identification where needed for reconciliation and tax reporting.

Bank Details

Routing transit number, account number, account type (checking/savings) and a bank name line used to route ACH debits accurately.

Authorization

Clear, signed language permitting the originator to debit specified amounts and describing whether amounts are fixed or variable and the expected frequency.

Schedule & Amounts

State whether debits are one-time or recurring, define frequency (e.g., monthly), and indicate how variable-amount notices will be provided to the payer.

Revocation & Notices

Describe how the payer revokes authorization, required advance notice, and where revocations must be sent (email, mail, or other designated method).

Legal & Compliance

Reference NACHA/ACH processing rules, applicable state electronic signature law (ESIGN/UETA), dispute rights, and any indemnities or limitation of liability.

Step-by-Step: Complete and Activate a Business PAD Agreement

Follow these steps to collect a valid authorization and set up ACH debit processing with minimal friction.

01

Prepare Document: Populate payer and bank fields, payment terms, and revocation instructions.
02

Obtain Authorization: Have an authorized signer sign and date the PAD agreement.
03

Verify Account: Use micro-deposits or bank verification to confirm account ownership before the first debit.
04

Schedule Debits: Load the authorization into your ACH system and schedule the initial and recurring transactions.

Where to Send and How Authorizations Flow

A PAD authorization becomes actionable once signed and verified; here are the routing and processing stages that follow completion.

Originator Records: Store the signed agreement with originator payment records for audit and dispute defense.
Bank Verification: Verify routing/account details via micro-deposits or account verification APIs before debiting.
ACH Submission: Originator submits ACH debit batches to its bank for NACHA processing on scheduled settlement dates.
Reconciliation: Match bank returns, chargebacks, and receipts to the PAD and maintain records for audit.

Digital Workflow Settings to Automate PAD Collection

Configure these workflow elements when creating an online PAD process to ensure reliable collection and compliance.

Field	Configuration
Signature Type	Enable electronic signatures under ESIGN/UETA
Authentication	Set email or SMS verification for signer attribution
Account Verification	Enable micro-deposits or bank verification API
Retention Policy	Automate archival with audit trail and export capability

Digital Signing and Integration Requirements

Confirm the provider offers audit trails, conditional fields for variable debits, and the ability to attach signed agreements to financial systems.

Integrations: Salesforce, NetSuite, Google Workspace
File Formats: PDF and DOCX supported
Security: TLS in transit and AES-256 at rest

Timelines and Processing Expectations

Typical operational timelines for PAD onboarding and recurring collections vary by originator and bank; plan accordingly to avoid missed payments.

Onboarding Lead Time:

Allow 3–7 business days for account verification before the first debit.

First Debit Schedule:

Schedule the initial debit after verification and after any required notice period.

Change Notice:

Provide written notice to payer per agreement terms before changing variable amounts.

Revocation Timing:

Revocations are effective per agreement terms; allow several business days to process cancellations.

Bank Return Window:

Banks typically return unauthorized debits within 60 days under banking dispute procedures.

Common Preparation Mistakes to Avoid

Using incomplete bank details: missing or transposed routing/account numbers cause ACH returns and delays in collection.
Vague authorization language: unclear frequency or amount provisions increase the risk of payer disputes or chargebacks.
Not documenting signer authority: failing to record signer capacity (title/corporate role) can lead to invalidation of authorization.
Ignoring revocation process: absence of clear cancellation steps creates compliance risk and customer confusion.

Penalties and Operational Risks of an Incorrect PAD

Returned Item Fees: Banks may charge originators or payers NSF and return fees for incorrect debits.

ACH Chargebacks: Unauthorized debits can be reversed under NACHA rules, resulting in lost funds and fees.

Regulatory Exposure: Improper consumer disclosures or unauthorized debits can trigger regulator scrutiny.

Reputational Harm: Frequent disputes erode customer trust and increase churn.

Contract Risk: Missing signer authority can render the authorization unenforceable.

Operational Cost: Manual reconciliation and rework increase staff time and processing expense.

eSignature Pricing Snapshot for PAD Workflows (signNow First)

Compare baseline plans and core capabilities across common eSignature vendors to match cost and compliance needs for PAD agreements.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes (Business Premium)	Varied plans	Varied plans	Varied plans	Varied plans
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently Asked Questions About Business PAD Agreements

Answers to common questions about execution, revocation, electronic validity, and handling returns for PAD agreements.

Need help? Contact support

Can a PAD be signed electronically?
Yes. Electronic signatures on PAD agreements are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and state UETA laws when the signature meets intent, consent, attribution, and record-retention requirements.
How does a payer revoke authorization?
Revocation procedures must be in the agreement; typically the payer gives written notice per the agreement terms. Process the revocation promptly and stop future debits to limit disputes.
What happens if the bank rejects a debit?
Rejected debits generate ACH returns or NSF fees; originators should reconcile returns, notify the payer, and follow NACHA return and re-presentment procedures.
Is notarization required for PADs?
Not typically. PAD authorizations rarely require notarization; check state or contract requirements and use notarization only where a counterparty or regulator explicitly demands it.
Who can sign on behalf of a business?
An authorized officer or signatory whose capacity is documented in the agreement should sign. Record the signer’s title and authority to prevent disputes over validity.
How long before the first debit occurs?
Allow time for account verification and any required notices; many organizations plan 3–7 business days for verification before initiating the first debit.

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