The prominence of ACH (Automated Clearing House) in modern financial transactions is indeed undeniable, whether you’re a consumer managing your bills or the CFO of an organization overseeing business payments. However, despite the convenience and security that ACH offers, many organizations still rely heavily on traditional paper checks for their financial transactions. This practice often persists due to inertia, legacy systems, or simply resistance to change.
Yet, as technology evolves, costs rise, and competition intensifies, individuals, especially entrepreneurs, must adopt best practices in all aspects, including financial management. Security is a paramount concern in any industry, with fraud continually on the rise. New technologies like EMV chips in payment cards aim to counteract fraud, but cyberattacks, including ddos attacks, remain threats to businesses and consumers alike.
Thankfully, ACH payment processing significantly mitigates these risks while offering advantages such as lower processing costs, improved cash flow management, faster transaction speeds, and robust transaction tracking. In essence, embracing ACH payments aligns with the best practices in technology and enhances both security and efficiency in financial transactions.
That said, below are five reasons why you should pay vendors via ACH and eliminate the need for paper checks altogether:
- Security
One of the biggest threats in the banking industry is fraud and it continues to grow. As a result, banks and credit card companies issue new cards with magnetic strips and embedded computer chips to combat this rising phenomenon. Further, attacks to gain financial information are not just limited to hacking servers. They can also be done via social engineering techniques or impersonation, such as with invoice frauds. Companies often choose to get more information here and implement robust measures to prevent such fraud. In any case, it is of utmost importance to consider the security of any and all financial transactions, regardless of the amount and method.
Manual check writing and sending them through the post exposes both the payer and payee to unnecessary amounts of risk. Use of ACH payment processing dramatically reduces this risk.
- Cost of Processing
A number of businesses still pay their bills by check. The costs of printing, writing, delivering and mailing checks add up to a significant amount over time. It is an enormous waste of money and time when you also include the employee time invested in this payment process. ACH payments accomplish the exact purpose while completely eliminating such hefty costs as the fees of an ACH payment is calculably lower than the traditional check payment method. This reason alone justifies the switch.
- Cash Flow and Accounting
While profitability is important, the saying “cash is king” highlights the significance of effective cash flow management for businesses. Timing receivables and payables is a crucial aspect of this management. The use of Automated Clearing House (ACH) transactions provides businesses with detailed data on how their cash flow is being managed, helping identify discrepancies. This data is valuable for tax companies, like these best tax firms in Nor Cal, to accurately calculate a business’s tax liability. ACH data empowers businesses to make informed financial decisions based on comprehensive information.
- Speed and management
During a transaction, there is a period of time where neither the payee nor the payer has access to the funds. Using ACH payment processor, the time is dramatically reduced, for this lag is never beneficial for either party. Also, tracking of payments is made much easier when the ACH process is used. Inflow and outflow of cash can be reported by email summary on a weekly basis. Better and more accurate data grants you as the CFO improved information to make appropriate decisions that can impact the organisation in a positive way.
- Best Practices in Technology
In this day and age, technology plays an enormous factor in every business. The only constant that we can count on is that it will change how we do business every year. If you are to embrace this fact, it can help your company to survive. Conversely, ignoring this fact may lead to risk of losing ground or even ceasing operations due to lacking a competitive edge. Financial institutions are forcing this change upon us all whether we like it or not. Their systems and services are propelling us towards more electronic payment processing systems every day. It limits their liability as well as ours if we adopt it and integrate into our company processes. This is inevitable and will become more painful it will be when the time comes that you are forced to make the change.
The cost saved from cutting a check versus making an ACH payment is reason enough to adopt this more efficient strategy in your company. In addition to the other reasons listed above, and you have a compelling strategy that can provide real savings to your business.
Please visit www.ach-pay.com to learn more about how ACH payments can help your business.
