Automated Clearing House
The Automated Clearing House (ACH) is an electronic payment network used by individuals, businesses, financial institutions and government organizations. Electronic ACH payments provide better cash management capabilities and lower costs than traditional paper payments. The nationwide network exchanges funds and information throughout the 50 states as well as the U.S. territories and Canada with participation by over 98% of the nation’s financial institutions, including thousands of savings banks and credit unions. Efforts are underway for the development of a worldwide ACH Network -the Worldwide Automated Transaction Clearing House (W.A.T.C.H).
The ACH network allows funds to be electronically debited or credited to a company or individual’s deposit account. Currently these deposit accounts include checking and savings accounts, loan accounts, and general ledger accounts. ACH transactions carry basic entry details such as the individuals name (except Point-of-Purchase transactions), financial institution routing number, account number, dollar amount of transaction and effective date for the transaction.
There are many benefits to utilizing the ACH network, and these are our favorites:
- Ability to deposit funds to multiple accounts.
- Reduces internal processing costs.
- Reduces bank service charges.
- Eliminates NSF fees associated with paper checks.
- Improved collection rate on returned checks.
- Item processing costs are reduced.
- Faster collection of funds at a reduced cost.
- Faster notification of returned entries.
- Delinquencies of receivables are significantly reduced.
- Reduces the possibility of insufficient funds.
- Eliminates costs associated with billing and second notices.
- Allows businesses to offer additional customer payment service.
- Funds are collected on predetermined dates
- Cash flow forecasting and funds management is improved.
- Provides the conveniences of automated transactions.
- Reduces the need for expensive wire transfers.
- Assures payment discounts for predetermined payment dates.
- Improve vendor relationships as a result of more timely payments.
- Ability to transmit entries on specified dates.
- Check handling and manual payment processing are eliminated or reduced.
- Costs associated with printing and mailing monthly bills may be eliminated.
- Eliminates erroneous checks (i.e., no signature or wrong amount).
The Automated Clearing House is an electronic payment Network that exchanges funds via Electronic Funds Transfer (EFT) throughout the U.S. fifty states and territories. Over 98% of the nation’s banks including the Federal Reserve belong to the ACH.
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