In 2021, the Automated Clearing House Network (ACH) moved more than $72 trillion between bank accounts throughout the United States reliably and inexpensively. Virtually every U.S. citizen and business uses the ACH Network for direct deposit of payroll, automated payments, income tax refunds, and other purposes. Yet, there are many things you may not know about the ACH Network. Here are a few that can help your business get the most benefit from it.
- ACH credits are not final in the same way as wires, but almost. A payor can attempt to reverse a payment made with an ACH credit only if the payor claims the beneficiary was already paid by a previous ACH credit entry, the beneficiary was the wrong recipient of the funds, or the original ACH payment was in the wrong amount. Otherwise, the credit is considered final.
- ACH rules give you three chances to collect. When you initiate a debit to a customer’s account for a payment, and the debit is returned for insufficient or uncollected funds, the debit can be reinitiated up to two times. You have up to 180 days after the settlement date of the original entry to reinitiate it. Checks returned for insufficient or uncollected funds may be converted to ACH debits and represented for collection up to two more times.
- To avoid fines, respond to NOCs. A notification of change (NOC) informs the originating depository financial institution (ODFI) that the routing number or bank account number in an ACH transaction is incorrect. If you initiated the transaction, the ODFI should then notify you. The next time you send a transaction to that same beneficiary, you must use corrected information. Non-response to NOCs is the #1 ACH rules violation and cause of fines. Ask your bank if it can help you comply with NOCs.
- Same Day ACH processing is available for domestic transactions up to $1,000,000. With three different processing windows, the timing of your transaction may even allow your beneficiaries to receive their money before end of the day. Same Day ACH credits and debits are perfect for time-sensitive payments like just-in-time inventory or emergency payroll, or simply to enhance your customer and supplier relationships. Work with your bank to help ensure you transmit your file by the Same Day processing deadline.
- ACH can play a critical part in your Business Continuity Plan. The use and adoption of ACH payments can be an integral part of business continuity planning. Being prepared with a streamlined process for funds distribution may help improve your response time to quickly help your employees, vendors, and consumers with the support they need in uncertain times. Examples include tax refunds, unemployment insurance, donation receipt, and government assistance.
- SEPA is Europe’s answer to the ACH Network. The Single Euro Payment Area (SEPA) standardizes the legal framework, settlement timeframe, formatting, and costs of non-urgent electronic payments made in euros throughout Europe. U.S. companies that have a bank account in a SEPA country can make and receive SEPA ACH-type payments to other accounts in any one of the 34 SEPA countries.
For more information, contact your Wells Fargo treasury management representative.
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