Editor’s note: This article kicks off a 2021 series of blog posts to help you put ACH to work in your organization. The next post addresses, “5 Reasons Why It’s Crazy for Businesses to Write Checks.”
If you’ve experienced the “joy” of having teenagers matriculating through middle and high school, you’ve no doubt heard the question, “Why do I have to take algebra?”
I know with each darling little one of mine, I tried to articulate the importance of problem solving, mastering methodology, applying logic to formulas, etc. But, I gotta admit, I’ve never encountered a need to solve a quadratic equation post-algebra class, and I still went to college, got jobs, married and am enjoying an algebra-free life. Of course, I couldn’t tell my kids that. Better that they suffered through it like I did!
ACH payments, however, are not like algebra. I can honestly say that businesses that want to make electronic payments, and get paid (I think that’s every business) really do need to know about how ACH payments work, including ACH payment features, requirements, rules, obligations and recourses. Not having a grasp of ACH basics can increase costs and risks unnecessarily.
As we here at Nacha speak with businesses, it’s pretty clear that even seasoned financial professionals (accounts receivable/payable, treasury, accounting, credit, etc.) are at times at bit fuzzy on the ACH’s full range of features, functions, benefits and requirements for the Procure-to-Pay/consumer disbursement, Order-to-Cash/consumer collections and Hire-to-Retire processes.
Unlike algebra, where we really don’t need to solve quadratic equations anymore, there are real risks to not knowing your rights and responsibilities with respect to ACH payments. Your business is exposed to increased risk and maybe less efficient operations if you don’t know the answer to these questions:
- What can the ACH Network do, or not do, if there is a payment error, or dispute between parties?
- If I make an error, can I claw back funds?
- How long do I have to alert my bank about an error?
- What can I do if there was an unauthorized withdraw of funds from my account?
- Is there a different risk for ACH credit and debit payments?
- Are there options for me to verify an account before my company pays another business?
- Is my company in compliance with the Nacha Operating Rules, and what is my liability if I am not in compliance?
- What are the available tools to mitigate risk, and what are the best practices for AP and AR ACH payments?
- How can I reduce payable and/or cash application costs with ACH?
- How do I get my supplier/buyer to use ACH?
Nacha Consulting is offering a free, 15-minute phone consultation to discuss your issues and evaluate options. Complete this form if you would like to connect with the Nacha Consulting team to discuss your organization’s ACH risk issues, Rules compliance, best practices or other concerns. (link for form)
Nacha has numerous resources to help businesses better understand the benefits and best practices for ACH payments: