An SMB Beginner's Guide to ACH Processing

 
12/16/2021

By Sierra Powell,

As an entrepreneur, scaling your business cannot become a full-time job in itself. However, it can start to become overwhelming between networking, working on collaborations, and making other moves to grow your business's revenue.

Finding SMB software to drive business growth easier can also be challenging. Continue reading to read the SMB beginner's guide in ACH processing and ways to make the transition smoother.
Small and midsize businesses have unique requirements that are different from large corporations. For starters, small businesses are those with fewer than 100 employees and midsized businesses are those with fewer than 999.

Although small and midsized businesses are among the most resilient, they face financial and other challenges and have to find ways to operate more efficiently. Sometimes that includes revamping the digitization methods, including automated systems, like ACH processing.

What is ACH Processing?

ACH, Automated Clearing House, is a process of moving money electronically. It is similar to credit card processing, but the money is debited from the customer's bank account. The money is put into the business account when the debit is complete. ACH essentially facilitates the secure transfer of payment to business by connecting to various banks throughout the United States.

Benefits of ACH Processing for Small and Midsize Businesses

  • ACH processing costs less for the business than credit card processing. There are normally no fees involved in ACH processing. ACH is also free to customers. Instead of creating interest on a credit card, they can simply schedule an ACH payment or use it in establishments for free. For the customer, it is less expensive than writing a check - which customers pay for.
  • Banks process ACH payments four times a day. That means that your company could receive the payment for an ACH on the same day that the payment was received. The payment status for both parties is known a lot faster than credit card payments. For instance, customers can check their bank account and see that money has come out of their account, almost immediately.
  •  ACH processing creates a second method of recordkeeping, especially when it comes to B2B business.

Some Popular Uses for ACH Processing Are:

Direct Deposits

If your business is deciding to discontinue issuing paper paychecks, direct deposit makes it easier to complete payroll efficiently. In addition to salaries clearing the bank faster, if adjustments are to be made to an employee's paycheck, using ACH processing means it happens immediately.

Vendor Payments

Vendors accepting ACH payments increase their potential to convert into a complete sale. In addition to more conversion, vendors who accept ACH payments have less risk of theft of cash from their business. Vendor payments also mean that there are ways for customers to track their spending and have an additional receipt if necessary.

Automatic Debit Transfers

Scheduling automatic transfers or payments, such as a mortgage, car payments, or car insurance, make it easy to avoid late fees. The payments can be set up or scheduled months in advance. In addition, customers can hold on to their money until the last minute because they have immediate access to setting up the transfer using ACH.

Additional Ways to Use ACH Processing

In addition to accepting payment from customers and paying employees, businesses can use ACH processing to:

Pay the Government

Small and midsize businesses can use ACH to pay their taxes to the government. Your statement will show "IRS USA Tax Payment'' for your records.

Pay Vendors

Using ACH is a great way for small and mid-sized businesses to pay vendors for supplies. In addition to being quick and easy, it is vital for avoiding fraud. Vendors enjoy the speed and no-nonsense way that ACH can be used which means that even their drivers can accept payment if they have the equipment.

Moving Funds

ACH is a great way for a business to move money from one account to another without having to leave the business. In addition to being easy, it is fast and convenient. 

Conclusion

As you have read, ACH is a great way for small and midsize businesses to scale. Even when those businesses are in the beginner stage, they can have success with ACH processing.
 
 


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