What is ACH?

The Automated Clearing House, or ACH, is a network of over 12,000 banks and financial institutions that comply with the national ACH (NACHA) standard format of transferring funds electronically.
 

Why use ACH?

 

The popularity of electronic payments has increased considerably over the past few years.  More and more businesses are turning to electronic transactions as a means of transferring and receiving funds because they offer a tremendous savings advantage over paper checks.  Electronic transactions allow for less administration time, lower bank fees, and quicker availability of funds.

 

A standards-based file format is a necessity due to the large number of different formats in place in businesses and financial institutions.  By using one of the Standard Entry Class codes, files can be processed efficiently and accurately.

 

How do I get started?

 

The first step is your relationship with your financial institution.  Contact them to find out:

•If your financial institution is a member of the ACH network

•If your financial institution will allow you to transmit ACH files based on your account type, or how to get such an account

•How the bank requires your ACH files be delivered (for example, FTP or web upload

 

How does ACH Universal create ACH files?

 

ACH Universal uses information you import to create ACH files.  The information to be imported is obtained through your accounting system using an export function or by using a report writer.  The only requirement on the file is that it be a tabular-format file.  This includes Excel spreadsheets, Access databases, comma-separate values (CSV), and tab delimited.

 

Files obtained through your accounting system resemble one of two formats: Ad Hoc, where all entries in a file contain required information to make a payment (name, amount, account number, routing number); or Profile-Based, where a transaction file contains amount and a lookup field to link to a profile containing static information (name, account number, routing number).  Regardless of method, the resultant ACH file will be the same.  Choose the method that matches the style of data you export from your accounting package.  See Gathering Data for more information on the difference between Ad Hoc or Profile-Based imports.

 

Popular ACH Uses

 

The three most popular reasons for a business to use ACH are:

 

•Pay employees (direct deposit)

•Pay vendors

•Collect from customers

 

See each article for a quick-start guide to one of these more popular ACH uses.