What is an ACH network and why you should use it?


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Every time you receive a direct deposit or use your bank’s automatic bill pay function, chances are good that you’ve utilized the ACH network.

Automated Clearing House is a system for financial transactions in the U.S. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll and vendor payments. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans and other kinds of debt.

Short for Automated Clearing House, ACH processes transactions electronically, cutting costs and resulting in quick processing times.

Despite the technology that allows funds to be processed quickly and with little hassle, many businesses still rely on paper checks to pay their invoices or even manage their payroll. If you’re still pushing paper checks, here are some reasons why ACH payments might be a better alternative for managing your money.

Low-cost transactions

With the ACH network, these transaction fees are much less than those associated with paper checks.

In fact, some estimates place the cost of an ACH transaction at 15 cents, compared with the average cost of $1.22 for mailing a business check.

Convenience of ACH payments

Processing invoices, cutting checks and making trips to the bank all require employee manpower. ACH payments offer a convenient alternative, allowing you to set the payment of your regular bills on an automatic, recurring schedule. This means you don’t have to worry about keeping track of paper invoices and cutting checks for those regular payments.

Fast processing times

ACH transactions process within a day, which is much faster than the processing time of paper checks. This decrease in time also improves cash flow and makes it easier to predict your current funds on any given day.

Many people might feel uncomfortable providing their bank account information for ACH transactions, but the account information required is the same as what’s written on a check.

With an ACH transaction, the account information is entered into a secure system and is then encrypted. Paper checks can pass through many hands and are far less secure than the encrypted ACH system.

Environmentally friendly

Fewer paper checks and invoices mean less paper, reduced postage costs and fewer trips to the bank. All of this helps your business go green, and saves on office resources.

If you’re still paying employees with paper checks, using ACH for direct deposit allows your employees quicker access to their funds with far less hassle than mailing or passing out checks. With the many benefits that ACH payments offer, there is little reason not to try them.

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