Contents
Introduction
The Automated Clearing House (ACH) Network is an electronic funds-transfer system that has revolutionized how businesses handle payments. Operated by NACHA (National Automated Clearing House Association), this payment system processes over 100 million transactions daily in the United States, including payroll direct deposits, tax refunds, consumer bills, and tax payments.
While paper checks have traditionally dominated business-to-business (B2B) payments, advancements in payment processing and accounting systems have made electronic payments accessible to companies of all sizes. ACH provides a faster, more cost-effective, and efficient way to send and receive payments compared to traditional methods.
How ACH Differs from Other Payment Methods
B2B transactions fundamentally differ from consumer retail transactions. Unlike retail payments that typically need to happen in real-time, businesses often grant each other defined payment periods (trade credit or terms). While essential for business operations, managing trade credit can be costly and burdensome.
Credit card acceptance for B2B payments presents challenges in terms of:
- High processing fees
- Complex settlement processes
- Reconciliation difficulties
ACH, by contrast, costs significantly less than other payment forms due to its batch processing nature. ACH payments are grouped and processed together, eliminating extra costs associated with on-demand transactions.
Types of ACH Transactions
To understand how ACH can benefit your business, you need to know the two basic types of ACH transactions:
1. ACH Credits
ACH credits represent funds being sent to a destination account. When you initiate an ACH credit, you’re pushing money from your account to someone else’s account. Common examples include:
Direct deposit of payroll
Vendor payments
Tax refunds
Person-to-person payments
2. ACH Debits
ACH debits represent funds being pulled from an account. With ACH debits, you’re authorizing another party to take money from your account. Common examples include:
- Automated bill payments
- Subscription services
- Mortgage payments
- Insurance premiums
For a business to make an ACH payment to another business, the payer must know the banking account and routing numbers of the payee. This requirement may pose concerns for smaller businesses hesitant to share banking information.
For smaller businesses, ACH debits often make more sense. With ACH debits, your customers provide their bank information with either:
One-time authorization to process payment, or
Approval for a specific amount for recurring transactions
To process ACH payments, your business needs an ACH merchant account from a bank or third-party provider like IntelliPay. A third-party provider processes ACH payments and deposits them into your business bank account.
Understanding ACH Processing Times
Classic ACH
Standard ACH payments, often called “classic ACH,” typically settle within 1-2 business days. According to NACHA, most payments settle the next business day.
Same-Day ACH
Same-Day ACH, introduced in early 2019, extends the acceptance window for ACH Originators (over 10,000 banks or financial institutions) and enables same-day funding. As of 2025, Same-Day ACH has multiple processing windows:
Morning submission deadline at 10:30 AM ET, with settlement at 1:00 PM ET
Afternoon submission deadline at 2:45 PM ET, with settlement at 5:00 PM ET
Late afternoon submission deadline at 4:45 PM ET (added March 2021)
According to NACHA rules, virtually all types of ACH payments, including both credits and debits, are eligible for Same-Day processing. Only international transactions (IATs) and transactions above $1 million (as of March 2022) do not qualify. Eligible transactions account for approximately 99 percent of current ACH Network volume.
Cost Considerations
ACH transactions involve fees, with different fee structures for classic ACH and Same-Day ACH:
Classic ACH fees are typically lower due to the longer processing time
Same-Day ACH includes a surcharge that the Originating Depository Financial Institution (ODFI) pays to the Receiving Depository Financial Institution (RDFI)
NACHA doesn’t set or regulate fees charged to businesses. The cost to send and receive ACH payments is determined by your company’s bank or payment processor.
As a business owner, you’ll need to weigh the costs between classic ACH with 1-2 day processing versus the Same-Day funding of Same-Day ACH. For time-sensitive payments, the additional cost of Same-Day ACH may be justified.
Benefits of ACH for Small Businesses
1. Cost Savings
ACH payments typically cost less than other payment methods like credit cards. According to a recent study referenced on IntelliPay’s blog, check fraud accounted for 47% of annual deposit account losses pre-pandemic, equating to over $22 billion in losses. By switching to ACH, businesses can significantly reduce these costs.
2. Improved Cash Flow
With predictable settlement times and the option for Same-Day processing, businesses can better manage their cash flow. This predictability helps with financial planning and ensures funds are available when needed.
3. Enhanced Security
ACH payments are more secure than paper checks. They eliminate the risks associated with physical checks, such as loss, theft, or tampering. According to IntelliPay’s security blog, ACH transactions include authentication measures that help prevent fraud.
4. Convenience
ACH payments eliminate the need for customers to carry checkbooks or send checks through mail. Customers can set up one-time payments or recurring payments, saving time and effort for both parties.
5. Automated Reconciliation
ACH transactions can be easily integrated with accounting software, streamlining the reconciliation process and reducing manual errors.
6. Environmentally Friendly
By reducing paper usage and eliminating the need for physical transportation of checks, ACH payments are a more environmentally responsible choice.
7. Broad Accessibility
The ACH network can reach virtually every bank account in the United States, making it an inclusive payment option for all customers regardless of their banking institution.
Protecting Your Business from ACH Fraud
As with any payment method, it’s essential to implement security measures to protect your business from fraud. IntelliPay recommends these practices to safeguard your ACH transactions:
- Implement ACH Filters: Block all but pre-approved transactions to protect your business and bank account.
- Consider ACH Debit Blocks: These can be activated if you suspect suspicious activity, blocking ACH debits and credits to your account.
- Use Dual Control: Require two different people to authorize ACH transactions, reducing the risk of internal fraud.
- Verify Account Changes: Always confirm any requests to change payment information through a separate communication channel.
- Monitor Transactions Regularly: Review your ACH transactions frequently to identify any unauthorized activity.
- Educate Employees: Train your team to recognize common fraud schemes, such as Business Email Compromise (BEC) scams that target companies using ACH payments.
How IntelliPay Can Help
IntelliPay helps small businesses take full advantage of all the benefits of ACH with none of the hassle. As a registered ISO/MSP of Citizens Bank and Synovus Bank, IntelliPay provides:
- Seamless ACH payment processing
- Both one-time and recurring ACH payment options
- Standalone and integrated solutions
- Support for both ACH debits and credits
Enhanced security measures to protect against fraud
Summary
Key takeaways about classic ACH and Same-Day ACH:
- ACH is a faster, more cost-effective way for businesses to send and receive payments
- Same-Day ACH credit offers an efficient way for a business to pay another business quickly
- ACH costs less than other payment models, like credit cards
- ACH debit is an excellent solution for small businesses hesitant to share banking information
Planning and a good partner help businesses fully take advantage of ACH’s opportunities and benefits. o learn more about how IntelliPay’s intelligent payment platform can work for you, contact sales@intellipay.com or call 855-872-6622.
Additional Resources
The Business Owner’s Guide to ACH Payments
How Do ACH Payments Benefit Your Business?
Payment Scams and How to Avoid Them
How Does ACH Payment Processing Work?
