What is Electronic Funds Transfer (EFT)?

Definition

Electronic Funds Transfer (EFT) is a digital payment method that allows organizations to transfer money electronically between bank accounts without the need for physical checks or cash. EFT facilitates faster, secure, and traceable payments to vendors, employees, or intercompany entities.

Key Features

• Automated Payments: Enables organizations to execute payroll, vendor settlements, and intercompany transactions efficiently.

• Secure Transactions: Reduces the risk of Wire Transfer Fraud through encryption and bank-level authentication.

• Integration with Systems: Works seamlessly with Electronic Invoicing and ERP systems to automate payment processing and reconciliation.

• Intercompany Transfers: Supports Intercompany Inventory Transfer and Inventory Transfer payments between corporate entities.

• Financial Optimization: Enhances liquidity management and monitoring of Return on Invested Funds by enabling timely disbursements.

Governance and Compliance

Organizations implement EFT within a Transfer Pricing Policy and Transfer Pricing Operations framework to ensure cross-border payments comply with regulatory requirements. Documentation, such as Transfer Pricing Documentation and Transfer Pricing Adjustment records, supports audit readiness and adherence to tax and financial regulations.

EFT processes can also leverage a Knowledge Transfer Framework and Transfer Learning (Finance Use) to train teams on best practices, internal controls, and fraud prevention methods.

Summary

Electronic Funds Transfer (EFT) is a secure, efficient method for transferring funds electronically. Integrated with financial systems, governed by policies, and supported by knowledge frameworks, EFT enhances payment accuracy, reduces fraud risk, and improves cash flow management.