Knowing what an ACH payment is will help you determine if this type of transaction is beneficial to your business. Electronic check transactions are a payment that is processed directly by the Automated Clearing House Network. In its simplest form, an electronic check transaction is the transfer of funds between accounts. They are most commonly used for payments to service providers, employee earnings, fund transfers, and supplier payments. Payments do not require paper and other resources that increase spending. Categorization of these payments is easier to perform because their name can be seen on the bank statement. ACH payments simplify bank deposits and increase the efficiency of business financial tracking.
Many Businesses Prefer ACH Processing
These payments can be completely electronic or begin in the form of a check. The check is processed as an electronic payment and never has to be signed or resubmitted to the organization where the account is held. This type of processing has multiple benefits. Customers do not have to fill out checks while others wait for them to finish. Payments do not get lost when mailed. Businesses receive these payments at a faster rate and the transaction is dependable. Checks do not have to be forwarded to a bank and then take days to be processed. Consumers like the convenience of not having to worry about writing a check wrong or it not arriving on time. Automatic payments for bills and other items do not have to be monitored or set up every time. A recurring payment can be set up on the account and then be drafted on the same date each time it is due. Any time a business can provide more convenience to their customers, they are more likely to receive repeat business and appeal to new customers. Service is the key to continued business.
The main uses for this service are payroll deposits, direct debit from an account, and the ability to convert paper checks to an electronic format. Checks can also be accepted for online purchases and payments through ACH processing. Transactions are resolved by similar methods as paper checks but in less time. A transaction is created online or through a terminal and then sent to be authorized by the Federal Reserve. After clearance, the amount is then deposited into the business account. If a payment is rejected, the money will not be deposited and be shown as a chargeback on the monthly financial report. Electronic check payments are not processed instantaneously. Completion occurs in two to three consecutive business days. While not immediate in payment, they work well for many business purposes. Businesses choose to make payments in this fashion for business supplies and processes. Convenience chains and other commercial retailers that still accept checks also use this processing to ensure payment. Billing companies implement these transactions for monthly billing cycles and one time payments. Businesses all over the world use electronic check transactions to provide better customer service and ensure payment for goods and services.