What is ACH Origination?

Automated Clearing House Origination refers to electronic transactions that can be used to disburse payments in an efficient manner, and/or collect electronic receipts through direct payments within the United States. ACH Origination must be approved by a relationship officer, and once the account is in place, business customers can opt for automated recurring transactions at regular intervals. It is a very cost effective and time efficient way to disburse or receive regular payments.

Disbursing payments through ACH

ACH Origination also allows you to make direct payments to the government or to pension and payroll checks among other things. The process itself is fairly simple. First, you need to obtain a written statement from the receiving party, stating that you are authorized to make electronic payments to their account. Then, you can deliver, for example, a payroll file to your bank a few days prior to the transfer date. The files are then transmitted into the ACH network, and your company’s account is debited, while the receiver’s is credited, on the agreed upon transfer date. The data must be formatted and in agreement with NACHA rules and regulations.

Receiving payments through ACH

Recurrent payments such as memberships, dues, contributions, subscription fees, or regular charitable contributions, can all be collected through ACH. The great advantage here is that the process is automated, predictable, and convenient, which allows your company to better manage finances.

In order to receive payments through ACH, you must first obtain a written statement from the sending party, which authorizes you to draw payments from their account at pre-determined intervals. Then, similarly to sending out payments, you prepare the documentation regarding the collection data a few days before the transfer date. After the files reach the ACH network, the money is released on the pre-determined date. All of the information must be compliant with NACHA rules and regulations.

The benefits of using ACH origination

ACH Origination eliminates the need for payment and collection operations. This means less time spent printing and processing checks, lower losses due to lost, forged or stolen checks, and lower postal expenses. It also improves cash flow and forecasting, because payments are collected faster at predetermined dates. Your clients and employees stand to gain as well, because the manual work required to collect and send money is minimized.

Overall, ACH Origination is a great way to augment and simplify one aspect of your business’ finances. With payments being sent out and received automatically, your company gains both time and money due to the precision and efficiency of ACH Origination. Ultimately, everyone involved stands to gain with this streamlined payment and collection process from your bottom line to your employees and customers who have a reliable way to make and receive payments.

For more information on ACH Origination or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.