Is an electronic PAD valid?

Yes. Electronic signatures are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA in most states when the four ESIGN elements are met: intent, consent, attribution, and reliable record retention.

How can a payer revoke authorization?

Revocation procedures should be stated in the agreement. In addition to contractual steps, payers may contact their bank to stop pre-authorized debits under banking rules; both contractual and bank processes should be followed.

What if a debit is returned?

Returned items are handled per bank/ACH rules; the agreement should explain returned-item fees, resubmission attempts, and timelines for resolving disputes and collections.

Are special consumer disclosures required?

Yes for many consumer-facing transactions: the ESIGN consumer-disclosure rules require notice of the right to paper, access confirmation, and procedures to withdraw consent (15 U.S.C. §7001(c)).

When is notarization needed?

Notarization is generally not required for PAD Agreements. Check state rules if adding notarization or RON for extra verification; requirements vary by jurisdiction.

How long should signed records be kept?

Retain signed agreements per applicable retention rules: at minimum the agreement term plus 3 years; healthcare-related records require 6 years (45 CFR §164.530(j)); tax-related materials follow IRS guidance.

Electronic Signature
Templates
Miscellaneous
Commitment and PAD Agreement

Commitment and PAD Agreement

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

Commitment and PAD Agreement

This Commitment and Pre-Authorized Debit Agreement (the Agreement) is made effective as of the Effective Date set forth below between:

Service Provider Name:

Client Name:

Recitals

WHEREAS, the Service Provider has agreed to perform certain services for the Client on the terms and conditions set forth in this Agreement; and

WHEREAS, the Client agrees to pay for such services and authorizes certain payments to be collected by pre-authorized debit from the Client's financial institution account on the terms specified below; and

WHEREAS, the parties desire to set forth their commitments, payment arrangements and PAD authorization in a single binding Agreement.

Scope of Work

Description of Services

Payment Terms

Total Commitment Amount Payment Schedule

Payments are due within days of invoice unless otherwise stated in a project schedule. Any unpaid amount shall accrue interest as follows:

Late Fee

All amounts payable under this Agreement are exclusive of taxes. The Client shall be responsible for any taxes imposed in connection with amounts payable hereunder, other than taxes based on the Service Provider's net income.

Payment Authorization (Pre-Authorized Debit - PAD)

By executing this Agreement, the Client authorizes the Service Provider to initiate pre-authorized debits (PADs) from the Client's bank account identified below to satisfy amounts payable under this Agreement, including recurring and one-time debits in accordance with the Payment Schedule.

Account Holder Name Financial Institution Name

Transit / Routing Number

Institution Number

Account Number

Account Type Checking Savings

The Client represents and warrants that the Client is either the account holder or has authority to provide this authorization for the account identified above. The Client may revoke this PAD authorization by providing written notice to the Service Provider at least days prior to the next scheduled debit. Revocation does not affect debits already processed in accordance with this Agreement.

Client Authorization

I authorize the Service Provider to debit the account described above in accordance with the Payment Terms of this Agreement.

Term and Termination

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

Either party may terminate this Agreement for convenience upon providing the other party with written notice not less than days. Either party may terminate immediately for cause if the other party materially breaches any obligation under this Agreement and fails to cure such breach within 15 days after receipt of written notice specifying the breach.

Confidentiality

Each party (the Receiving Party) shall keep confidential and not disclose to any third party any non-public information disclosed by the other party (the Disclosing Party) that is marked confidential or that a reasonable person would understand to be confidential, and shall use such information only for the purposes of performing its obligations under this Agreement. The confidentiality obligations do not apply to information that: (a) is or becomes publicly known other than by breach of this Agreement; (b) is rightfully received from a third party without breach of an obligation of confidentiality; (c) is independently developed without use of the Disclosing Party's confidential information; or (d) is required to be disclosed by law or order of a court or regulatory authority, provided the Receiving Party gives prompt notice and cooperates with the Disclosing Party to seek a protective order or other remedy.

Indemnity and Liability

Each party shall indemnify and hold harmless the other party from any claims, losses, liabilities, costs and expenses (including reasonable legal fees) arising from the indemnifying party's breach of this Agreement, negligence or wilful misconduct. Except for willful misconduct or gross negligence, neither party shall be liable to the other for any special, incidental, consequential or punitive damages.

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction of without regard to its conflicts of law rules.

Entire Agreement

This Agreement, including any schedules and attachments expressly incorporated herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals and communications, whether written or oral. Any amendment to this Agreement must be in writing and signed by authorized representatives of both parties.

Notices

Service Provider Notice Address Client Notice Address

Service Provider

Printed Name:

By:

Date:

Client

Printed Name:

By:

Date:

What a Commitment and PAD Agreement Is

The Commitment and PAD Agreement is a written authorization that establishes a payer's commitment to allow recurring electronic debits from a designated bank account for payment obligations. Typically used for installment plans, memberships, or ongoing service fees, the agreement sets the payment schedule, amount or calculation method, effective date, and termination provisions. In the United States, such authorizations must meet e-signature legal standards under ESIGN (15 U.S.C. ch. 96) or state UETA statutes to be enforceable when signed electronically, and should also clearly obtain bank-debit consent.

Why a Clear PAD Authorization Matters

A Commitment and PAD Agreement documents payer consent, reduces billing disputes, and provides a clear basis for automated withdrawals. Properly executed, it establishes payment terms, protects payee collection rights, and creates an auditable record acceptable under ESIGN and UETA for electronic execution.

Typical Parties Who Complete and Rely on This Form

Organizations that collect recurring payments and administrators responsible for payment authorizations typically prepare this agreement.

Utilities, subscription services, and membership organizations collecting monthly ACH debits.
Financial institutions or lenders setting up installment repayment plans with authorization.
Healthcare providers and insurers for patient billing and premium collections.

The agreement is also common for landlords, schools, and nonprofits that require predictable, recurring funding streams.

Who Signs and Who Manages the Agreement

Billing Manager

Billing Manager, Accounts Receivable. Responsible for drafting PAD terms, tracking consents, and reconciling ACH returns. Ensures consent language meets ESIGN/UETA standards and retention requirements for auditability; coordinates with the bank for authorization formats and returned-item handling.

Account Holder

Account Holder, Individual or Business Owner. Reviews and signs the commitment to authorize debits, confirms bank account details and effective dates, and retains a copy. Can revoke authorization per the agreement terms and applicable banking rules; incorrect information risks returned payments and fees.

Required Data Elements — Quick Reference

Full Legal Name: Legal name as on ID

Bank Routing Number: 9-digit ABA routing number

Bank Account Number: Enter full numeric account number

Account Type: Checking or savings

Payment Schedule: Frequency and next debit date

Signature Block: Signed name and date

Primary Risks and Potential Consequences

Failed Debit Fees: Bank/merchant fees may apply

Unauthorized Claims: Payer may dispute debits

ACH Return Risk: Returns delay reconciliation

Tax Reporting: Incorrect payer details affect records

Contract Disputes: Vague terms trigger litigation

Incomplete Authorization: May render debits unenforceable

Common Preparation Mistakes to Avoid

Failing to capture a clear, dated signature or relying only on initials can make authorization contestable and complicate bank processing.
Leaving routing or account numbers incomplete or transposed leads to returned items, extra fees, and delayed collections.
Using vague payment descriptions or ambiguous schedules increases disputes over amounts and timing of debits.
Not providing required consumer disclosures for electronic records (where applicable) can negate consent under ESIGN consumer-disclosure rules.

Real-world Examples of PAD Agreement Use

Sample use cases show how recurring-debit authorizations reduce friction and create auditable payment records across industries.

Martin Properties (Real Estate)

Martin Properties used a Commitment and PAD Agreement to automate rental collections and reduce in-person paperwork across properties.

They processed payments faster with fewer customer calls.
Using clear authorization language and a signed PAD Agreement reduced disputes, simplified bank reconciliation, and created an auditable record for lease enforcement. The documented consent also streamlined refunds and chargeback resolution when tenants changed accounts.

Fertility Centers of Illinois (Healthcare)

Fertility Centers of Illinois implemented PAD Agreements for recurring patient billing and to maintain HIPAA-compliant payment records.

They prioritized privacy and audit trails.
Combining explicit bank authorization with access controls and signed consent reduced administrative time, supported secure billing, and ensured retention of records necessary under 45 CFR §164.530(j) for HIPAA compliance.

Step-by-Step: How to Complete the Commitment and PAD Agreement

Follow these steps to complete and execute a Commitment and PAD Agreement correctly online or on paper.

01

Prepare Document: Specify parties, payment amount or formula, and schedule.
02

Gather Bank Details: Collect routing number, account number, and account type.
03

Obtain Consent: Present clear electronic disclosure and capture the signer intent.
04

Record and Retain: Save signed copy and audit trail per retention policy.

Recommended Digital Workflow Settings

Suggested digital workflow settings for customization, signer authentication, and secure PAD processing across payer and payee systems.

Field	Configuration
Platform	signNow; PDF, DOCX; Salesforce, NetSuite integrations
Authentication	Email link, SMS code, or advanced verification
Form Fields	Signature, date, routing number, account number, checkbox consent
Notifications	Email receipts, reminders, and failure alerts

Where to Send or File the Signed Agreement

Routes for the signed Agreement depend on payer, payee, and bank processing preferences and compliance needs.

Payee Records: Store a signed copy in receivables and billing systems
Bank Authorization: Provide bank with required mandate or authorization form
Payer Copy: Send customer a copy and confirmation receipt
Regulatory Filing: Retain evidence for audits and dispute resolution

Technical Requirements for Digital Signing and Distribution

Digital signing and distribution require platform support for secure storage, audit trails, and optional bank verification workflows.

Supported Formats: PDF, DOCX, HTML
Integrations: Salesforce, NetSuite, Google Workspace
Authentication Options: Email, SMS, or advanced verification

Timing and Notice Expectations

Key dates and notice items that commonly appear in Commitment and PAD Agreements and related processing.

Effective Date:

Date authorization begins and triggers first debit

First Debit Date:

Specify initial debit scheduled after effective date

Cancellation Notice:

Follow contract terms and bank procedures to stop debits

Bank Return Window:

Returns follow bank/ACH rules and deadlines

Record Retention:

Keep signed records per regulatory retention schedules

Commitment and PAD Agreement vs One-time Debit Authorization

A quick comparison to help determine whether a recurring PAD Agreement or a single-debit authorization fits your payment use case.

Criteria	Commitment and PAD Agreement	One-time Debit Authorization
Intended Use	recurring payments	single payment
Recurring Payments
eSignature Suitability	high (esign/ueta)	high (esign/ueta)
Bank Mandate Needed	often required	usually not required

eSignature Vendor Comparison for Executing PAD Agreements

Pricing and feature comparison for eSignature vendors commonly used to execute Commitment and 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, no credit card	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes (available)	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

FAQs — Common Questions About PAD Agreements

Answers to frequent questions on validity, revocation, bank returns, and electronic signing for Commitment and PAD Agreements.

Need help? Contact support

Is an electronic PAD valid?
Yes. Electronic signatures are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA in most states when the four ESIGN elements are met: intent, consent, attribution, and reliable record retention.
How can a payer revoke authorization?
Revocation procedures should be stated in the agreement. In addition to contractual steps, payers may contact their bank to stop pre-authorized debits under banking rules; both contractual and bank processes should be followed.
What if a debit is returned?
Returned items are handled per bank/ACH rules; the agreement should explain returned-item fees, resubmission attempts, and timelines for resolving disputes and collections.
Are special consumer disclosures required?
Yes for many consumer-facing transactions: the ESIGN consumer-disclosure rules require notice of the right to paper, access confirmation, and procedures to withdraw consent (15 U.S.C. §7001(c)).
When is notarization needed?
Notarization is generally not required for PAD Agreements. Check state rules if adding notarization or RON for extra verification; requirements vary by jurisdiction.
How long should signed records be kept?
Retain signed agreements per applicable retention rules: at minimum the agreement term plus 3 years; healthcare-related records require 6 years (45 CFR §164.530(j)); tax-related materials follow IRS guidance.

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