The Advantages of ACH Payments for Businesses

If you’re looking for a way to cut costs in your company, taking a hard look at the time and money your business spends issuing and receiving paper checks may be the place to start. According to the National Automated Clearing House Association (NACHA), paper checks likely have the highest labor cost when handling payments.

An Automated Clearing House (ACH) transaction is typically a fraction of the cost of a paper check, whether you are issuing or receiving one. No matter the size of your company, if you’re not doing ACH, you’re spending a significant amount of time and money handling the mundane transactions necessary to run your business. Still, you may wonder, “What are the advantages of ACH payments for my business?”

Take a closer look at what ACH is and how ACH payments can benefit your business.

What Is ACH?

The ACH is an electronic network among banks and other participating financial institutions worldwide that allows the safe and secure transfer of money — without the need for paper checks or cash. Banks and businesses can quickly transfer money, and the transaction can be settled within one to two days.

For instance, suppose that you need to pay a vendor. You enter your payment into the ACH network, and your bank takes that money out of your account. The network then transfers your payment to your vendor’s bank, now showing a credit for your vendor. Your vendor receives a notification of your payment, although the money might not be available for a day or two.

Your payment can even be set up so the vendor can draw the payment automatically with your authorization.

Types of ACH Transactions

There are two types of ACH transactions: direct deposit and direct payment.

ACH direct deposits transfer money from businesses and governmental entities to consumers for transactions such as:

• Paychecks
• Employee reimbursements
• Tax refunds
• Government benefits (e.g., Social Security)
• Pensions
• Interest payments

Individuals, businesses, and organizations can all use ACH direct payments to send money from banks for payments.

The Advantages of ACH Payments for Businesses

For businesses, ACH payments come with a wide range of advantages. Here are the benefits ACH payments can provide your business:

• Easier and faster collection of payments from customers
• Less time and money spent processing checks and payments
• Reduced errors and fraud
• Automated recordkeeping
• Lower payment processing costs than credit cards
• High-priced items processed without concern for credit card spending limit
• Streamlined operations and more flexibility

With ACH payments, you also get the added benefit that one person can do these transactions.

Discover How ACH Payments Can Benefit Your Business

Today, you have more options at your disposal than relying on traditional paper checks. ACH can help you keep your company finances organized with digital invoicing, direct deposit, and automatic bill pay, all at a fraction of the labor costs paper checks require.

At The Payment HQ, we take pride in making custom payment processing easy. We can help you find the correct payment solutions for your business.

Have any questions or comments? Contact us now to start using a faster and more convenient way of handling payments with ACH.