The type of business that you run has a big influence on the modes of payment that you may wish to accept. For service industries and delivery-based businesses, cash-on-delivery is an option, but you might not want your staff handling large amounts of cash. It puts them and you at risk. It can be a lot easier – and safer – to have customers swipe their cards on portable electronic keypads, or pay using smartphones or tablets.
On the other hand, if your business receives regular payments, having customers swipe or enter their card data every month is less advantageous. If your customers pay weekly, monthly, quarterly, or annually, or if they are making segmented payments, then going bank-to-bank may be more convenient for you both. The customer needs to authorize automated payments. This ensures your cash flow and minimizes the risk of customers forgetting to pay.
Understanding Automated Clearing House Payments
ACH is an interbank network that allows banks to make routine payments to each other. Unlike checks, which are processed as they come, or credit cards that are billed once a month, ACH payments are done in bulk, usually once or twice a day. The bank will collect all the ACH transactions from all its customers and lump them together. This lowers the processing costs significantly.
In some ways, ACH is slower than other banking transactions, because they are only done at specific times of day. If you miss the window, you’ll have to wait for the next one. But keep in mind that ACH, your customers can pre-approve payment for a specific date in advance, in which case this won’t be an issue.
Fewer non-payment issues
When the date approaches, your merchant processor liaises with the bank to release the money. No further action is needed from your customer, so there’s no back-and-forth and no time lost chasing the money. You’re also able to virtually eliminate chargeback issues associated with credit card purchases, because chargebacks can only be initiated for ACH payments on the grounds that the payment was not authorized–not on the grounds that the product or service was not received or was unsatisfactory.
ACH payments allow you to plan exactly how much money is coming in and on which date. It gives you a far clearer picture of your liquidity in the future than practically any other kind of transaction.
Penny for penny, ACH costs less to process. It leaves a clear paper trail, which is crucial follow-up in case of financial glitches. Finally, many banks offer additional services when you transact through them, so ACH can extend your credit line and make you eligible for other banking perks and discounts.
For more information on how comprehensive ACH payment processing services will save your business money, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.