Running a business is about continuous improvement. You’re always looking for ways to sharpen your competitive advantage. 

You’ve changed your product for the better. Your customer care is second to none. Your marketing is optimized for results. 

But what about payments? When was the last time you revisited the payment methods you offer? 

In this article, we’ll teach you how to accept ACH payments. They’re fairly simple to set up, and the benefits are far-reaching. Think more profit and happier clients. 

First, we’ll define ACH payments. Then, we’ll explain how they work. 

We’ll explore why you should accept ACH payments before walking you through the setup process. 

To finish, we’ll share three quick tips to use to get started. Let’s jump right in. 

What Are ACH Payments? 

ACH stands for automated clearing house. These payments are a type of electronic transfer, which means the entire transaction happens digitally. 

Payments take place via the ACH network. This connects banks across the US. It’s managed by the National Automated Clearing House Association (Nacha). 

Individuals and businesses can then send or receive money directly from their bank account. It’s quick, easy, and secure. 

This payment system facilitates many different types of transactions. This includes: 

• ACH credits, where money is pushed from one account to another. Examples are direct deposits, payroll deposits, and social security benefits. 
• ACH debits, where money is pulled from one account to another. Examples are mortgage payments, one-time debit transfers, and subscriptions. 

FROM ONE OF OUR PARTNERS: What Are ACH Transactions? Everything You Need to Know 

How ACH Payments Work for Small Businesses 

Billing and payments aren’t always the most exciting part of running a business. But using ACH bank transfers can streamline the entire process—for you and your clients. Every minute saved is a minute you can spend growing your business. 

How exactly do ACH payments work? 

Let’s imagine you’ve invoiced a customer. They’ve decided to pay you using the ACH. It would unfold like this: 

• You get permission from your customer to debit their bank account. This is called debit authorization. Usually, it involves filling out a form. Nacha has a sample you can use. 
• You then send the payment request to the customer’s bank account. This happens over the ACH network. 
• The ACH network processes the transaction. If the funds are available, they are moved from the customer’s account to your account. 
• The funds settle in 24 to 48 hours. After this time, you’ll see the cash in your bank account. 

You can also use the ACH to pay your vendors and set up recurring payments: 

• You might give your vendors authorization to charge your bank account. The process then works the same as above, but you’re the “customer.” 
• For recurring payments, you might change the authorization form. You’ll also need to choose a bank or payment processor that supports recurring payments. From there, you set up the payment in the system. You choose the amount and frequency. The funds are then deposited automatically. How easy is that? 

RELATED ARTICLE: 9 Advantages of a Cashless Business 

Why Should Small Businesses Accept ACH Payments? 

Payments are something every business has to deal with. Instead of thinking of them as just another admin task, turn them into a competitive advantage. 

With the right strategy, payments can lift your profit and boost customer satisfaction. Here’s how: 

Lower Transaction Fees 

Transaction fees eat into your profit. 

Wire transfers, for example, cost about $25 per transaction. If you’re making a profit of $200 on a job, that’s 12.5% down the drain. Over time, this can seriously impact your earnings. 

In contrast, the average ACH fee is just $0.29. Let’s do the math—ACH payments are 99% cheaper. 

Better Cash Flow Management 

Good cash flow management is important for so many reasons: 

• You can comfortably cover your expenses. You can pay wages, buy supplies, and so on. 
• You can make plans for the future. You can use data to accurately forecast your earnings. 
• You can make smart investments in your business. For example, you might take out a loan to purchase new equipment. You know you can afford the repayments because your cash flow is reliable. 

ACH payments improve your cash flow management from different angles. 

As we’ve mentioned, it’s a cheaper way to get paid. That means more money in your account after each job. 

It’s also fast. Payments are processed quickly, so you can use the funds sooner. 

Finally, it’s easy for customers. They don’t have to remember to pay. Instead, you initiate the transaction, which means you get paid on time every time. 

More Customer Convenience 

ACH payments are as simple as can be for your customers. 

Everything happens electronically. They don’t have to go out and get cash or write a check—something 46% of Americans didn’t do at all in 2023. 

They also have peace of mind knowing their data is secure. 

With greater security and convenience comes higher satisfaction levels. ACH payments contribute to a positive customer experience (CX). And in many industries, it’s CX that separates the surviving from the thriving. 

Reduced Fraud Risk 

Did you know that eight in 10 organizations fell victim to a fraud attack or attempt in 2023? This is a 15% increase over 2022. 

The method most vulnerable to fraud? Checks. About two-thirds of businesses faced fraud attacks on check payments. 

You can protect your business, your reputation, and your clients from malicious criminals by switching to ACH payments. 

Fuss-Free Integration with Software 

When all your software works together like a well-oiled machine, your life becomes that much easier. Why? 

• Data is sent between your software solutions. This means no matter where you look, the information is up to date. 
• You don’t have to enter data manually more than once. There’s less chance of making mistakes. 
• You benefit from a 360-degree view of your business. You can see the whole picture—not just the separate parts. This empowers smarter, growth-enabling decision-making. 

Physical payment types like cash and checks can’t be automatically integrated. But ACH payments can. 

This means less work, fewer errors, and meaningful insights that fuel your next phase of growth. 

FROM ONE OF OUR PARTNERS: 7 Things You Should Know Before Setting Up ACH Billing 

How to Set Up ACH Payments for Your Business 

You’ll need to go through a few steps before you can use the ACH for payments. 

The good news is once you’ve done the setup, you’re good to go long-term. You keep getting the benefits without any extra work. 

Here’s how to get started. 

Step 1: Choose the Right Payment Processor 

First, you’ll need to choose a payment processor that ticks all the boxes. What these boxes are really depends on your business. 

For example, do you need recurring payment support? What about software integration?  

When you know what you want out of a processor, you can start looking for one. Spend some time researching your options. Look at the features they offer, the price they charge per transaction, and their reviews. 

If you’re left with one or two promising processors, consider reaching out and scheduling a demo. This can help you make a final decision. 

Step 2: Put the Banking Infrastructure in Place 

You’ve got your payment processor. Now, it’s time to run through the setup. 

You’ll need to make sure you have all the banking infrastructure in place to accept ACH payments. This might include: 

• Creating a business bank account to receive payments 
• Connecting your bank account with your payment processor 
• Sharing your payment information with your clients 

Step 3: Establish Payment Terms 

Your payment terms tell your clients when and how to pay. They also explain what happens if payments are late. 

Because you’re adding a new payment method, you’ll need to update your terms. Explain that you accept ACH payments, and briefly outline the process on your invoice. 

Step 4: Gather Client Authorization 

You need consent from your clients to charge their accounts via the ACH network. Generally, you’ll use a form to do this, just like the example we linked above. SurveyMonkey also has an authorization form template you can use. 

The client must complete this form before you can use the ACH to collect funds. 

Step 5: Check for Security and Compliance 

If you use the ACH, you’ll need to follow ACH Rules Compliance. This makes sure you’re not violating the Nacha Operating Rules and Guidelines. 

Rules include getting proper authorization from the client and processing payments within specified time frames. 

ACH payments are also subject to other data security standards. These require third parties like payment processors to make sure payment information is unreadable—or encrypted. 

If you already accept credit card payments, you’ll be familiar with the PCI DSS. However, ACH payments are not governed by these standards. They only apply to credit card payments. 

RELATED ARTICLE: ACH Versus Wire Transfers: Which Payment Method Is Right for Your Business? 
 

3 ACH Payment Tips to Use Right Away 

Benefit from ACH payments as soon as possible. Use these quick tips to get started: 

• Switch to a payment processor that supports ACH payments. Make sure they comply with all the rules set out by Nacha. Also see if the processor integrates with other software you use. 
• Think about how you’ll get authorization. This might be via a form or electronically. It can even be over the phone. 
• Update your payment terms. Make sure your invoices have clear payment instructions. Edit these to include how to pay via the ACH.