Why Changing to ACH Payments Could Make Perfect Sense for Your Business
They say money makes the world go round, and that's nowhere more true than in the world of small business. However, the days of trade being conducted using solely cash are far in the past, with checks long being the preferred way for smaller companies to make payments to their suppliers.
Of course, electronic payments are becoming ever more common, and you'll be very accustomed to paying for personal goods and services with the swipe of a credit card. However, for many small businesses, the check still rules when it comes to paying suppliers - but there's a cheaper, easier, more reliable alternative that could be a perfect fit for your operation: payment over the Automated Clearing House (ACH) system.
What is the Automated Clearing House System?
The ACH network is an electronic system for transferring money digitally, and all the major banks are members of it. It is a way of moving funds almost instantly from one bank account to another, making it a simple matter to settle payments at the click of a mouse to anyone with a suitable bank account. No single company controls access to the network, meaning there is a range of different solutions available for any business wanting to make or receive payments, using the two systems of Direct Deposit by ACH and Direct Debit by ACH.
Does ACH Make Financial Sense?
The first consideration in any business operation is whether or not it's an effective and economical use of money. In this area, there's little doubt that paying your suppliers by ACH wins out over checks. The total cost of check payments, taking into account bank fees and other expenses, can easily be $5 or more per check. ACH payments come in at around a tenth of this, with a typical per-payment charge of $0.50 or less.
What Are the Other Advantages?
ACH payments offer a business many other benefits besides simple cost savings.
They are more reliable: no more lost checks.
They offer instant payment, putting an end to 'the check is in the mail' delays
ACH payments are more secure. Despite the cybercrime scare stories, electronic payments are much more difficult to forge or intercept than paper ones, and are easier to track and trace.
They're more convenient, removing the need for trips to the bank or the post office.
ACH software simplifies record keeping and accounting by making full transaction histories available instantly online.
They're kinder to the environment than printing paper checks and sending them by mail.
What Apps Do We Recommend for SENDING Payments via ACH?
Many companies just use the first electronic payment software they find. Often the first name recommended by small business advisors is Bill.com. However, the biggest name is not always the best for small businesses. Of course Bill.com can be an improvement over paper check, but it is far from perfect with some significant downsides. For example Bill.com has one major issue in that it requires the receiver of funds (the vendor of a small business) to register an account with Bill.com prior to receiving the money. For this reason along with an outdated and hard to use user experience, many small businesses are now moving to improved ACH payment software like Plooto. New companies like Plooto are revolutionizing payments by making it very simple and easy to use. Plooto is one company that unlike most of the others does not require the recipient to make a complicated account and login in to receive payment electronically. Simplicity and ease of use is a key differentiator prompting many companies to choose Plooto over Bill.com.
Who Do We Recommend For RECEIVING Payments Via ACH?
The answer here is an easy one. Quickbooks Online makes receiving ACH funds from customers a snap. Within seconds, subscribers of Quickbooks Online can quickly email an invoice and check one box to receive the funds via ACH. Doesn’t get much easier than that.
Considering all these benefits, it's little wonder that the number of payments the ACH system handles is now around 23 billion a year. Is it time for your own business to be adding to that number? Let us know we can help!