If you are involved in the financial management of a company or have an interest in business payments, you would’ve heard of ACH payments. But do you really know what ACH payments are or why ACH payments are beneficial for businesses? ACH payments have helped improve and reduce the workload of finance controllers of all business sizes, which is why an in-depth exploration to understand precisely what ACH payments are, is needed. Now, let’s dive into your complete and ultimate guide to ACH payments.
Table of Contents:
- What is ACH Payment?
- How ACH Payments Work?
- Are ACH Payments Secure?
- Which Types of Businesses can Benefit from ACH Payments?
- Is it Possible to Set Up Recurring Payments?
- Benefits of ACH Payments?
- ACH Payments, the End-all, Be-all
- Additional Resources
What is ACH Payment?
ACH stands for Automated Clearing House (ACH), and the ACH Network is a centralized network of banks and financial institutes in the United States (USA). The ACH Network processes electronic financial transactions, which are ACH payments, also known as direct deposit or direct payment. The ACH Network is managed, administered, and governed by National Automated Clearing House Association (Nacha).
Businesses extensively use ACH payments to pay vendors or suppliers and receive payments from customers or clients. Moreover, ACH payments are often used by businesses to deposit salaries directly to employees’ bank accounts.
According to Nacha, “quarterly volume of 7.1 billion payments was an increase of 11.2% from the same period in 2020,” and “the value of those payments was $17.3 trillion, reflecting a nearly 19% increase from a year earlier.” Moreover, in 2021, compared to the first quarter of 2020, business-to-business (B2B) ACH payments volume saw a 17.3% increase. These statistics show how business payments are moving away from traditional payment methods, like paper check payments.
How ACH Payments Work?
To initiate an ACH payment, obtaining banking information is the first step. Using , ACH payments can become extra simple as you will need to enter the banking detail (ACH Routing Number and Account Number) for only the first-time payment to a supplier or vendor. Starting the second payment, as all information is stored, you can simply enter the payment amount to process the payment.
If your business wants to set up an approval process before payments are processed, Plooto also offers an easy and straightforward payment approval workflow to process all business payments without a bottleneck.
As technology advances, the ACH Network is also continuously making enhancements to process ACH payments. Three to five business days are the standard expectation to process an ACH payment.
Your business can simply pay from anywhere at any time with Plooto, escaping from the pains of making paper check payments or visiting the bank to make a business payment.
Are ACH Payments Secure?
As the ACH Network is federally regulated and, as mentioned above, managed, administered, and governed by NACHA, ACH payments are processed securely. Moreover, using Plooto to make ACH payments strengthens the security of the payments as is certified under the ISO 270001 standard, an international standard.
Which Types of Businesses can Benefit from ACH Payments?
All sizes of businesses, nonprofits, and religious organizations can make ACH payments with Plooto. Free your process from slow and stressful traditional payment methods to easy and hassle-free payment methods.
Is it Possible to Set Up Recurring Payments?
With Plooto paying bills and getting paid electronically becomes simple and easy. Your business can schedule recurring payments to avoid penalty fees from missing a payment deadline.
Additionally, your business can collect recurring payments from your customers or clients. Automating your will allow your business to get paid faster, improving cash flow while reducing stress and struggles from chasing to collect payments.
Benefits of ACH Payments?
Still unsure why ACH payment volumes are increasing, and the benefits of ACH payments are unclear? Here are few benefits of ACH payments that apply to all businesses.
Save Costs – Eliminate the cost of making payments using a paper check: printing, stamp, and mailing fees. Plus, don’t forget that time is money. Your business can save time on chasing to get signatures and making time to sign paper checks.
Security – Moving away from paper check payments will naturally diminish the risk of fraudulent activities associated with paper check payments. Moreover, as all information is encrypted and processed behind the screen, only those initiating the payment will have full access to the information, improving information security. Don’t forget Plooto is ISO certified, meaning using Plooto is even more secure.
Reduce Manual Work – Automating payments can reduce redundant manual work. Furthermore, Plooto automates the reconciliation process with your accounting software, reducing manual labor to save time.
Accurate Record Keeping – With automatic reconciliation, human errors are reduced, making recordkeeping more effortless and accurate audit trails become more easily accessible.
Save Time – This is a repeated theme across all benefits, and you have to admit that time is money. The total time saved can help to increase the productivity of employees.
ACH Payments, the End-all, Be-all
ACH payments are a great way to transition from old, slow, problematic business payments to modernized, fast, and stress-free business payments. Get started with Plooto’s to begin experiencing a modernized payment experience for your business.