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The Elevation Blog

Faster Cash Flow and Lower Payment Costs with Same Day ACH

“Cash is king” and Same Day ACH supports the crown!

Cash flow is the lifeblood of companies, and faster closure of accounts receivables ensures smoother operations, particularly with respect to purchases, payroll, investments, debit reduction and any other functions requiring payment.  Cash flow forecasting is one of the key metrics for most treasury departments and one of the most challenging to get right consistently. 

The ACH Network got a high octane boost with the availability of Same Day ACH in 2016.  This means that ACH payments or collections initiated “today” are received and settled “today.”  Same Day ACH payments can be sent to - or collected from - any bank account in the U.S.  

Previo
usly,  ACH payments or collections initiated “today” were received and settled “tomorrow.”  The classic/next-day ACH transfer is still an option, and Same Day ACH is a faster payments offering flexibility when further speed is needed for making a payment. For example:
 
  • Executing emergency payments, off-cycle disbursements and corrections or payouts, time critical/due-date payments, or account transfers;
  • Correcting errors/re-initiating payment; and
  • Reducing costs compared to other expedited payment options. 

Beginning Sept. 15, 2017, Same Day ACH will be available for debit payments (when funds are “pulled” from a customer account) enabling the same-day processing of virtually any ACH payment.  Same Day ACH debits can improve the collections and cash flow process too. For example:
 

  • Speeding the funds collection cycle without having to change customer behavior, and thereby improving the logistics cycle/disbursements of goods/services, particularly for higher risk/cash only/credit hold customers;
  • Reducing risk with faster notifications regarding problem payments (e.g. account not found, incorrect account number, insufficient funds, debit block), thus providing an opportunity to speed resolution and followup actions (e.g., having payments corrected, re-initiated, resolving “dropped” payments); and
  • Reducing costs compared to other expedited payment options. 

While Same Day ACH is an optional payment method for sending or collecting payments, businesses that receive ACH payments will now be required to receive Same Day ACH payments in addition to “classic” ACH payments. 

This means that payments received with “today’s” date must be credited for being paid “today” (so your customer cannot be negatively impacted for a late payment just because the cash file from your bank arrives at 8:30 a.m., and contained payments that should have been credited “yesterday). 

Same Day ACH presents a range of opportunities for both the payables and receivables sides of the business.  With this, it’s important as well to understand the obligations and implementation considerations as Same Day ACH can impact a number of business functions. 

NACHA has created the “Same Day ACH for Businesses Essentials Guide”to assist with understanding the benefits and requirements of Same Day ACH.  Download your copy to help assess opportunities and obligations

.Download the Guide 

 

Topics: ACH, Automated Clearing House, Receivables, ACH Transfer, ACH Network, Payments, Faster Payments, payables, payment costs, Same Day ACH, Treasury, cash flow

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