In the business world today, what is the most common form of payment? Next to credit cards and cash, it’s debit cards. As popular as they already are for making payments, their popularity and use is expected to grow exponentially! So why, if credit cards and debit cards are so popular, are businesses looking at other methods for receiving and making payments? Answer: Associated with every transaction, when carried out with either a credit card or debit card, there is a high processing cost.
What’s the solution to a problem such as this? Answer: ACH transfers (Automated Clearing House). The smarter choice for today’s businesses – versus credit cards and debit cards – is the use of ACH transfers. Here’s why.
Perfect for Recurring Billing
For businesses that operate on a subscription model, ACH is ideal. In a most cost-effective manner, it allows them to accept payment, so they save money on transaction fees. The correlation between transaction fees and transactions means that the more transactions there are, the greater the number of transaction fees. That equates to money lost for businesses. The best choice, therefore, is ACH.
Convenience and Flexibility
Money transfers can be simplified with ACH – no more cutting checks. You experience the best of both worlds as a business owner because:
- Your customers have the flexibility to set up recurring payments or make a one-time payment with ACH.
- You get to say goodbye to that big bully of a checkbook as a payer, thanks to ACH. Right from your online banking portal, you can approve ACH payments securely. You don’t have to be around to personally sign a check.
No more having to follow up with customers because their card expired, and their payment failed. The transaction happens between the accounts of two banks. What’s more, to alleviate missed due dates, automatic payments can be scheduled for recurring credits and debts.
Security and Reduced Fraud Risks
One of the problems with checks is their vulnerability. They can be forged, misplaced, and/or stolen. Those worries are done away with courtesy of ACH. You can eliminate intermediaries through direct ACH transfers. To confirm the involved parties’ authenticity, micro validation is carried out. This gives the customer peace of mind but also ensures two things for the business owner:
- There are no account transaction blocks.
- Also assures accurate account information.
What’s more, if you believe you’re the victim of fraud or an error occurs, you can usually reverse ACH payments – unlike wire transfers.
Unlike large corporations, the same level of security isn’t usually as available for middle-market companies and small businesses. As a result, they are increasingly being targeted by fraudsters. Increase your level of protection by partnering with a commercial bank with services that strongly help prevent against fraud.
Faster Processing
ACH provides a settlement time that strikes a happy medium between credit cards and checks. Whereas it may take 2 to 3 business days for a credit card payment to settle and 5 to 6 business days for a check, it usually only takes about 3 to 4 business days for an ACH settlement to occur. In fact, same-day processing is now available where ACH payments are concerned.
What does this type of expediency mean for your business? You can expect quicker access to cash, flexibility with payments, and improved workflow efficiency.
Increased Sustainability
The concern over how the environment is affected by a business’s operations has become increasingly crucial. Investors, employees, and customers are all demonstrating preferences for companies that are eco-friendly. Without a doubt, corporate sustainability is a hot button today.
As opposed to processing and issuing thousands of checks made from paper, ACH is a green alternative. By limiting the use of paper, you save trees. Checks no longer need to be transported either. Carbon emissions and material usage can be significantly reduced by switching to ACH, particularly if your business conducts the majority of your transactions through receiving and writing checks.
Improved Cash Flow
With ACH payments, the old phrase, “The check is in the mail.” will no longer be an excuse. If you are the recipient of any kind of payments, that’s good news. On the date the payment is due, you should receive your funds.
If you are the one who’s paying – on the other hand – right up until the payment due date, you can hold onto your funds. Any way you look at it, you’ll be enjoying a more predictable, stronger cash flow.
Lower Transaction Cost
This may be one of the biggest reasons why ACH transfers have become so popular for today’s businesses versus debit cards and credit cards. Doing business via paper checks is a pricey endeavor, whether you’re dispersing or receiving payments. One of the major benefits of electronic payments is cost savings.
Let’s face it, there are a slew of miscellaneous costs that go into the use of checks for disbursing payments: postage, envelopes, check printing, etc. When using ACH, these disappear. What’s more, the ACH payment can also include invoice posting details, as needed.
Don’t put off until tomorrow the benefits of ACH that you can enjoy today. It’s a convenient, reliable way of receiving funds and making payments. By using electronic funds transfers, you can replace paper checks. You benefit from increased security, lower costs, and predictable cash flow. It’s just that simple.