ACH Software Explained: Options for Managing ACH Payments & Transactions

The National Automated Clearing House Association(NACHA) is an electronic network that financial transactions are sent through in the United States. ACH payments are the go-to method for domestic B2B money transfers across a variety of sectors. 

Also referred to as electronic checks (or echecks), ACH processing is an efficient, reliable, and cost-effective way to move funds between accounts, without the need to cut a paper check. The quickest way to process electronic payments is by using ACH software to automate tasks.

What is ACH Software?

ACH software allows a business to easily create and transmit ACH files. Also called “treasury software,” an ACH payment solution provides a secure, reliable, and timely means of processing credit and debit transactions. The platform functionality helps to maximize your bank’s profitability and elevate the customer experience. 

Key features of ACH software include:

• Real-time error checking
• Generate ACH visibility reports
• Originate commercial payments, payroll direct deposits, and taxes
• Manage electronic data interchange (EDI) on customer accounts
• Create automated files for NSF returns and NOC transactions
• Prearranged Payment and Deposit (PPD)
• Better manage risk with audit trails and role-based views
• VAT and tax compliance – maintain W-9, W-8BEN, VAT Details

How Does ACH Software Work?

ACH software starts with your data. You can import it from a variety of channels that include:

• Excel
• CSV file
• QuickBooks 
• Microsoft SQL Server
• All major accounting packages or legacy systems that can export to Excel/CSV

Import transactions from your data file and include all banking information (both the client and vendor) from every financial institution involved. And yes! You can encrypt all of this stored data in ACH software.

The platform will perform all file formatting and batching to ensure the ACH file is in full compliance. It is then ready to be transmitted to your bank. The system will then send email notifications to your vendors and customers with a full check stub for their records. 

Since the ACH software is installed at your location, a business can create an unlimited number of ACH files, regardless of your license selection (one-time or subscription). 

Look for a program with full automation of tasks, including:

1. Import data
2. Create ACH file
3. ACH file transmission to the bank

After the ACH transaction takes place, a file should be sent to the receiving party with remittance advice.

Electronic Payment Types

So, why do you need software to manage ACH payments? Because ACH payments are the top choice for business transactions. That’s because you can process payments in bulk. When it comes to comparing an EFT vs. ACH, both are forms of electronic payment, but an ACH has fewer variable costs and can process at a higher rate. 

The same goes for an ACH vs. wire transfer. Wires are processed on an individual basis. Additionally, they are used to transfer funds directly from one bank account to another. This includes the account number and routing information. An ACH goes through the Clearing House and is managed by the Federal Reserve Bank, so it’s more secure. 

The Benefits of an ACH Payment Solution

ACH software offers a flexible transaction processing system that enhances your bank operations and lets a business closely manage the ACH process. 

Whether a bank is the originator (ODFI) or receiver (RDFI), ACH payment software should integrate with your digital banking and core banking system to offer key benefits like:

• Schedule vendor payments to maximize cash and minimize processing times
• Control exposure risk on ACH origination (from submission to settlement)
• No canceled checks or paperwork
• CCD (Cash Concentration and Disbursement)- ACH format in which funds clear overnight
• Enhance the customer experience with reliable and secure ACH payment processing
• Plug into mobile and online banking solutions for added continuity and convenience
• Avoid the high cost of taking credit card payments or using third-party checks
• Pay a single, flat-rate fee (never a percentage)
• ACH payments process faster than checks so a business can hold onto cash longer
• Lower risk and better security when less susceptible to credit card and check fraud

To manage your exposure to risk, increase cash flow, and streamline your payment process, an ACH software solution is a healthy start.