- Don’t miss out on the benefits of ACH payments – Learn how to set up ACH payments for your business
- Understand the key benefits of ACH payments that could give your business the edge it needs to thrive
- Learn how you can get started with ACH payments and leverage AI in ACH payments to boost customer experience and cash flow
ACH (Automated Clearing House), also called “direct payments,” is a financial network for electronic payments, responsible for money transfers worldwide. The primary purpose of ACH payments is to transfer funds from one account to another electronically, eliminating the need for paper checks or cash. ACH network enables secure transactions, easier accounting, and scalability to your business operations. ACH payments increased by $1 trillion for the 10th year in a row in 2022, according to the National Automated Clearinghouse Association (NACHA).
Why are ACH payments important for your business?
ACH Network has proven reliable for companies of all sizes have to receive payments and pay vendors/suppliers, leading to strong year-over-year growth.
Completing an ACH payment takes only half the time needed for making a check payment. You also don’t need to go through the hassles of writing, stamping, and mailing the checks physically. An added advantage of ACH payments is that the processed payment is immediately reflected in your bank account, thus streamlining the account reconciliation process.
Other major benefits of using ACH payments for your business:
ACH payments are processed in batches. This reduces the rate per transfer, making it less costly when compared to paper checks, credit card transactions, and wire transfers.
2. More convenient than any other type of payment
With ACH transactions, there’s no need for printing, signing, or mailing paper checks, as you can make payments remotely from your office or home. It also comes with the added benefit of automation-enabled scheduling for recurring payments without calendar reminders or paper invoices for tracking transaction charges.
Transactions made via ACH payments are reflected in your bank account almost immediately, even if the actual processing may take 2-3 days to complete. This is faster and more convenient than paper check processing.
3. Highly secure
The ACH payments network is regulated with many layers of security, including encryption, authentication, and regulatory compliance. Reputed financial institutions directly manage the transactions, thus eliminating any chance of disputes regarding hidden charges. ACH payments are also subject to regulatory oversight and compliance with industry standards such as NACHA Operating Rules, which establish guidelines for the secure transmission and processing of ACH payments.
4. Fast processing
ACH payment processing times are faster than traditional payment methods, with payments being processed as quickly as the same day or up to three days. This faster processing time can be beneficial for businesses as it helps to improve cash flow, allowing businesses to receive payments and access funds more quickly. Additionally, the faster turnaround time of ACH payments can help businesses to identify issues with payments from vendors sooner, such as declined payments, allowing them to take corrective action more quickly.
5. Consistent cash flow
In addition to being more reliable than traditional payment methods, ACH payments can also be easily automated, as it allows for recurring payments to be scheduled and processed automatically. This automation reduces the administrative burden on businesses, freeing up time and resources to focus on other aspects of the business, while also ensuring that payments are made on time and cash flow is maintained.
What are the steps to set up ACH payments for your business?
ACH payments can accelerate your cash flow, irrespective of the industry you’re working in. Another benefit of ACH is its lower fee compared to other wire transfers.
While setting up ACH payments for your business, you should follow the below-mentioned steps for smooth and easy onboarding.
Step 1: Setup your ACH payment account
Creating an ACH payment account is the first step to start receiving B2B ACH payments. However, before setting up your ACH payments account, you must choose the best payment processor to handle your transactions. You’ll need the following documents while filling out the setup form:
- Proof of company address
- Valid ID of the company owners
- Federal tax ID
- Estimated processing volumes
Step 2: Select an ACH payment processor
While choosing a suitable payment processor for your ACH payments account, consult with your bank regarding the processing charges. It is advised to compare different operators with the details of their features and choose the best one according to your business needs and preferences.
Step 3: Complete the paperwork and submit your payment details
While filling out your business details, you’ll come across a lot of other terms and conditions of ACH payments. It is advised to read all the information carefully and proceed with caution. If you choose to partner with an ACH payments operator, you must comply with all the rules and regulations of the payments provider.
After completing the necessary validity checks, the service provider will fetch your payment details. This is needed to get the required inputs into the system. The entire process can take up to 5 business days to get completed.
How do I get started with ACH transactions?
You need to introspect your business needs before selecting the best ACH payment processing provider. Here are some more important factors to consider when opting to provide ACH payment options to customers:
- Carefully compare the features of each ACH payments provider, including their processing fees and chargebacks
- Go for the most convenient website integration with a payment gateway
- Ensure that the setup process is hassle-free for both you and your customers
How to improve cash flow and customer experience with ACH payment support?
With HighRadius’ AI-based E-Invoicing and Payment Software, you can let your customers pay through their preferred mode and enable them to set auto-pay cadences for scheduled and recurring payments. HighRadius’ EIPP Software allows your customers to make payments through 150+ payment methods, including ACH, boosting your cash flow.
Not only does it enable ACH payments for you, but also enables your customers to schedule payments, pay in installments, make partial payments, and support complex customer hierarchies, including parent-child scenarios. You can also offer superior customer experience by providing secure, flexible, and unique payment links with HighRadius’ AI-enabled EIPP software.
ACH Payment Received. What’s Next?
ACH payment processing can be challenging due to the lack of a standardized form for remittance, which makes cash posting a cumbersome process. 100% manual ACH payment processing with no support from banking partners and other vendors for ACH payments is a major challenge that several businesses face. This roadblock, coupled with a rising volume of ACH payments, do not make ACH payment processing easy for finance teams. Additionally, aggregating information from various sources such as EDI, emails, PDFs, faxes, and spreadsheets can cause delays. However, technology advancements now offer multiple features to overcome these hurdles, such as Automated email remittance capture and AI-enabled data collection from web portals.
Every finance team requires the right cash application software that can leverage advanced technologies to improve the cash flow by simplifying ACH payment processing. HighRadius’ AI-based Cash Application Software automates the cash application process for ACH payments, reducing the need for manual processing and improving processing speed and accuracy. You can automatically match payments and remittances to the open invoices with the software. It also speeds up the processing of payments, so that you can get paid faster. This helps reduce the risk of late payments or missed invoices, which can impact cash flow. It applies cash accurately even with an incomplete or inaccurate invoice number with automatic code deductions based on internal codes. With automated remittance software and web bots, the software simplifies remittance capture, saving you time and effort.
AI can help you improve accuracy, efficiency, cash flow management, customer experience, and decision-making across your accounts receivable process. HighRadius’ AI-Driven Autonomous Finance Solutions For The Office of CFO are purpose-built and customizable, assisting you in decision-making, while providing maximum benefits for your business.