Receivable Savvy hosted a webinar in February featuring Robert Unger, Senior Director – Product Management and Strategic Corporate Relations with NACHA, the Electronic Payments Association. The purpose of the webinar was to identify the necessary elements every company should know in order to incorporate ACH into their receivables mix and maximize the Invoice-to-Cash process. Following is the first excerpt from that webinar.
What is the ACH Network?
The ACH network stands for the Automated Clearing House network. It’s an electronic banking system that was built in the seventies. It’s a good old-fashioned batch processing store-and-forward transactions kind of network. If you think about it, in your wallet you probably have a Visa, MasterCard or American Express card. Those cards represent different payment networks, so they all have an association attached to them. They have rules, issuers and acquirers transactions flow between the network.
The ACH really is the same way, only we’re not a consumer branded network. You know the ACH network if you get paid by direct deposit, or have money taken out of your checking account every month for a recurring bill such as a mortgage or car payment. These transactions flow through the network. A lot of companies use ACH in all of their collections channels. ACH can be used in channels wherever you collect payments, whether that’s the mailbox, the telephone, the Internet, mobile payments or bank-based payments. The ACH network can support those transactions for you.
What are some of the key features of the ACH Network?
Some of the key features of the ACH network include the fact that it’s governed by the NACHA operating rules. NACHA is the governing body for the Automated Clearing House Association, just as the VISA Association is the governing body for the VISA network and MasterCard Association is the governing body for the MasterCard network. NACHA is a non-profit. We’re not affiliated with the government, but we develop all the rules that bind all the participants for how the ACH network operates. A big feature of the ACH network is, especially when you consider receivables, is that the ACH network can support both data and dollars. What I mean by this is, your customers can send you payments and, within that ACH payment they can include a lot of remittance information that you need to apply that payment to an open invoice and to perform your cash application. Right now ACH payments settle in one to two days, although later this year, same-day ACH is going to become available and I’ll address that later in the webinar.
You can watch the recording of the entire webinar here (login or free registration required).