Like the rest of the world, when COVID-19 hit, Jeffrey and Grace Littlejohn were concerned. And like many small- and medium-sized businesses, their family-run residential electrical services company experienced a steep decline in March and April. But a few months later, business began to pick up once again.
“As an electrical services company, we were in the right line of business,” Grace Littlejohn said. “Because people were quarantined at home and had to work remotely, they started to really pay attention to their surroundings. They either wanted to improve their spaces for themselves, or prep their homes for sale, or they just had time on their hands and wanted to take care of some electrical work around the house.”
With the unexpected uptick in their business in the midst of a pandemic, having customers make ACH payments has been a true benefit to the Littlejohns as electronic payments are easy, convenient, low cost and secure.
JML Electric LLC, based in Marshall, Virginia, was founded in 2011, and started making ACH payments two years later when it onboarded its first non-family employee.
“Jeff wanted to tighten up his bookkeeping and pay his employee through Direct Deposit,” Grace said. “We wanted the easiest way to run transactions and using Direct Deposit, in particular, was just idiot-proof.”
For the Littlejohns’ business, ACH works as a debit payment in which funds are “pulled” from their customer’s account. It is also known as a Direct Payment, and is a popular option that is convenient and saves costs compared to other options.
It’s also easy for the customer – just like when a consumer authorizes the utility company to debit the consumer account to pay a bill – and easy for the business.
Whether businesses know it as Direct Deposit, Direct Pay, EFT, electronic check, or an electronic bank transfer, ACH payments are faster and more reliable than paper checks,.
Some small and medium-sized businesses use accounting software – such as QuickBooks for the Littlejohns – that supports ACH payments by creating and transmitting ACH files.
After a customer enters their bank information, QuickBooks prepares ACH information for processing through the ACH Network, which is connected to virtually every bank and credit union in the U.S.
In addition to ACH, the Littlejohns allow customers to pay a variety of ways, including by paper check, cash and credit card, but they definitely prefer ACH as a payment method. Currently about 25% of their payments are ACH and they are intent on growing that.
With ACH, their business “isn’t hit with a fee, like with credit cards,” Grace said. In fact, the Littlejohns had to increase their prices by about 5% to accommodate credit card fees.
Also, with ACH, “there is no check to physically handle, and there is no paperwork to track,” Grace said. “With checks, my husband has to worry about taking them out of his pocket or out of his car. It’s a major hurdle getting a check from Point A to Point B.”
For some small and medium-sized businesses, before the pandemic, writing and mailing a paper check (and worrying that it may get lost or stolen in the mail) or even picking up a paper check and taking it to the bank were merely a hassle. But during a pandemic with social distancing requirements, handling paper checks is an even bigger pain point.
The Littlejohns’ message to their fellow business owners is clear: “If you expect your business to grow, you need to have a dedicated system to process transactions in a legitimate, low-cost way, and ACH works best for us.”
Helping businesses and organizations of all sizes to more easily make and receive ACH payments is one of Nacha’s strategic initiatives aimed at increasing adoption of ACH payments. For more information on how to leverage ACH for your business, visit ACHQuickStart.org, an online resource for your business to learn how to pay or get paid by other businesses using ACH. For more information about JML Electric LLC, visit jmlelectricllc.com or call (703) 829-0565.