ACH online payment: its advantages and disadvantages

Automated Clearing House (ACH) payments are electronic payments made through the ACH network, an electronic network that handles a variety of transactions that occur in the United States, some of the most common being: payroll deposits, invoices Mortgages, utility bills, insurance bills, B2B (business-to-business) payments, and e-commerce payments. For businesses, an ACH online payment has several advantages over disbursement by check, money order, or telephone, in particular:

1. Punctual payments

Left behind to send payments by mail or phone, many clients procrastinate, resulting in your business losing money that could be in their accounts, which could translate to lower investment ratings. While late payments may not ruin your business, they do complicate your current finances.

2. Less late fees

While some entities benefit handsomely from late fees, they can cause other entities to lose money in the form of lost customers. While consumers always pay late fees to entities whose services are essential, such as banks and insurance companies, they often do not pay when faced with late fees for services that are more expendable. ACH benefits customer retention by helping prevent late fees.

3. Faster access to funds

ACH disbursements take less processing time than standard debit and credit disbursements, approximately 1-2 days compared to 2-3 weeks, respectively. Posting disbursements to a business account sooner rather than later allows you more financial flexibility today, especially if the majority of your income comes from ACH payments.

4. Less warranty costs

With traditional reimbursement methods come various expenses that ACH Pay eliminates, such as: paper, mail, and extensive telephone personnel. Automatic payments can also decrease the expense of collection action, either internally or through outsourcing, as they make it difficult to increase late fees and late payments.

Drawbacks

ACH payment drawbacks are not inconveniences so much as contingencies that must be addressed to benefit from the deal, such as:

1. Off-site data storage

Off-site data storage can be found inexpensively through software as a service (SaaS) providers that specialize in data storage and security, or commercial services that offer the same service. Keeping payment data stored off-site in encrypted form is crucial to preserving it from fire, flood, or hardware theft.

2. Fraud

Like all systems that use stored financial information, the ACH system is a target for fraud, both internal and external, and statistics show that the former represents the greatest risk in terms of data theft. Fraudulent activity can be greatly reduced by the presence of firewalls that protect against malicious activity inside and outside, and also by engaging in smart personal practices, such as the following four:

1. Using permanent instead of temporary employees for certain jobs

two. Separate critical tasks as much as possible

3. Intensify selection procedures for certain positions; Y

Four. Reset confidential account passwords on a regular basis