ACH, or Automated Clearing House, is a payment processing service that transfers funds between two accounts, two banks or two entities, typically within one to two days. ACH can be used for many types of financial transactions, including paying employees, accepting vendor payments, and processing ecommerce and overseas transactions.
Consider ACH the Center of a Bicycle Wheel
Through this central channel, money can be transferred from one bank to another, one business to another, or one individual to another. There is no fee for the person who receives the money. On the other hand, when you use wire transfers for transactions to other countries, there are large fees, sometimes for both the payor and payee, to use the service.
Benefits to ACH
Using ACH for your small business payments and accounts receivables saves time and money. It costs less than half of what the same transaction would cost if it were done by check, and the payment gets there faster. No more “it got lost in the mail” excuses!
If you care about the environment, ACH is the way to go. Rather than deal with the waste that paper envelopes and checks cause, not to mention the carbon footprint created by traditional mail service, ACH is done electronically.
ACH is safer for all parties. Identity theft happens when someone can dig through the mail to steal account numbers. Because everything is done electronically, it takes the danger factor out of the payment equation.
ACH also helps in that it automates processes that otherwise take time for your staff to perform. By setting up automated payments, you know exactly what’s coming, and you save time for other more important tasks. Paychecks and recurring bills can easily be paid on an automated schedule, which ensures they’re never late.
There’s nothing more frustrating than waiting for a customer to have to track down the check signer before paying you. Add five business days for the check to arrive via mail, and you have a serious cash flow issue before long. But ACH takes that check signer out of the equation, and as soon as your invoice is approved for payment, your customer can automatically generate a payment to you, which will be available in your bank account within 24-48 hours.
Automated Clearing House payments help you run your business more efficiently, and at a lower cost than other payment processing options. Contact us to find out how ACH payments can help automate your accounting today.