Benefits of ACH Payments for Businesses
There are numerous benefits of using an ACH payment system. In this article, we discuss any of the benefits of ACH payment methods for business bill payments. But, first, what does the ACH payment option entail?
What is ACH and why is it important?
ACH (Automated Clearing House) is a network or payment process used for electronically (electronic payments) making money transfers between bank accounts across the United States. It is run by a clearinghouse network called Nacha (formerly NACHA – National Automated Clearing House Association), and may also be referred to as the ACH network or ACH scheme for moving funds between bank accounts).
Since the 1970s, the ACH network payment solutions have offered a unique payment processing program with faster processing times and the potential for cost savings. In 2020, the number of financial network and electronic bank transactions handled by ACH rose 11 percent from the previous year, reaching $61.9 trillion. Transactions included both domestic and international transfers. Payment preferences for international payments and commercial dealings were also covered.
ACH is important for a lot of reasons. ACH is one of the most widely used payment systems in the world; it is both safe and reliable. More customers are beginning to choose ACH payments over payment by credit card because they like the payment efficiencies of being able to pay monthly bills, and because they like the ACH’s direct connection to their bank accounts. The ways the ACH platform processes payments save you time and money while allowing you to have payment experiences that are safe and expedient, with little or no room for any form of payment failures.
In regards to having a payment on time, ACH payments are quicker and more reliable than paper checks and other paper-based payments. ACH transactions are usually $1 per transaction, much less than a typically expensive payment method, like credit and debit cards and paper checks, and saving you money on processing fees and other payment processing costs.
Benefits of ACH Payments for Businesses
Following are the benefits of ACH payments for businesses:
Control of your cash flow
Scheduling payments with an ACH enables your small business to postpone payments until you have the cash on hand to make them, so your business can hold on to its money longer. This eases the uncertainty as to when a check will be received (and deposited), when funds will be withdrawn, or when it may be lost in the mail, all of which results in additional time, money, and penalization.
Save time and money
Paying business bills with an ACH is more cost-effective. If you use the ACH electronic payment systems to send and receive business-to-business payments, the entire process is entirely free and processed with just a few clicks.
The risk of a payment being forged, lost, or stolen is mitigated by using ACH payments. The ACH data is encrypted, and neither accounts nor vendors can see the data that is saved on the platform. Paying with ACH helps to ensure your financial information is safe and secure.
Remote (hands-free) payment
For those customers who prefer not to use their credit cards or to keep their information secure, ACH offers a useful alternative.
Also, ACH transfers are an ideal solution for the current business environment where COVID-19 has disrupted many existing infrastructures. The fact that small businesses and their vendors and suppliers can use an online automated system and continue to process payments between them is vital to keeping businesses running.
Ideal for recurring payments
If you need to make recurring payments, ACH payments can save you the time spent on routine transactions and process those payments on time without repeated reminders. ACH payments also allow you to receive recurring payments on time, enabling you to better manage and predict your cash flow.
The ACH electronic payment gets rid of all the printing and transportation hassle, so the resulting carbon footprint is much smaller.
Improved sales conversion/customer relationships
ACH payments make it easier for new customers to pay and increase the likelihood of converting them to customers. And recurring purchases can be handled through ACH payments, where customers do not have to worry about sending and receiving their payment bills, thus reducing the customer friction you have with your business.
Are ACH payments safe?
Paper checks are much riskier than ACH, which is more secure. To set up an ACH, you only need to fill out your bank information once. But each time you write a new check, you must share your banking information, which leaves you vulnerable. Another risk is that a check can get stolen or lost. Moving money between accounts can be very tedious, but sending money using an Automated Clearing House payment will simplify the process.
If you run into problems such as ACH errors or fraud, you have federal protection, but you, however, must report it to your bank within sixty days. ACHs (Automated Clearing House) are also better because they are immediately reversible and can be altered immediately (compared to wire transfers, which are final and cannot be reversed once made). This makes it more difficult for thieves to steal your money and flee.
Additionally, using ACH is more secure than sending money with some money transfer services, as the recipient must have an American bank account to receive the funds. This allows recipients to give sufficient information for law enforcement to be able to track them down should they be engaging in illegal activity.
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