Businesses that collect payments through ACH benefit from a lower cost than credit card payments. They can also avoid churn and lost payments due to credit cards expiring or being maxed out.
To make an ACH payment, your business or bank provides the employee’s banking information to the ACH network, and funds are transferred within a few days. The ACH network is a great choice for small, regular payments such as payroll.
Reduced Risk of Fraud
If you are a small business that sells products and services, you likely accept credit cards for payment. While credit card payments are convenient for customers, they come with processing fees that can quickly add up for a small business. ACH payment processing is much less expensive for businesses and can save them money over time. ACH also is ideal for recurring payments like subscriptions or rent payments. Because a customer’s bank account information remains the same, setting up a recurring payment is much easier than getting their credit card number on file each month. ACH credit payroll are also less likely to be canceled or maxed out than a credit card, making them a safer choice for recurring payments.
Similarly, many small businesses use ACH to pay employees through direct deposit. This eliminates the need to check employees and reduces potential errors or fraud. However, it is still important to have a process to detect internal theft and other forms of fraud. One way to mitigate this risk is to use a service, which can automatically match incoming ACH transactions to a list of previously authorized debits. If the bank notices a red flag, they will notify you of any suspicious activity.
Increased Customer Satisfaction
ACH offers a cost-effective and simple way to facilitate those transactions for businesses that collect recurring customer payments. Utilizing the ACH network eliminates the need for costly credit card processing fees and avoids customer churn from expired cards.
ACH can also save you time and money by automating the payment process for subscription services, such as streaming video or business software. This helps you avoid the hassle of collecting monthly payments manually and ensures that customers receive their product or service on time.
In addition, ACH offers a secure, convenient way for small businesses to make direct deposit payroll. By allowing employees to choose how much of their paycheck to withdraw from their bank account, you can reduce employee costs, save on postage and paper checks, and improve cash flow forecasting.
Many online payment processors provide ACH functionality as part of their service offerings, and many invoicing, accounting, and membership platforms also support ACH payments. For a fee that is often less than 1% of the transaction amount, you can save yourself hefty payment processing fees and make your customers happy at the same time. To learn more about ACH for your business, speak with your financial institution. They may offer various bundled pricing options and incentives to help you get started.
Increased Employee Efficiency
ACH is an efficient digital payment system that allows your business to process transactions without needing paper checks. Trillions of dollars move through the ACH network each year. The system lets you transfer funds from your business bank account to your employees or vendors. You can also use ACH to pay for services, such as subscriptions and memberships.
With ACH, payroll deposits are processed promptly, allowing your staff to get their paychecks as soon as they’re ready. This is especially helpful for employees who prefer to deposit their payroll into their bank accounts directly. You can even use Same Day ACH to ensure that your payroll is processed by the Friday of payday.
Small businesses that use ACH are also likely to save on printing costs, envelopes, and stamps. Furthermore, ACH payments are more eco-friendly than traditional checks. The ACH network is also much faster than credit card payments. ACH is more than two times as fast as Visa or Mastercard payments. This makes ACH the ideal payment option for recurring payments. It can help you avoid churn on your subscription business and save money over time. It also helps you avoid costly late fees since you’ll never have to worry about a check getting lost in the mail.
Increased Cash Flow
For businesses that collect recurring payments, sell big-ticket items, or accept monthly bill payments like rent, utilities, and subscription services, there’s a way to automate transactions, save money on payment processing fees, and avoid problems with lost or changed credit card numbers. It’s called ACH payment processing.
The ACH network has been in operation for decades and is one of the safest and most efficient systems in banking. It moves more than $61.9 trillion annually. It enables small business owners to send and receive funds directly between bank accounts (called originating depository financial institutions or ODFIs) and to pay independent contractors for services rendered.
Using ACH for direct deposits and payments reduces costs to the business, and it is much safer than sending or receiving funds via wire transfers. It also eliminates the need to print, sign, and mail paper checks. ACH is a great option for any small business looking to improve cash flow and get more control over its finances.
Many banks offer ACH as a service to their customers, and they can help you set up a payment system to meet your needs. A third-party processor can also provide ACH services. They may charge more than a traditional merchant account but will be cheaper than credit card processing companies. They will also provide more insight into the timing of payments so you can resolve payroll issues faster, correct errors, and fund paychecks on the intended date.
