Automated Clearing House, or ACH, is an electronic network that facilitates financial transactions. Some of the most common uses for ACH include direct deposit, payroll, and vendor payments—making it a great option to process safe, secure, and affordable payments to staff, part-time help, freelancers, suppliers, vendors, and more.
Because ACH is a digital clearing and settlement network that processes electronic exchanges between depository institutions, it offers decreased costs and other savings compared to traditional bank-based payment systems.
We’ll cover some of the ways that ACH transaction processing can help your company save money, time, and resources.
What is ACH?
The ACH network was historically used by the US Government to make payroll direct deposits, pay government vendors, and forward Social Security benefits to recipients. In 1999, the Federal Reserve opened the ACH network to corporate use. While it was met with limited adoption initially, now ACH processes over 22 billion transfers annually, totaling nearly $40 trillion.
Businesses utilize ACH payments to make direct deposits, process debits and credits between vendors, suppliers, and more. They may also use ACH services to make tax payments directly to federal, state, and local government entities.
How ACH Saves Your Company Money
You may be wondering how ACH transaction processing can save your company money. The answer is simple – electronic processing saves time, money, and resources by eliminating non-essential steps in the payment process.
Additionally, you cut out the middleman from the payment process. Eliminating this unnecessary step not only saves your company time and resources it also helps reduce the opportunities for fraud or theft.
In short, using an ACH processing service will not only save your company time and resources, it will also save your company money.
The biggest way that ACH saves your company money is by lowering costs. Paper checks are expensive. On average, it costs $1.22 in supplies, work hours, and incidental costs to process a paper check received for payment. The same payment can be processed using ACH for a fraction of that cost.
Savings on disbursing payments can be even greater. Instead of producing and printing checks, signing checks, placing checks in envelopes, paying for postage, and paying for labor to deliver checks to delivery centers, ACH instantaneously and electronically deposits payments in recipients bank accounts—saving you time, money, and resources.
Does your business send wire transfers? These electronic fund transfers can cost $25 or more depending on the dollar amount. ACH transaction processing allows you to schedule and send funds electronically at a fraction of the cost, sometimes costing only pennies.
Better Cash Flow Management
One of the biggest advantages of using an ACH processing service is the benefit to company cash flow. Receiving and disbursing payments can seem like a juggling act to many businesses. Waiting for a payment to arrive is not only frustrating it can complicate cash flow and interrupt normal business.
With ACH payment processing you can receive electronic payment from vendors on the payment date, eliminating the need to wait for a paper check payment to arrive in the mail. What’s more, you don’t have to wait for the check to clear, the electronic deposit is instantly cleared and deposited into your account.
Likewise, sending payments via ACH improves cash flow management. Using ACH to make payments allows your company to hold and leverage funds up to the payment date. Because you don’t need to account for payments that are out there for delivery, you can better manage and control your cash flow.
A great benefit of ACH transaction processing is the increased security over traditional check payments. By eliminating paper checks, you eliminate the possibility of check fraud. ACH not only eliminates the possibility of a check being stolen it also eliminates the possibility of a check being lost.
Because deposits are electronically made into the recipient’s bank account, there can be no question as to where the funds are. Lost or stolen checks are a thing of the past and deposits can be electronically verified the instant they are made. All in all, the ACH network provides a safer way to process payments.
Scheduling payments, deposits, and credits can be a full-time job. ACH automates your recurring payments giving your payroll and accounting department more flexibility. Because recurring payments are automated, tt frees up time and resources for your staff to focus on other important tasks—saving your company time and money.
What’s more, ACH payments can be approved online, meaning last minute payments can be managed and processed even if your account manager is out of the office. Payouts and payments can be approved from virtually anywhere at anytime. ACH transaction processing gives your company greater flexibility, saving you time, work hours, and resources.
Making environmentally friendly choices isn’t just good for business; it’s good for the planet. ACH processing eliminates the use of thousands of paper checks and their envelopes every day. That saves trees and reduces paper waste.
What’s more, it eliminates the environmental impact of mail trucks delivering those envelopes to homes and businesses. Going green saves the planet and puts a little green back into your business. It’s not just about saving the planet, it’s about saving money too.
Save Money and Time With ACH
ACH is an incredibly reliable, efficient, and cost-effective way to process payments, payouts, deposits, and credits. Using an ACH processing service to manage your payments will save you money by lowering costs, improving cash flow management, offering better security, and providing greater flexibility for your accounting staff. As an added bonus it helps you make environmentally friendly business decisions that help your bottom line too.
With so many cost saving benefits for businesses of all sizes, utilizing ACH transaction processing is the smart decision for your company. Stop sending and receiving payments the old fashioned (and expensive) way, take advantage of ACH payment processing and save money for your business today.