Electronic Funds Transfer (EFT)
An electronic funds transfer (EFT) is a movement of money initiated electronically, without the payment starting as cash or a paper cheque.
In everyday Australian business use, “pay by EFT” often means sending money from one bank account to another through online banking. The wider term can also cover direct credits, direct debits, card and EFTPOS transactions, mobile banking payments and other electronic methods.
The Reserve Bank of Australia includes electronic funds transfers within the payments system. EFT describes a broad way of moving money; it is not the name of one universal payment network.
Where Electronic Funds Transfers Appear
You may see EFT on:
- customer invoices and supplier bills showing bank-payment details
- online banking confirmations and account statements
- bank feeds and imported bank statements
- payroll, tax and superannuation payments
- payment batches from accounting or banking software
- remittance advice sent to explain which invoices were paid
Related documents do different jobs:
| Record | What It Shows | What It Does Not Prove By Itself |
|---|---|---|
| EFT Confirmation | A payment instruction or electronic transaction | That final settlement has completed |
| Remittance Advice | Which invoices or bills a payment covers | That the money has moved |
| Bank Feed Entry | A transaction reported by the bank | Which accounting record it belongs to |
| Receipt | Evidence that payment was received | The full terms of the original sale |
How EFT Works In Bookkeeping
An EFT usually settles or partly settles another record. A customer transfer may pay an invoice, while a supplier transfer may settle an accounts payable balance. Payroll and tax transfers settle their own liability accounts.
When the transaction reaches the bank feed, match it to the underlying record rather than entering the income or expense again. Then complete the bank reconciliation so the accounting balance agrees with the bank.
Payment references matter. An invoice number, customer name or remittance advice can help identify a transfer, especially when one payment covers several invoices or bank fees change the amount received.
Simple Example
A consultant sends a customer an invoice for $1,100. The customer initiates an EFT using the invoice number as the payment reference. When the $1,100 deposit appears in the bank feed, the consultant matches it to that invoice.
The match reduces accounts receivable and marks the invoice as paid. Recording another $1,100 sale from the bank feed would count the income twice.
EFT, EFTPOS And Direct Debit
EFT is the umbrella term. EFTPOS means electronic funds transfer at point of sale and is one form of electronic payment. A direct debit is another form in which an authorised payee initiates the collection.
Different countries use names such as bank transfer, direct credit, ACH transfer or SEPA credit transfer. Those labels can refer to particular networks or legal rules, so they should not be treated as exact global synonyms.
In Australia, ASIC’s ePayments Code guidance covers specified consumer electronic transactions through subscribing providers. Its protections should not automatically be assumed to cover every business payment or transaction in another country.
Why Electronic Funds Transfers Matter
EFT makes business payments quicker to initiate and easier to trace than cash, but it does not remove bookkeeping checks. A payment can still be duplicated, sent to the wrong account, allocated to the wrong invoice or left unmatched.
Good payment references, supporting records and regular reconciliation create a clear audit trail from invoice or bill to bank transaction.
How Gimbla Can Help
Gimbla brings invoices, bills, bank transactions and reconciliation into the same accounting workflow. When an EFT appears in a bank feed or imported statement, matching it to the correct record keeps customer balances, supplier balances and reports up to date.
If a customer payment was recorded outside the normal matching flow, follow the mark an invoice as paid guide and check the bank reconciliation afterwards.
Related Terms
Helpful Gimbla Guides
In Short
An EFT moves money electronically. In the books, the important next step is to match that movement to the correct invoice, bill or liability and reconcile it to the bank.