Standing Order
Financial Dictionary — Cash Management & Banking
Definition
A standing order is an instruction from an account holder to a bank to make recurring payments of a specified amount to a specified beneficiary.
Detailed Explanation
The account holder sets the amount and schedule and may arrange an end date. It differs from direct debit, where an authorized payee initiates collection. Setting up a standing order does not prove that each scheduled payment has succeeded.
Common Uses
Used for fixed recurring transfers such as scheduled savings, regular support payments or fixed contractual payments.
Practical Example
A company instructs its bank to transfer AED 3,000 to a beneficiary on the fifth day of each month. It verifies execution before marking each payment as completed.
Why This Term Matters
Reduces repetitive payment work while requiring monitoring of successful execution, changes and cancellation.