Recurring ACH Payments: How To Set Them Up

May 19, 2021 | Weekly Articles

For any business looking to simplify their collections process and reduce the amount of time they spend waiting for customers to pay, they need to set up recurring billing. To save even more money, using ACH payments over credit cards can bring the best value to your business both from an operations and financial size.

Here’s a guide on how to accept and set up recurring ACH payments.

The basics: what is an ACH payment?

An Automated Clearing House payment, also called an ACH payment, is a payment processing method from an electronic payment network that results in direct transfers of funds from a customer’s bank account to your business bank account. It is a bit like a wire transfer or cashier’s check-in that funds are guaranteed on-hand for the transaction and works as a more immediate withdrawal from the customer’s account than credit cards or debit cards, which use a third-party bank to “credit” transactions. But the biggest benefit for both customers and businesses is its ability to fulfill recurring payments, such as weekly, monthly, or annually.

You may be familiar with ACH through its other term of “direct deposit.” Some well-known examples of ACH services are payroll services like ADP and fund transfer services like PayPal, Venmo, and Intuit Merchant Services.

How do I set up ACH payment processing with users?

ACH payment setup begins by obtaining all necessary personal and bank information from the users and signed authorization to withdraw funds. It can be set up as a one-time withdrawal or a regular withdrawal at any frequency.

You can sign customers up in person during a sale, or you gain approval over the phone, provide forms via email and regular mail, or direct them to a user-friendly form on your website for an improved user experience. As a merchant service provider, BNG Payments can aid you with all of these options by installing all necessary software on your terminals, mobile devices, and online systems.

When all information is provided and approved, the customer will be automatically billed and the payment will be taken at the frequency agreed upon. When the due date arrives, your bank will send a payment request to the customer’s bank, at which point the two banks confirm the money is on hand and the transfer process begins. When payment is completed, the ACH system generates a paid invoice, and you and your customer are informed that payment was made, such as by email, text, and within your accounting software.

Benefits for customers using ACH payments as recurring transactions

This option is ideal for any recurring billing such as subscriptions, financing payments, mortgage or utility payments, insurance premiums, and other bank-to-bank transactions that are time-sensitive and typically have penalties for late fees. These fees can add up to significantly more savings and reduced hassle than paying each bill individually. After just one transaction set up, everything is automatic, and customers maintain a tight read on their transaction history.

There are also no transaction fees to customers, unlike wire transfers and cashier’s checks. Just like PayPal, fees are taken from the person or institution receiving the funds.

ACH also offers more flexibility on transaction volume. Customers can move larger amounts than other forms of payments such as credit cards and cashier’s checks. The typical maximum for ACH is $25,000 per day, with an additional restriction on the total amount withdrawn each month. Each bank sets its own threshold.

ACH also provides a safeguard to the customer by allowing for cancellations in payment before the transaction is officially approved. Like a credit card, approvals can take 3-5 days, and customer payments can be canceled and refunded within that time frame. These are benefits that cash, wire transfers, and all forms of checks can’t match. Coupled with the fact that each payment is encrypted and customers are not charged for these transactions, it is a safe and cheap payment method compared to other immediate payment options.

Accepting recurring payments with ACH can save you money

For your business, ACH payments work as same-day deposits, though they work a bit like a credit card payment in that the funds are not guaranteed for 3-5 days. This slightly longer finalization time than cash, wire transfers, and cashier’s checks also means it is a significantly less expensive option for immediate funds than these transaction methods, even cheaper than most card payment types such as credit cards and debit cards. This cost savings has resulted in thousands of companies using ACH to generate billions of transactions worldwide.

With recurring payments happening consistently and reliably, you also have a regular income that makes it easier to plan business initiatives and improve your bottom line for more growth and higher profits.

Accepting recurring payments saves you time

ACH’s powerful payments integration also frees up valuable time you would typically spend on billing. All future payments from customers come with invoices that are automatically created and paid following a preset payments list through accounting software such as QuickBooks, with all records of payments deposits and receipts automatically generated and sent to customers.

Timely and consistent payment creates a more dependable framework for income forecasting, and the ease of use for customers can aid with customer satisfaction that can literally result in payments for decades, not just weeks or months. This payment solution provides your sales teams with more time to achieve more sales while speeding up your back-end accounting, so you have more time to spend on important growth initiatives.

ACH also helps you pay other businesses such as utility businesses, product vendors, and even your employees, with all payments provided on time. All this work frees up more time for your business goals and helps you avoid unnecessary late fees from utilities and vendors.

What business types use ACH payments?

Usually, service-based businesses or B2B industries benefit the most from ACH payments, since this system works for both one-time payments and recurring payments. Some organizations that find ACH particularly helpful are subscription businesses or those that offer ongoing payment options such as financing. Most companies offering set monthly services also offer ACH.

How do I set up recurring ACH payments?

Firstly, you will need a linked ACH authorization form from your customers, sometimes called an Application for Payment. As an ACH provider, we can provide you with this form or make it easy for customers to access it electronically and directly link it to your billing system to make the customer approval process easy.

Once you have obtained signed authorization for recurring payments, you will need to create a sales receipt with the customer’s information in the bill-to section in your payment processing solution.

You will be directed to another screen where you can schedule the payment, but be sure to select “Schedule” and not the button titled “Reminder.” Then set the recurrence for any date and frequency you like, but set the time to zero days in advance, and then instruct it to automatically send emails. If there is another prompt asking for you to confirm authorization and approve the transaction, be sure to do that here, too.

How to manage, suspend, or stop recurring ACH payments

If you need to change any elements of the recurring payment, go to the gear icon again and select “Recurring Transactions”, and make any necessary changes. Usually, this will come on behalf of a customer request to change their payment method, or from canceling their service with you.

Some payment platforms give your customers to manage their payment method themselves and will notify you of the change on the account. But for many companies, your accounting team will need to keep on top of requests for cancellations.

Finding a strong partner to process payments

To make the setup of this powerful software easy on all your devices and your accounting software, it helps to enlist the help of an experienced merchant service provider.

BNG Payments regularly works as a preferred partner, helping with the setup and ongoing supervision of ACH payments. We specialize in providing the most up-to-date and reliable software and can adapt that software to your given software systems, terminals, online systems, and mobile devices.

We can set up your systems to take ACH payments through multiple payment forms. And we excel at our response time for support issues if issues arise.

Contact us to learn more about how ACH can benefit your specific business and how we can help you experience the powerful benefits of ACH immediately.

Ready to grow your business with a new payments solution?

Reach out to our team today!